Precious Metals Monthly Bank Participation Report: October 2014

The CFTC releases at the end of each month the futures positions in precious metals of the large banks. A detailed analysis was provided by Ed Steer in his latest newsletter (click here to subscribe). We want to share his analysis because Ed Steer comes to the following factual conclusion: once again, it’s Citigroup, HSBC USA, Scotiabank, along with the ring leader JPMorgan Chase, that run the show in all four precious metals.

From Ed Steer’s daily gold and silver newsletter:

Along with the Commitment of Traders Report came the companion October Bank Participation Report.  This report strips out the Comex long and short positions for all the banks on Planet Earth that hold positions in the Comex futures market. There were improvements in the Comex net short positions of all the world’s banks in all four precious metals, from big changes to small ones.

Don’t forget that this BPR data is extracted directly from the current COT Report data, so for this one day a month we can compare apples to apples—and see what the bullion banks have been up to versus the rest of the traders.

In gold, ‘3 or less’ U.S. banks were net short 2,633 Comex contracts.  In the September BPR, these same ‘3 or less banks’ were net short 10,064 Comex contracts, so there has been an improvement of about 8,400 contracts during the reporting month.  Since Ted puts JPMorgan’s long-side corner in the Comex gold market at 21,000 contracts, this means that the other ‘2 or less’ U.S. bullion banks—which would be HSBC USA and Citigroup—have to be net short about 18,400 Comex contracts between them to make the math work out properly.

Also in gold, ’19 or more’ non-U.S. banks held 49,887 Comex contracts net short.  In the September report, these same banks were short 60,925 Comex contracts.  I would be prepared to bet a decent amount of money that Canada’s Scotiabank is short a third of those 60,925 contracts all by itself.  That would make the remaining 40,000 contracts or so, divided up between the remaining 18 non-U.S. banks, are more or less immaterial.

Below is the BPR chart for gold going back to 2000.  Note the blow-out in the short position in gold in the U.S. banks [red bars on Charts 4 and 5] in August of 2008.  This is when JPMorgan took over the Comex short positions of Bear Stearns.  Also note the blow-out in gold in the non-U.S. banks [the blue bars on Chart #4] when Scotiabank got ‘outed’ in October of 2012.  The net Comex short position there blew out by almost double.  The net long position also increased.  The ‘click to enlarge’ feature really helps here.

gold_bank_participation_report_October_2014

In silver, ‘3 or less’ U.S. bullion banks were net short 9,867 Comex contracts. [In the September report, the same number of banks were short 15,953 Comex contracts]  Since Ted pegs JPM’s short position in silver at 10,500 contracts, this means that the other U.S. banks must be net long the Comex futures market to the tune of 700 contracts or so.  Obviously JPMorgan holds the largest silver short position of all the U.S. banks.

Also in silver, ’11 or more’ non-U.S. banks are net short 19,585 Comex silver contracts. [In the September BPR these same banks were short 22,298 Comex silver contracts]  Just like in gold, I’d bet money that the lion’s share of the non-U.S. banks’ short position in silver is held by Canada’s Scotiabank—approaching 90 percent, if not higher.  It’s my opinion that their short position in the Comex silver market now dwarfs that of JPMorgan.  It’s almost not worth mentioning, but the Comex short positions in silver held by the other 10 bullion banks are totally immaterial.

Below is the BPR chart for silver and, once again, cast your eyes on the events of August 2008 on charts #4 and #5—and October 2012 in chart #4—to see where JPMorgan took over the silver short position once held by Bear Stearns—and where Canada’s Scotiabank was ‘outed’ by the CFTC.  Both events stand out like the proverbial sore thumbs that they are.

silver_bank_participation_report_October_2014

In platinum, ‘3 or less’ U.S. bullion banks are net short 6,196 Comex contracts, which is a huge decrease compared the prior three reports.  Note on chart #5 the tiny long positions held by these U.S. banks, compared to their massive short positions.  This is proof positive that these positions are held solely for price management purposes.  I would bet that JPMorgan is the proud owner of the lion’s share of these positions as well.

Also in platinum, ’14 or more’ non-U.S. banks are net short 4,453 Comex contracts, which is also a massive improvement from prior months.  As a ‘for instance’ these same banks were short 8,880 Comex platinum contracts in the July BPR, which was the low before the last rally in gold and silver began.  Divided up more or less equally, which they probably aren’t, most of the positions held by these 14 banks approach immaterial as well, at least compared to the outrageous short positions held by the U.S. bullion banks, principally JPMorgan Chase.

platinum_bank_participation_report_October_2014

In palladium, ‘3 or less’ U.S. bullion banks are net short 8,687 Comex contracts, which is down from the 10,643 contracts they were net short in September, but virtually the same as they were short back in the July BPR.  So even though JPMorgan et al engineered the price down by about $150 during the reporting month, to its lowest level since mid April, that’s the best they could do.  The non-technical traders on the long side in the Managed Money category flatly refused to puke up their positions, or go short by much.  That situation holds true to a certain extent in platinum as well.

Also in palladium, ’13 or more’ non-U.S. banks were net short 3,765 Comex contracts, which is down big from the 5,937 Comex contracts they held net short in September’s BPR.  But it’s only a marginal improvement in their 4,694 short position they held back at the end of June.

Try as they might, da boyz can’t get any traction in palladium—and that’s certainly obvious over the last 18 months in the chart below.  And as an aside in Chart #5, look at the obscene short positions compared to their puny long positions held by the ‘3 or less’ U.S. banks.  It’s so grotesque, one doesn’t know whether to laugh or cry.

palladium_bank_participation_report_October_2014

So, once again, it’s Citigroup, HSBC USA, Scotiabank—along with the ring leader JPMorgan Chase that run the show in all four precious metals.  And it’s a good bet that they, at least the U.S. banks, have their little piggy noses in the copper, crude oil and dollar index troughs as well.

Chart courtesy: Goldchartsrus.

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