JPMorgan Now Long Gold. A Game Changer?

The latest futures positions report (Commitment of Traders, COT) shows the continuation of a pattern that started after the gold and silver price rally in August 2012. Especially the gold market is turning upside down. Why? Because of the gigantic spread between the speculators (increasingly short, although it somehow stabilized past week) and the commercials (increasingly long, although it stabilized as well past week). The below chart reveals this point; commercial positions are in green (close to net zero), speculators are in blue and red (also moving to net zero). As readers see, today’s positions are comparable to the ones at the end of 2008, right before a major upleg in the price of gold and silver price started. Does it mean that we are about to witness the same bull run? It could be although the big difference between now and then is that QE only started then while QE seems to becoming increasingly ineffective right now. Otherwise stated, the central bank has created +2 trillion US dollars between now and then, while other central banks across the world have created similarly huge amounts of money to combat deflation. Chart courtesy: sentimentrader.com.

COT gold 7 june 2013 price

The big revelation in the latest COT reports, however, was in the June Bank Participation Report. That report shows the positions of US vs non-US banks in the futures market. These are the positions at the end of May:

US Banks Long: 56,751
US Banks Short: 27,129
=> net 29,622 contracts long

Non-US Banks Long: 24,035
Non-US Banks Short: 49,075
=> net 25,040 contracts short

Now that may seem like a balanced situation at first glance (US Banks long minus non-US Banks shorts are somehow higher than zero). But the interpretation of these figures in an historic context reveals a very important (and unique) evolution. Ted Butler explains in more detail what to make out of these figures (source: Jesse):

“Since the Bank Participation Report of February 5, the US bank category position (in effect, almost exclusively JPMorgan) has swung by a net 100,000 contracts, from net short 70,000 contracts to net long 30,000 contracts (all rounded). There has never been a move of such magnitude before. Over that same time, the total net commercial short position (in the COT) declined by 113,000 contracts, meaning that JPMorgan accounted for almost 90% of the entire commercial decline. It is not possible for that extreme degree of concentration and market share not to be manipulation, pure and simple.

And here’s the manipulative icing on the cake – JPMorgan was able to flip a net short position in COMEX gold of 50,000 contracts in February to a net long position of 50,000 contracts on a gold price decline of as much as $350. I would submit that the singular purchase of 10 million ounces of gold (worth the equivalent of $15 billion) within four months on a greater than 20% price decline could only be accomplished if the price was manipulated lower by the purchaser. No other explanation would be possible.

JPMorgan’s emergence as the big COMEX gold long changes the dynamic of the gold market. In addition to conclusively proving that this is the most crooked and evil financial institution ever to exist, it confirms the extremely bullish set up for the gold price.

Of course, if JPMorgan can continue to accumulate inventory on lower prices, we will get lower prices temporarily. But having JPMorgan confirmed as being on the long side of gold is a game changer.”

So JP Morgan was able to maneuver itself to the long side of the gold market while speculators (which by nature are long during the bull market) have been pushed to the short side. Does it mean that the gold price will move up right away? No, it doesn’t, although it could. Timing a price move is not what this report is about. But with the largest holder of gold futures contract on the long side of the market things could seem less bearish as the picture that has been painted lately.


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  • bob12345654321

    No collusion between the international bankers and US regulators…nothing to see here folks…please move on…2+2=5…