The Latest Bank Participation Report

52
Tue, Jun 14, 2016 - 11:25am

The latest CFTC-generated Bank Participation Report provides another case study of the methods through which the major Bullion Banks attempt to influence and direct gold prices.

We've written about these CFTC-generated reports so many times, it would be impossible to link every post. However, nearly every post began with these bullet points. Here they are again, just so that we're on the same page:

  • The CFTC's Bank Participation Report is issued monthly from a survey taken at the Comex close on the first Tuesday of every month. The report summarizes the combined positions of the four largest U.S. banks (primarily JPM, MorganStanley, Citi, Goldman but occasionally others) and the twenty largest non-U.S. banks (Scotia, HSBC, DeutscheBank, UBS, Barclays and others).
  • These reports might be utter nonsense and complete falsifications, designed to mislead you and get you leaning the wrong way. In 2014, JPMorgan was fined by the CFTC for "repeatedly submitting inaccurate reports relating to the required reporting of positions". See here: https://www.cftc.gov/PressRoom/PressReleases/pr6968-14

Again, we know that what The Banks report as their "positions" provides an incomplete picture at best. Not only do The Banks maintain considerable long and short bets in the OTC market, they also operate numerous, offshore hedge funds and utilize these funds to take positions not included in the CFTC data as "commercial". So, what good are these reports? Similar to the weekly Commitment of Traders reports, the Bank Participation Report is only useful/interesting when considered historically...and that's what we'll do again today.

As you know, gold has been on a tear in 2016 as investors and traders around the globe have profited form being long. You would think that some of the "smartest" and "best-connected" traders in the world...those on Bullion Bank trading desks...would have profited from this 20% move as well. However, if you think that, you're dead wrong.

For your consideration, here are the last six CFTC-generated Bank Participation Reports for Comex gold. Please take some time to review them and be sure to note the size of the position changes in each category in relation to price.

1/5/16 @$1078 GROSS LONG GROSS SHORT TOTAL NET

US Banks 6,387 49,447 -43,060

Non-US Banks 35,499 37,698 -2,199

TOTAL -45,259

2/2/16 @$1127 GROSS LONG GROSS SHORT TOTAL NET

US Banks 9,136 54,150 -45,014

Non-US Banks 22,313 42,663 -20,350

TOTAL -65,364

3/1/16 @$1231 GROSS LONG GROSS SHORT TOTAL NET

US Banks 8,183 81,050 -72,867

Non-US Banks 20,514 72,777 -52,263

TOTAL -125,130

4/5/16 @$1230 GROSS LONG GROSS SHORT TOTAL NET

US Banks 11,099 88,208 -77,109

Non-US Banks 22,788 93,900 -71,112

TOTAL -148,221

5/3/16 @$1292 GROSS LONG GROSS SHORT TOTAL NET

US Banks 10,791 118,437 -107,646

Non-US Banks 21,905 109,511 -87,606

TOTAL -195,262

6/7/16 @$1247 GROSS LONG GROSS SHORT TOTAL NET

US Banks 12,704 73,928 -61,224

Non-US Banks 21,004 93,076 -72,072

TOTAL -133,296

Obviously, there are a few things here that should literally jump off the page at you:

  • First of all, check the gross long positions in both categories. Price rises over 20% yet these Banks hardly add or subtract any longs. In fact, look at the remarkable consistency of the Non-US Bank long position between February and June. Price rose $170 and then fell over $90 before climbing back. Yet, these 20 Banks barely budged their relatively tiny long position. What does this tell you about their ultimate motive? Is it to profit from alternately being long and short??
  • Look at the change to the total combined short position between February and May. It increased by 300%!! This while price was rising from epic lows near $1100 to just shy of $1300. Again, are these brilliant, MBA-carrying traders looking to profit or are they hoping to accomplish something else?
  • And, of course, be sure to note the changes from May to June. During this time, price fell nearly $100 and then rallied back $40. Did The Banks use this period to add some longs? Of course not. Instead, while the speculators were dumping long positions over fears of looming Fed rate hikes, The Banks were gleefully buying back and covering some of their massive, accumulated short positions. Note that the combined total net short position fell by 62,000 contracts or about 32% over this time period.
  • Lastly, at the peak on May 3, the total combined net short position of these 24 Banks was 195,262 Comex contracts. That same day, the CFTC-generated Commitment of Traders Report showed a "Gold Commercial" net short position of a near-record 294,901 contracts. So, of that record net short position and near-record open interest total back in early May (all issued in a desperate attempt to keep price below the pivotal $1308 level), The Banks themselves were responsible for over 66% of the total. Sixty-six freaking percent! This is NOT hedging or any other legitimate activity. This is Market Manipulation 101. Issue limitless amounts of paper derivatives until the point comes where speculative interest is exhausted. Use the selling that ensues to buy back your ill-gotten shorts, likely at a profit, but be at the ready to issue them again should price resume its uptrend.

Again, none of this should come as any surprise to regular readers here at TFMR. The purpose of this post is to continue shining the light of truth upon the fraudulent, paper derivative pricing scheme. Only when this scam/sham is finally defeated will price be allowed to reach its fair value. In the meantime, all those playing in the "Comex Casino" need to be aware of the forces aligned against them and trade accordingly.

TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  52 Comments

Jun 14, 2016 - 12:11pm

Another look at DB

By any traditional TA measure, a closing low below the previous intraday low would be pretty bearish.

Jun 14, 2016 - 12:19pm

Total gold OI up another

Total gold OI up another 13,000 yesterday to 539,000 on the $11 gain. Gotta wonder how many they're adding today to hold gold back from $1290+...

Jun 14, 2016 - 12:28pm

FWIW re the S&P

I had also done this back on Friday and sold for a profit earlier today...thinking that the "market" will likely stabilize ahead of the Fedlines tomorrow. May look to get re-short then. I still have my 10 DB puts, though, and now can feel free to just leave them on since I've booked this other profit.

AGAU kenmasters675
Jun 14, 2016 - 12:36pm

Ugly Miners ??

It would be hard to call these Ugly -Huh ha ha

If anyone was lucky enough to but these in Jan they have not been ugly unfortunately I have held and added to these the last couple a years so I am just well back in the green

a 15 - 20% correction would not be unlikely here, so what? they are all headed up over the long term I haven't the inclination or the smarts to try and time trades during this market I feel safer sitting tight . I have made out well, cost averaging into these when they were on the canvas so I am following Jesse's advice "being right an sittin' tight" I will dump a few of my "pigs" over the next few weeks and take the losses - just readjust my portfolio etc

YTD

AG + 267%

MUX + 203%

PVG + 69%

MPUCF + 125%

BGAVF +417%

GGTCF + 168%

BHVCF +549%

RPMGF + 249%

RickshawETF
Jun 14, 2016 - 12:41pm

seventh

"Is this Heaven? No, it's the gold storage vault for the PBOC . . . "

Maryann
Jun 14, 2016 - 12:42pm

Thank you TF....

You read my mind. I was just wondering about that. Now, I have a question and please forgive me in advance if this is dumb as I am such an option novice but I was wondering if you have any concern about the gap between 34 and 36 on the GDXJ chart? I was looking at the put open interest and it seems high at those levels. Am I reading that right? Edit to add that that is for the Aug puts not July.

Thank you again! At my own risk, I am playing along at home.

Maryann
Jun 14, 2016 - 12:43pm

No concern at all

If it goes down there, I'll buy 2 more. LOTS of time on this one.

AGAU
Jun 14, 2016 - 12:45pm

I hear ya

And didn't we just have a 15% correction in May?

Again, after a 140% move to the new highs last week, you're going to get consolidation. It's inevitable. In the end, I'm up so much that I'm just letting it all ride. If I try to get cute and day trade, all I'll be is wrong and I'll miss out on massive reversals like the 10% beauty back on June 3.

Doople
Jun 14, 2016 - 12:55pm

Risk in Miners

The risk to the miners IMHO is to be out of the market. The returns have been excellent. Now we are in a seasonally weak time of year for gold until say the end of July but with Brexit looming and other fundamental issues, gold may not follow the play book. It does seem to me that the Shanghai Gold Exchange has stabilized the market some. The punishing drops seem to be less punishing. Now with this valuable information in hand plus $3.00 USD you can get yourself a cup of coffee at Starbucks.

Jun 14, 2016 - 1:16pm

Subscribe or login to read all comments.

Contribute

Donate Shop

Get Your Subscriber Benefits

Private iTunes feed for all TF Metals Report podcasts, and access to Vault member forum discussions!

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

Key Economic Events Week of 8/12

8/13 8:30 ET Consumer Price Index
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Labor Costs
8/14 8:30 ET Philly Fed
8/14 9:15 ET Ind Prod and Cap Ute
8/14 10:00 ET Business Inventories
8/15 8:30 ET Housing Starts & Bldg Permits

Key Economic Events Week of 8/5

8/5 9:45 ET Markit services PMI
8/5 10:00 ET ISM services PMI
8/6 10:00 ET Job Openings
8/8 10:00 ET Wholesale Inventories
8/9 8:30 ET Producer Price Index

Key Economic Events Week of 7/29

7/30 8:30 ET Personal Inc/Spending & Core Inflation
7/30 10:00 ET Consumer Confidence
7/31 8:15 ET ADP employment
7/31 2:00 pm ET FOMC Fedlines
7/31 2:30 pm ET CGP presser
8/1 9:45 ET Markit Manu PMI
8/1 10:00 ET ISM Manu PMI
8/2 8:30 ET BLSBS
8/2 10:00 ET Factory Orders

Key Economic Events Week of 7/22

7/23 10:00 ET Existing home sales
7/23 10:00 ET Richmond Fed Manu Idx
7/24 9:45 ET flash Markit PMIs
7/25 8:00 ET Count Draghi/ECB policy meeting
7/25 8:30 ET Durable Goods
7/25 8:30 ET Wholesale Inventories
7/26 8:30 ET Q2 GDP first guess

Key Economic Events Week of 7/15

7/15 8:30 ET Empire State Fed Index
7/16 8:30 ET Retail Sales and Import Price Index
7/16 9:15 ET Cap Ute and Ind Prod
7/16 10:00 ET Business Inventories
7/17 8:30 ET Housing Starts and Building Permits
7/18 8:30 ET Philly Fed
7/19 10:00 ET Consumer Sentiment

Key Economic Events Week of 7/8

7/9 8:45 ET Fed Stress Conference, three Goon speeches
7/10 8:30 ET CGP Hump-Hawk prepared remarks
7/10 10:00 ET CGP Hump-Hawk House
7/10 10:00 ET Wholesale Inventories
7/10 2:00 ET June FOMC minutes
7/11 8:30 ET CPI
7/11 10:00 ET CGP Hump-Hawk Senate
7/11 12:30 ET Goon Williams
7/12 8:30 ET PPI

Recent Comments

randomness