BPR April: Precious Metals Suppression In COMEX Market Continues

The CFTC releases at the end of each month the futures positions in precious metals of the large banks. A detailed analysis of the April report was provided by Ed Steer in his latest newsletter (click here to subscribe), chart courtesy of Goldchartsrus. The data in this report prove that the prices of all four precious metals are going nowhere because of suppression in the COMEX market. So long, supply and demand fundamentals in precious metals are insignificant.

From Ed Steer’s daily gold and silver newsletter:

In gold, ‘3 or less’ U.S. Banks were net short 29,595 gold contracts in the April BPR, compared to the 38,457 contracts they were net short in the March BPR.  I would guess that JPMorgan is  close to market neutral in gold, if they even hold a COMEX position at all, either long or short—and all of this short position is held by HSBC USA and Citigroup.

Also in gold, ’19 or more’ non-U.S. banks are net short 44,592 COMEX contracts, which is a slight improvement from the 51,151 COMEX contracts in the March Bank Participation Report.  It’s my opinion that Canada’s Scotia bank holds about a third of this short position all by itself, so the remaining 30,000-odd contracts spread out over the remaining ’18 or more’ non-U.S. banks are pretty much immaterial.

Here’s Nick’s chart of the Bank Participation Report for gold going back to 2000.  Charts #4 and #5 are the key ones here.  Note the blow-out in the short positions of the non-U.S. banks [the blue bars in chart #4] when Scotiabank’s COMEX gold positions [both long and short] were outed in October of 2012.

BPR_2015_April_Gold

In silver, ‘3 or less’ U.S. banks were net short 15,055 COMEX contracts in the April BPR.  That compares to the 13,499 COMEX contracts they were net short in the prior month.  Since Ted says that JPMorgan currently holds an 18,000 contract short-side corner in the COMEX silver market, that means that HSBC USA and Citigroup must be net long about 3,500 contracts to make the numbers work.

Also in silver, ’15 or more’ non-U.S. banks are net short 26,466 COMEX contracts in this month’s report.  That compares to the 22,734 contracts these same banks were short in the prior BPR report.  Since October of 2012 when Scotiabank got outed, it’s my firm belief that at least 80 percent of the above short position is held by Canada’s Scotiabank—and the chart below confirms that.  This means that the short positions of the remaining ’14 or more’ non-U.S. banks are immaterial in the grand scheme of things.

Here’s the BPR chart for silver.  Note in Chart #4 the blow-out in the non-U.S. bank short position [blue bars] in October of 2012 when Scotiabank was brought in from the cold.  Also note August 2008 when JPMorgan took over the silver short position of Bear Stearns—the red bars.  It’s very noticeable in Chart #4—and really stands out like the proverbial sore thumb in chart #5.

I estimate that between JPMorgan and Scotiabank, they are currently net short about 39,000 COMEX silver contracts between them.

BPR_2015_April_Silver

In platinum, ‘3 or less’ U.S. banks are net short 6,648 COMEX contracts in the April BPR.  In the March BPR these same three banks were short only 5,226 contracts, so they’ve increased their net short position by 27 percent in just one month.

Also in platinum, ’16 or more’ non-U.S. banks are net short 9,132 COMEX contracts, up about 8 percent from the March BPR.  I would guess that maybe only one foreign bank has a material short position in platinum, so the rest don’t matter.  But none of the non-U.S. banks matter in the face of the gargantuan short positions held by the ‘3 or less’ U.S. banks.

Here’s the BPR chart for platinum—and please note that the banks were never a factor in platinum until mid 2009.  Now look at them.  If you want to know why the platinum price isn’t going anywhere, despite the supply/demand fundamentals, look at the total long positions the banks have vs. their collective short positions.  Palladium too!  That tells you all you need to know.  The banks are net short about 23 percent of the entire COMEX futures market in platinum.

BPR_2015_April_Platinum

In palladium, ‘3 or less’ U.S. banks are net short 8,234 COMEX contracts.  This number has been virtually unchanged for the last six months.

Also in palladium, ’11 or more’ non-U.S. banks are net short 2,319 COMEX contracts, a decline of 25 percent from their net short position in the March BPR.  This number of contracts spread over 11 banks is immaterial when compared to the short positions in the ‘3 or less’ U.S. banks.

Here’s the BPR chart for palladium updated with the April report’s data.  Just look at the long positions vs. the short positions held by the U.S. banks in Chart #5.  You couldn’t make this stuff up!  You should note that the U.S. banks were almost nowhere to be seen in the COMEX futures market in this metal until the middle of 2007—and they became the predominant and controlling factor by the end of Q1 of 2013, where they remain today.  I would bet that JPMorgan holds the vast majority of the U.S. banks’ short position—and maybe all of it.  Palladium as well.  And how about silver?  And just as matter of interest, the banks, in total, are net short about 33 percent of the entire COMEX futures market in palladium, but it’s the ‘3 or less’ U.S. banks that are calling the shots in this metal—and the other three as well.

BPR_2015_April_Palladium

As I said last month at this time—along with a couple of Wall Street investment houses, these are “da boyz’—the sellers of last resort—and you can call them what you like.  Until they decide, or are instructed to stand back, the prices of all four precious metals are going nowhere—supply and demand fundamentals be damned!

As Jim Rickards so correctly put it, the price management scheme is now so obvious, they should be embarrassed about it.

But they obviously aren’t.

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