GotGoldReport: U.S. Banks Buy Gold Futures in Dramatic Position Change!
- U.S. Banks Buy Gold Futures in Dramatic Position Change!
by http://www.gotgoldreport.com/
HOUSTON – We thought we would share with our readership an important change in the positioning of large U.S. banks in the monthly futures-only Bank Participation Report (BPR) issued by the Commodity Futures Trading Commission (CFTC). The most recent report was published Friday, May 10 for positions as of the close on Tuesday, May 7.
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The main reason we are going to the trouble of doing this short report is that there is a surprising dearth of accurate information about the new data available on the Web.
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One of our members forwarded to us some coverage by others which we found utterly useless and inaccurate (showing a preconceived bias on the part of the author), so perhaps this report will provide some clarity for those who closely follow the CFTC commitments of traders reports as well as the positioning of banks in futures.
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U.S. Banks Net Shorts Fall to Lowest Since Summer, 2008
Let’s start this review with our comments shared with GGR Subscribers on Sunday, May 12. After mentioning that the combined commercial traders – the Big Hedgers, which includes the U.S. banks in the Legacy COT reports – had reduced their collective net short positioning for gold to the lowest since the 2008 panic and at a “very fast pace,” we said:
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“An aggressive pace of LCNS reduction with none more aggressive than U.S. banks. The Bank Participation Report (not to be confused with the weekly Legacy COT report, which is separate) shows that over the past month U.S. banks covered or offset a whopping 24,855 (60%) of their net shorts (from 41,666 to just 16,781 contracts net short). The number of U.S. banks reporting falls below 4, a tell. We have not seen the U.S. banks show so low a net short position since they briefly went slightly net long in the summer of 2008 during the panic.”
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So in just one month, as gold fell a net $123.45 or 7.8% (from $1,575.67 on April 2 to $1,452.22 May 7), U.S. banks covered or offset 60% of their net short bets on gold, down to an extremely small 16,781 contracts net short. We have to go all the way back to the June 3, 2008 BPR to find a time when the U.S. banks, including bullion banks, showed a lower number of net short bets held.
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In fact, in that June 2008 report the U.S. banks were actually net long gold then by 5,381 lots. (But as the graph below clearly shows they would not stay net long. By the next monthly report in July they had put on an amazing 82,228 contracts net short in just one month.)
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Below is a graph showing the nominal net short positioning reported by U.S. banks to show it visually. (top of post)
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read more!
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