Central Bank Induced Market Distortion Goes Bananas

‘Conjuring Profits From Sub-Zero Yields’ The above is the title of the recent Bloomberg articlethat discusses the ECB’s penalty rate on bank excess reserves (which as one analyst recently remarked have become the proverbial ‘hot potato’ now that a 20 bp fine is charged for their possession) and its effects on bond markets. In euro-land, government bond yields have already completely collapsed, partly to almost Japan-like levels – and yet, more capital gains can still be achieved, even with paper sporting negative yields. According to the article:
‘David Tan got to help oversee $1.5 trillion at JPMorgan Asset Management by picking winning trades. Now he’s studying how to make money from investments that look sure to lose.
Across much of Europe in the past year, the yield on two-year government debt tumbled from little, to none, and then below zero. That means buyers would walk away with less cash when the securities matured – if they waited that long.
Money managers like Tan are navigating a market where positive returns are still possible on debt with negative yields provided others will pay a higher price before the notes come due. Those opportunities were enhanced last week when the European Central Bank increased the cost for financial institutions to park their money with it. After that, depositors were tempted to take their cash from the ECB and funnel it intogovernment bonds, because the negative yields hurt less than the central bank’s more punitive charge.
‘If yields continue deeper and deeper into negative territory, the opportunities for capital gains remain,’ Tan, who is head of rates in London for the fund-management unit of the U. S.’s biggest bank. ‘If your central hypothesis is that yields are going to converge’ with the ECB’s charge on deposits then you still see ‘some potential price appreciation,’ he said.
The list of institutions that may choose to lose includes asset managers so large they’re willing to pay for their cash to be held safely as well as banks that want to avoid the higher ECB charges. And it includes many large financial groups like insurers whose rules are too inflexible to give many alternatives. At the top of the heap probably are other central banks.
Central bankers ‘are a fairly value-insensitive bunch,’ Michael Riddell, a London-based fund manager at M&G Group Plc, which oversees the equivalent of about $415 billion, said on Sept. 5.’They have to invest their FX reserves somewhere if they want to buy euro-area assets that have the top credit ratings, then they have no choice.’

This post was published at Acting-Man on September 10, 2014.

Jeff Gundlach Live Webcast: “The Fixed Income Playbook”

In a few moments, the up and coming “bond king challenger”, Jeffrey Gundlach will hold one of his signature free to all webcasts, this time focusing on what Gundlach calls the “Fixed Income Playbook.” Will he agree with David Tepper that the bond bubble is now bursting, or, on the contrary, side with JPM and its estimation that there is $5 trillion in excess liquidity which will inevitably find its way into the bond market and send yields to even lower record lows, find out in minutes.

This post was published at Zero Hedge on 09/09/2014.

Big Banks Manipulated $21 Trillion Dollar Market for Credit Default Swaps (and Every Other Market)

Derivatives Are Manipulated Runaway derivatives – especially credit default swaps (CDS) – were one of the main causes of the 2008 financial crisis. Congress never fixed the problem, and actually made it worse.
The big banks have long manipulated derivatives … a $1,200 Trillion Dollar market.
Indeed, many trillions of dollars of derivatives are being manipulated in the exact same same way that interest rates are fixed (see below) … through gamed self-reporting.
Reuters noted last week:
A Manhattan federal judge said on Thursday that investors may pursue a lawsuit accusing 12 major banks of violating antitrust law by fixing prices and restraining competition in the roughly $21 trillion market for credit default swaps.
‘The complaint provides a chronology of behavior that would probably not result from chance, coincidence, independent responses to common stimuli, or mere interdependence,’ [Judge] Cote said.
The defendants include Bank of America Corp, Barclays Plc, BNP Paribas SA, Citigroup Inc , Credit Suisse Group AG, Deutsche Bank AG , Goldman Sachs Group Inc, HSBC Holdings Plc , JPMorgan Chase & Co, Morgan Stanley, Royal Bank of Scotland Group Plc and UBS AG.
Other defendants are the International Swaps and Derivatives Association and Markit Ltd, which provides credit derivative pricing services.
U. S. and European regulators have probed potential anticompetitive activity in CDS. In July 2013, the European Commission accused many of the defendants of colluding to block new CDS exchanges from entering the market.
‘The financial crisis hardly explains the alleged secret meetings and coordinated actions,’ the judge wrote. ‘Nor does it explain why ISDA and Markit simultaneously reversed course.’

This post was published at Washingtons Blog on September 9, 2014.

Stuck Inside of the CME with the COMEX Blues Again

Sep 07, 2014
Precious metals prices remain range-bound over the short-term after a devastating three year run.
From a technical standpoint, it doesn’t look great; we are stuck in this limbo of tightly controlled price limbo while the world continues to melt apart for the 99.9%.
COMEX positioning for the big banks and speculators has not changed that much over the last few months.
JPM’s short remains at around 50 days of world production.
In fact, these spec longs who have been hanging in throughout may be the reason we’ve remained range bound over the last couple of options expirations – like the one this week.
Prices are not going to move up from here until the paper pushers who control prices via the exchanges find a way to profit from it.
Regulatory capture happened long, long ago.
The Painted Tape
Now we even know that central banks intervene directly. Yes, most people get it. Everything is manipulated. But the precious metals are manipulated more so.
And the blind spot for most is that these metals still hold monetary status. Let them trade freely, and you will see what I mean immediately.

This post was published at Silver-Coin-Investor on Dr. Jeffrey Lewis /.

A Quick Reminder Of The Only Thing That Matters, In One Chart

Over the weekend, one of JPM’s best strategists, Nikolaos Panigirtzoglou, looked at global liquidity and concluded that “the current episode of excess liquidity, which began in May 2012, appears to have been the most extreme ever in terms of its magnitude and the ECB actions have the potential to make it even more extreme.” Curious why? Read the key note excerpts here. But more to the point, for anyone lamenting stingy central banks, here is one chart that should put everything in perspective, and explain why the world has reached a plateau of permanent addiction to monetary liquidity injections, and whynothing else matters.
Oh, and good luck with that “Fed is about to raise rates” stuff…

Source: “JPM

This post was published at Zero Hedge on 09/08/2014.

As ISDAFIX Becomes Next LIBOR, Can GOFO Manage To Avoid The Spotlight?

As ISDAFIX Becomes Next LIBOR, Can GOFO Manage To Avoid The Spotlight? In the wake of the recent LIBOR benchmark interest rate rigging scandal and successful prosecution of a number of global investment banks for participating in LIBOR manipulation, a new interest rate rigging scandal is gathering steam.
Allegations surfaced last year that ISDAFIX, a similar global interest rate benchmark, had been rigged by a group of global banks, and these allegations are under investigation by a number of regulators including the US CFTC and the UK FCA. While the regulators have not provided any feedback as of yet, the class action suits by impacted investors are now beginning.
ISDAFIX is a set of global benchmarks for interest rate swaps that are used by the worldwide financial community to price and settle contracts based on these interest rate derivative swap contracts. The interest rate swap market is worth over $450 trillion, and these products and contracts are used by a wide spectrum of participants from large corporates to national pension funds and investment houses. The International Swaps and Derivatives Association (ISDA) owns the ISDAFIX benchmark.
The first class action suit in the US has just been filed by the Alaska Electrical Pension Fund, and is seeking compensation for alleged manipulation of the ISDAFIX benchmark rates. The class action suit accuses 13 investment banks and one brokerage of manipulating the benchmark rates to artificial levels over a multi-year period so as to avoid paying out to clients on the interest rate contracts.
The defendants comprise the largest investment banks in the world including Barclays, JP Morgan, Deutsche Bank, Goldman Sachs, HSBC, UBS, and Credit Suisse, (which are all market making members of the London Bullion Market Association) and also Citigroup, and Bank of America. Brokerage house ICAP is also named in the class action suit. ICAP was in charge of calculating the US dollar version of ISDAFIX by averaging rates which were submitted by the contributing banks.
The Alaskan pension fund suit contains analysis by legal and investment consultancy Fideres. Fideres was also the consultancy that provided analytical evidence of price manipulation for a number of recent class action suits that allege price manipulation of the London Gold Fixing benchmark.
According to the suit, analysis over 2009-2012 by Fideres finds that on nearly every day the banks in question were all submitting virtually identical rates to each other, and that when it became known in December 2012 that UBS had begun cooperating with regulators over the LIBOR investigations, only then did the submitted rates start to diverge.
Following the manipulation allegations, the owner of the benchmark, ISDA, took the administration of the benchmark away from ICAP, and more recently, a new administrator ICE Benchmark Administration has been appointed by ISDA. ICE is the owner of numerous financial exchanges and clearing houses, such as the NYSE Euronext exchange.
After the LIBOR scandal, the LIBOR benchmark became the world’s first regulated benchmark. LIBOR is now regulated by the UK FCA, and coincidentally, LIBOR it is also administered by ICE Benchmark Administration. There is an expectation in the market that the ISDAFIX benchmark will probably also become a regulated benchmark.

This post was published at Gold Core on 8 September 2014.

JPMorgan Stunner: “The Current Episode Of Excess Liquidity Is The Most Extreme Ever”

Curious why everything is being bought in the aftermath of last week’s ECB’s unprecedented announcement, and both bonds and stocks are either at or just shy of record highs ignoring completely the worst US nonfarm payroll print of 2014? JPM’s Nikolaos Panigirtzoglou explains why.
From “The ECB’s liquidity boost”, here first is the background on where in the global central bank central-planning experiment we stand right now:
The ECB President stated in this week’s press conference that the ECB’s forthcoming programs, i.e. TLTROs coupled with ABS and covered bond purchases, could take the ECB’s balance sheet back to early 2012 levels, i.e. to 3tr from 2tr currently. These remarks, not only suggest that the ECB might have a target in mind regarding the size of its balance sheet, but raise questions about the boost to global liquidity from prospective ECB actions. In aggregate, G4 central balance sheets started rising rapidly from the end of 2010 driven by the Fed’s QE2 followed by the BoE’s QE, ECB’s LTROs, Fed’s QE3 and BoJ’s QE. As a result of these central bank actions, G4 central bank balance sheets expanded by almost $4tr over 4 years i.e. by $1tr per year since the end of 2010 (Figure 1). With the ECB aiming at a 1tr expansion of its balance sheet, this $1tr per year pace in G4 central bank balance sheet expansion is likely to increase rather than decrease from here, despite the Fed’s tapering. The BoJ is already expanding its balance by close to $650bn per year, so adding a similar pace of increase for the ECB’s balance sheet (500bn or $650bn per year) should result in an annual pace of G4 central bank balance sheet expansion of $1.3tr, even as the Fed ceases bonds purchases.

This post was published at Zero Hedge on 09/07/2014 –.

JPMorgan’s 16 Reasons Why The Fed Should Hike Rates (And 5 Excuses For Delaying)

Things are getting a bit hotter for the Federal Reserve regarding the tradeoff between growth and inflation, according to JPMorgan CIO Michael Cembalest. For the last few years, he notes, a zero rate policy was put on autopilot given excess labor and industrial capacity. Both are shrinking now, and when looking at a broad range of variables, some are clearly mid-cycle. If so, in a few months Fed governors will have to jump out of the 0% interest rate pot and remove some of the liquidity that it has infused into the US economy;

This post was published at Zero Hedge on 09/05/2014.

In Bankrupt Argentina CDS Auction, Barclays Buys Whatever JPM Has To Sell; Citi Goes For The Hail Mary

It has been a while since Creditex ran a CDS settlement auction of any note for two reasons: CDS no longer is a credible or legitimate method to hedge against default risk (see Greece, Banco Espirito Santo), thus making the stated purpose of CDS irrelevant, and when the default carries with it systematic risk ISDA will simply screw over CDS-holders and change terms whenever it sees fit following a few politically-connected phone calls, at which point good luck collecting on your “insurance.” Which is why the just concluded Argentina CDS settlement auction following its bankruptcy last month, was a welcome reminder of what markets looked like in the BC (Before Central-planning) era.

This post was published at Zero Hedge on 09/03/2014.

The ‘New’ Silver Fix and the Powers That Be!

The ‘New’ Silver Fix and the Powers That Be! With Remarks On Texas Governor Rick Perry & Texas Gold! Accompanied by a Warning to Jewelers!
Presented August 2014 by Charles Savoie
Effective mid-month August 2014, the old silver ‘fix’ has been replaced by a new silver ‘fix,’ run jointly by the CME Group, owner of the COMEX, and Thomson Reuters. But has anything of real substance changed? It certainly has not. The new ‘fix’ was awarded by the LBMA, London Bullion Market Association, composed of neer-do-well entities including Barclays Bank, HSBC Bank, Goldman Sachs, JP Morgan Chase Bank, and additionally Bank of Nova Scotia, Credit Suisse, Deutsche Bank, Mitsui & Company, and Paris based Societe Generale. For 116 months I’ve routinely made details available about a unique organization known to few as ‘The Pilgrims Society.’ Persons who haven’t become aware of this group can find details on Google search. If you especially want the monetary details relating to this group and precious metals, add my name to theirs in the search box or read ‘The Silver Stealers’ documentary. Therefore, I won’t go into another basic explanation of The Pilgrims Society here. The ringleaders of the megabanks above have all had heavy representation in The Pilgrims Society. The rest have been and remain represented in interlocking groups such as the Trilateral Commission and the Bilderberg conferences – groups founded by Pilgrims Society members. I am not among the commentators you can read the fastest, because of the nature of these presentations, in depth examinations must be made to substantiate my claims. However, just to make reference to this alleged ‘new’ silver fix, and how bogus it is, I offer this brief report. An oft repeated phrase most have heard, and which drives home how dismal this old world often is, has it that ‘the more things change, the more they remain the same.’ We will not get into a long documentary such as ‘Who Controls The Gold Stealing New York Fed Bank,’ released last February, but will let a few points suffice. This is a mere matter of a group of gangsters who tossed the ball to others in their racketeering organization. Mitsui Global Precious Metals, a Silver Users Association member, is a subsidiary of Mitsui & Company – a Trilateral Commission interest. The Mitsuis and the Rockefellers have been associates since before 1907 when the Japan Society was founded by Rockefeller-Vanderbilt liaison Lindsay Russell as another offshoot of The Pilgrims Society. The Japan Society in fact was forerunner to the Trilaterals, founded 66 years later, but represented an expansion into Britain and Europe, in response to Bilderberg not including Japanese industrialists and bankers. Meaning that Bilderberg is over-rated compared to the Trilaterals! However, they both sprang from this older organization which remains in the shadows.

This post was published at Silver-Investor on August 29, 2014.

Wall Street Admits That A Cyberattack Could Crash Our Banking System At Any Time

Wall Street banks are getting hit by cyber attacks every single minute of every single day. It is a massive onslaught that is not highly publicized because the bankers do not want to alarm the public. But as you will see below, one big Wall Street bank is spending 250 million dollars a year just by themselves to combat this growing problem. The truth is that our financial system is not nearly as stable as most Americans think that it is. We have become more dependent on technology than ever before, and that comes with a potentially huge downside. An electromagnetic pulse weapon or an incredibly massive cyberattack could conceivably take down part or all of our banking system at any time.
This week, the mainstream news is reporting on an attack on our major banks that was so massive that the FBI and the Secret Service have decided to get involved. The following is how Forbes described what is going on…
The FBI and the Secret Service are investigating a huge wave of cyber attacks on Wall Street banks, reportedly including JP Morgan Chase, that took place in recent weeks.
The attacks may have involved the theft of multiple gigabytes of sensitive data, according to reports. Joshua Campbell, supervisory special agent at the FBI, tells Forbes: ‘We are working with the United States Secret Service to determine the scope of recently reported cyber attacks against several American financial institutions.’

This post was published at The Economic Collapse Blog on August 28th, 2014.

Just In: Acquittal – Real Fraudsters were the Banksters!

Real estate flippers avoided criminal conviction because they argued, and persuaded the jurors, that the REAL criminals were the banksters!! No way!!!
‘In an unprecedented trial, four people charged with mortgage fraud were acquitted Friday by a jury in Sacramento federal court after defense attorneys argued the real culprits are the so-called victim lenders.’ Let’s do a little background.
We all know of the real estate boom, and bust, particularly in California, and specifically localized in massive numbers in California’s Central Valley. Essentially, some of us have correctly pointed out that the root cause of the onset of the bubble, were criminal bankers, beginning withBlythe Masters of JPMorgan, who conjured up the scheme of securitized finance for home mortgages. The scheme was simple: the big banks would write loans, using investor money, and none of the banks’ own money. Once the loans were made, the banks would in turn package a thousand loans or so, and bundle them up, then sell them as a whole to investors, as a security. Investors getting first dibs at repayment streams [upper tranches] were paid less interest, than investors who were last to be paid [lower tranches]. The whole theory was that out of the pool of the thousand home loans, not all would default and go bad. Since in the aggregate, most of the loan payments would be paid on time, then those investors at the upper tranches were not risking non-payment as compared to the investors and the lower tranches. The interest rates were balanced against this risk, and the securities were marketed and sold off to investors.
The problem, though, crystal clear to anyone with a brain, from the inception of the whole scheme, is in the incentive structure of the whole mess.
Not a single participant in the scheme had a single incentive to scrutinize the deal. The prospective home loan applicant, wanted a home, and inflated the income and other figures on the application. None of the bankers cared about the fake applications, because the bankers were only going to bundle the loans and sell them off, having no skin in the game and having massive incentives to get more and more loans bundled regardless of the underwriting standards or risk of default.
The investors at the upper tranches cared not. They were guaranteed first payment from the income stream. Their risk of loss was near zero. The lower tranch investors cared not either, as they were getting astronomically high rates of return, and on balance, the risk to them of defaulting payment streams was outweighed by the lucrative returns, much like unsecured credit cards. They figured there would be defaults, but the high interest rates made it, on balance, perfectly acceptable.

This post was published at TF Metals Report on August 27, 2014.

The Federal Reserve Explained in 7 Minutes

Is the Federal Reserve a government institution? How and when was this central bank of the United States formed? Why are US citizens forced to divulge all their financial information under penalty of law, yet that of the Federal Reserve remains veiled? The following short video sheds light on this otherwise dark banking enigma.

For more information on this shady outfit, read this brief article on exactly how the Federal Reserve System works. And see a simple, illustrated example of the subtle fleecing of the US currency system since the Fed’s inception.

Comedians Show Us The Truth

What is it about a comedian that gives him that uncanny ability to put the shocking and sad truths right in front of our eyes, and yet make us laugh at them?  First up is Jon Stewart showing how the main-stream media has wavered on its reporting stance of JP Morgan’s takeover of Bear Stearns in 2008 and its recent $13 billion settlement with the Justice Department over ‘alleged’ financial misdeeds.

The Daily Show
Get More: Daily Show Full Episodes,The Daily Show on Facebook

And then there’s the slightly more serious delivery of the reality of our socioeconomic conditions in the western world by Russell Brand in this BBC interview by Jeremy Paxman.

While the comedian usually does a good job of showing us the issues, their ideas on how to solve society’s problems can be questionable.   Peter Schiff takes up the opposition to Brand’s socialist remedy in the following video.

Those Controlling the World Admit: The United States Can’t Borrow Indefinitely

Speaking from the center of control over world policies, the Council on Foreign Relations, the CEO of one of the most powerful banks in the world, Jamie Dimon of JP Morgan, admits, “It’s virtually assured, the question is when and how.”  That was his immediate response to the question put to him regarding the possibility of the international bond market moving against the US because of its inability to get its fiscal house in order.

What the crazy conspiracy theorists have been saying for years, the conspirators are now admitting openly.  Does this mean the end-game is fast approaching?  Maybe.  According to CNN, the Treasury Department has said the U.S. government must raise the amount of money it can borrow or else it would be unable to pay its bills.  When you get into a situation where you need to perpetually borrow in order to pay off the debt and keep the game running, you’re following in the footsteps of Charles Ponzi.  And as ZeroHedge has noted, Ponzi Finance is the policy being followed at this point, which is likely a precursor to the end-game.

The Decline And Fall Of The Dollar & The USA

The following video from OneTruth4Life explains how America’s founding fathers created a sound money system, framed within Article I, section 8 of the Constitution.  It goes on to describe, in full detail, what’s happened since then – anti-Constitutional acts by certain government leaders and bankers, which debased the currency at various moments in history.  These acts seem to become more blatant as history proceeds, and have led to, or have been the primary motive for most, if not all, the military conflicts.  Furthermore, it will be the primary factor that will have brought the nation to its own doom at some point in the near future.

Physical Gold & Silver Activities Are Revealing (Part 2)

May 13, 2013

In the first five months of the year, the physical movement of precious metals in the wholesale arena has been a bit precarious. Physical gold holdings seem to be depleting, while silver holdings are growing. In our first pair of charts, the so-called COMEX-approved warehouses have seen a dwindling of gold to the tune of 3 million ounces. On the other hand, the warehouse inventories of silver have grown by 22 million ounces. (Click on charts to enlarge.)

Daily Change in Physical Gold Held by COMEX Warehouses
Daily Change in Physical Silver Held by COMEX Warehouses

JP Morgan’s bullion depository can account for about half of the depleted 3 million ounces of gold, which is not surprising given their futures activity. Combined with the activity over at the Scotia Mocatta depository, 90% of the physical off-take of warehouse gold inventories are identified.

Daily Changes in JP Morgan’s Gold Bullion Depository
Daily Changes in Scotia Mocatta’s Gold Bullion Depository

But since JP Morgan is issuing the majority of gold deliveries in the futures market, why isn’t all the gold coming from their own vaults? Why involve Scotia Mocatta? Are they partners in this effort?

Now let’s take a look at the diversion of the two most popular precious metal ETFs, GLD and SLV. Since the beginning of 2013, the GLD ETF has reduced its physical gold holdings by 9 million ounces. During the same period, the SLV ETF had grown its physical silver holdings by 21 million ounces, though in recent weeks SLV has also shown signs of diminishing physical holdings.

Daily Change in GLD Physical Gold Holdings
Daily Change in SLV Physical Silver Holdings

On top of the physical migration, there also seems to be growth in the naked shorting of these funds. In the last month, the number of shares that have no physical backing has almost doubled for both GLD and SLV.

Number of GLD Shares Short
Number of SLV Shares Short

Ted Butler has pointed out numerous times that the existence of these shorted shares could indicate that the funds are reneging on their fiduciary responsibility to maintain sufficient metal backing. Furthermore, the short situation allows market prices for the metal to remain suppressed because the funds are refusing to purchase the metal, opting instead to allow naked shorts to exist for extended periods. Nevertheless, those shorted shares represent 1.5 million ounces of gold and 5 million ounces of silver that are missing from the physical equation.

An obvious observation here is that the naked shorting is making the physical off-take in GLD look worse than it actually is, while the build-up in SLV is made to look less impressive.

Still, the 9 million ounce reduction of physical GLD holdings (even if the naked shorts are taken into consideration) presents a quandary: Just where did that physical gold end up? Because at least up until today, those ounces have not shown up in any of the visible markets. It either never existed in the first place, was secreted off to some foreign location, and/or now exists in some mighty strong (and quiet) hands, like those of JP Morgan. (It is an interesting coincidence that Germany’s request to repatriate its gold included 300 tonnes held by the New York Fed.)

Physical Gold & Silver Activities Are Revealing

May 14, 2013

The Volcker Rule was supposed to be implemented and enforced by now. As part of Dodd-Frank, the rule set out to establish limitations on proprietary trading by financial institutions. But the “big banks” have successfully delayed its implementation. The “Too Big to Fail” industry is not only making money with their prop desks, but also helping to keep the illusion of a sound dollar. Using evidence provided by, of all places, the CME and its daily delivery reports, one particular firm is shown to be isolated in the efforts to keep precious metal prices contained.

Every trading day, the CME releases a report like this one, identifying the details behind all futures contracts being executed for physical delivery.

So who’s doing the selling and who’s doing the buying?  Data from these reports show that since at least the beginning of 2013, JP Morgan has been on the opposite side of the trade against most of the other players in gold and silver.

These first pair of charts show the net daily change in physical deliveries by all futures traders who are either issuing (delivering) or stopping (receiving) metal, excluding JP Morgan’s client and proprietary trading desks. (Click on the charts to enlarge.)

Daily Change in Net Gold Accumulation via All Futures Trading Entities other than JP Morgan
Daily Change in Net Silver Issuance via All Futures Trading Entities other than JP Morgan

If JP Morgan’s activities are ignored, on a net basis there’s more accumulation of physical gold rather than selling and that trend has consistently grown since the beginning of the year. For silver however, it’s the opposite – more selling of physical silver than buying.

Now let’s find out who everyone is buying gold from and to whom much of that silver is being delivered. The following pair of charts show the same data, limited only to JP Morgan’s client & proprietary trading desks.

Daily Change in Net Gold Issuance by JP Morgan
Daily Change in Net Silver Accumulation by JP Morgan

These charts are perfect mirror opposites, which is expected since the issues and stops for every trading day should always be a zero-sum result. But what is alarming is the consistency of the trends and the magnitudes of the issues and stops. One entity has been steadily increasing its supply of gold to the market, which now stands at 2.2 million ounces. That’s over 70% of all the gold deliveries year-to-date (about 3 million ounces). And that same entity has taken a net delivery of 4 million ounces of silver from other traders, which is less intensive as it only represents 10% of the 35 million ounces delivered year-to-date by the entire market.

Let’s break it down further. JP Morgan’s prop desk has a net issuance of 1.5 million gold ounces since the beginning of the year. That represents 50% of the total gold deliveries year-to-date. And in silver, they had been buyers until April 29 when they issued 7 million ounces from their proprietary account. On April 29th, that 7 million ounces represented 25% of the 28 million total ounces of silver delivered by the market year-to-date. (It’s interesting to note that it was also 100% of all the deliveries made that day!)

Daily Change in Net Gold Issues by JP Morgan’s Proprietary Account on the Futures Exchange
Daily Change in Net Silver Issues & Stops by JP Morgan’s Proprietary Account on the Futures Exchange

JP Morgan’s client account has issued nearly 700K gold ounces so far this year. Their clients’ silver stash, however is still accumulating.

Daily Change in Net Gold Issues by JP Morgan’s Client Account on the Futures Exchange
Daily Change in Net Silver Issues & Stops by JP Morgan’s Client Account on the Futures Exchange

In their gold trading, it doesn’t look as if JP Morgan is trading against their own clients. On the contrary, they seem to be working in concert. But in silver, their prop desk hasn’t made a move since the first day of the May contract delivery, when they dropped those 7 million silver ounces. A large chunk of that went to their own clients, who’ve continued to accumulate in the first weeks of May.

So here we have physical evidence beyond that which has been continually displayed in the CFTC’s COT & BPR reports. The same conclusion can now be reached via the physical or paper market perspectives.

Just imagine if JP Morgan’s prop desk had been terminated as the Volcker Rule went into affect. Who would have supplied all that gold to the market? Without the prop desk, the futures contracts would have been distributed more evenly across the market. There’s no doubt that prices of precious metals would be a lot higher without JP Morgan’s concentration.

We invite readers to verify all this for themselves. Historical reports may be difficult to find, as the CME’s web site doesn’t appear to make them available, though they do provide high-level summaries by month and year-to-date. But here’s a zip file containing all their daily reports since the first of the year, which give all the juicy details.

Read part 2 of this gold and silver physical situation.

The American Dream

Maybe it’s time we all wake up from our slumber. Maybe it’s time to understand the things that we’ve been too lazy to learn for ourselves instead of relying on someone else to tell us what to think!  We have God-given rights as human beings, yes! But along with those rights, we have responsibilities we must accept – each and every one of us!

Here’s a start…. understand what money truely is!

“If the American people ever allow private banks to control the issue of their money, first by inflation, and then by deflation, the banks and corporations that will grow up around them will deprive the people of their property – until their children wake up homeless on the continent their fathers conquered.”  – Thomas Jefferson, 1802

“He who sacrifices freedom for security deserves neither.” – Ben Franklin

For more information on the Federal Reserve, the way it works and its history, see this article.  And here’s an interesting look at the way the US fiat currency has been debased over the last 100 years.