Precious Metals Monthly Bank Participation Report: February 2015

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), chart courtesy of Goldchartsrus.. The conclusion that stands out is that Scotiabank’s increasing monster short positions in both gold and silver (particularly silver) may put the bank in jeopardy at some point, unless they’ve got themselves covered in other markets like JPMorgan appears to have done in silver.

From Ed Steer’s daily gold and silver newsletter:

In gold, “3 or less” U.S. banks are net short 56,738 COMEX gold contracts, which is a monstrous blow-out from their 8,616 contract short position they held in the January BPR.  In ounces it’s a 4.1 million ounce change for the worst.  Since there are “3 or less” U.S. banks involved, the bulk of these short positions are held by HSBC USA and Citigroup.  But as Ted mentioned in his comment in the COT Report, JPMorgan may actually hold a small short position in the COMEX gold market as well.

Also in gold, “21 or more” non-U.S. banks are net short 76,255 COMEX gold contracts.  The prior month they were short 51,991 contracts.  This is an increase of more than 24,000 contracts, or 2.4 million ounces held short from the January report.  It’s my opinion that Canada’s Scotiabank holds about 40 percent of this amount all by itself, at least it did in January’s BPR, but that ratio may have decreased slightly in the February report, but not by much.

Here’s Nick Laird’s chart (courtesy of Goldchartsrus) showing those changes—and you have to go back a couple of years to see an uglier Bank Participation Report in gold than you’re looking at here.  Note that the long positions in gold held by the U.S. and non-U.S. banks combined are the smallest they’ve been since early 2010—and the short positions of these same banks are the largest they’ve been since February 2013.  Charts #4 and #5 are the two you should concentrate on.

gold_bank_participation_reports_February_2015

In silver, “3 or less” U.S. banks are currently net short 18,968 COMEX silver contracts.  In the January BPR, these same banks were net short 10,240 COMEX silver contracts, an increase of 85 percent in just one month.  Since Ted says that JPMorgan is short 20,000 contracts by themselves, that means that the other two banks, or maybe one U.S. bank, has to be net long the COMEX silver market.  If there are two banks, they would be HSBC USA and Citigroup, the same as gold—and if only one bank, I’m sure it would be HSBC USA.

Also in silver, “12 or more” non-U.S. banks are net short 28,753 COMEX silver contracts.  In January, these same banks were net short 18,046 COMEX silver contracts, an increase of just under 60 percent in one month.  Canada’s Scotiabank most likely holds about 50 percent of the February BPR COMEX short position all by itself—and that may be a conservative number.

Here’s the Bank Participation Report chart for silver updated with February’s data—and as you can tell from Chart #4, the short positions of the U.S. and foreign banks combined hasn’t been this large since January of 2013.

silver_bank_participation_reports_February_2015

In platinum, “3 or less” U.S. banks are net short 7,522 COMEX platinum contracts in the latest BPR.  In the January BPR, these same banks were short 4,188 contracts, which is an 80 percent increase in just one month.

Also in platinum, “15 or more” non-U.S. banks are net short 9,782 COMEX contracts.  The prior month they were short 6,260 COMEX contracts, a more than 50 percent increase in one month.

platinum_bank_participation_reports_February_2015

In palladium, “3 or less” U.S. banks are net short 8,260 COMEX contracts which is an improvement from the January BPR when these same banks were short 8,376 contracts.  It wasn’t a large change for the better, but at least the change was in the right direction.

Also in palladium, “14 or more” non-U.S. banks are currently net short 2,370 COMEX contracts, a big improvement [21%] from the 3,010 COMEX contracts they were short this metal in the January BPR.

But checking the palladium BPR chart below, these month-over-month improvements are an illusion, as these banks have been massively short the palladium market for more than two years now.  Before that, their presence was virtually non-existent, especially the non-U.S. banks.

palladium_bank_participation_reports_February_2015

As you can tell, with the exception of palladium, the banks of the world—especially the “3 or less” U.S. banks, have been going massively short against all comers since these latest rallies in gold, silver and platinum began at the start of 2015.  Along with a couple of Wall Street investment houses, these are “da boyz’—the sellers of last resort.

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