Bank Participation Report by Turd Ferguson
This aggregated report gives us a once-a-month look at the gross positions of those traders classified as banks, both U.S. and non-U.S. Now check this out...let's start with the report from last October so that you can see from another perspective just how steep the changes have been in the nine months since.
GROSS LONG GROSS SHORT
U.S. Banks 40,625 146,809
Non U.S. Banks 34,881 113,445
TOTAL 75,506 248,254
And now here are the numbers from last month (June). Note that the banks had moved from net short position of 172,748 to a small net long position of 4,582. This got everyone's attention and was well summarized here: http://jessescrossroadscafe.blogspot.com/2013...ticipation.html
GROSS LONG GROSS SHORT
U.S. Banks 56,751 27,129
Non U.S. Banks 24,035 49,075
TOTAL 80,786 76,204
Well, we've all been waiting with baited breath for the July report and it just came in. Would the banks continue to cover on these falling prices or were they adding to the downside momentum? We got our answer:
GROSS LONG GROSS SHORT
U.S. Banks 69,565 24,939
Non U.S. Banks 34,904 58,565
TOTAL 104,560 83,859
The total net long position grew by over 16,000 contracts to an astounding 20,701. But drill a little deeper...The U.S. banks actually added net longs of 15,000! The only thing holding the overall net position in check was the 9,500 new shorts put on by non U.S. banks (HSBC? Scotia? Barclays? UBS?) Do you think that The Fed warns, plans and advises the non-U.S. banks as clearly and succinctly as they do the U.S. banks?? The Fed IS the U.S. Banks. If Barclays or UBS is too stupid to see what's going on and they are actually adding shorts at these prices, well Hells Bells, go right ahead! Their selling simply allows the U.S. Banks to cover even more!
Look, I know these past nine months have been brutal and we've all suffered through the almost-daily pain of continued losses. But this is almost over! Yes, prices may continue lower, stopping and turning who knows where. However, I am 100% confident in my analysis of The Big Picture here. The major, too-big-to-fail, Fed-Primary-Dealer and Bullion Banks have now fully gotten themselves out from under what had been an extraordinarily wrong-footed net short position of over 146,000 contracts last autumn. They are now net long nearly 45,000 contracts! (And certainly more than that after last Wednesday and Friday.) That flip of 191,000 contracts took place while price declined by 30% from $1800 to $1250 and represents a change of position equaling over 595 metric tons.
