Mark McHugh

What Really Happened This Week in Gold and Silver

In Open Thread on Friday, March 2, 2012 at 5:50 am

Hard to believe, but CNBC and the World’s chartologists missed a very important point:  In the last three days JP Morgan’s house account has taken possession of 3 times more physical silver than it did in all of 2011 (626 contracts, or 3.1 million t oz.)  bringing their 2012 total to 1,058.  The last time the Morgue took delivery of this much silver was September, 2010 at around $20.55 (it’s almost like they knew QE2 was coming – more on that later).

On Tuesday,  when silver shot up more than 4%, the CMEgroup initially issued blank trading reports, as in “!!!! NO DATA !!!!”, but eventually  published this:

492 of the 513 contracts delivered (96%) came from the Bank of Nova Scotia (425!) and the US Government   JPM customers.  So it wasn’t exactly so “widespread buying!” was it?

Now let’s jump over and see what happened in gold:

Of the 335 gold contracts delivered, JPM (customer & house combined) supplied 334.  There was only one  gold delivery that didn’t come from JPM, and that one contract went to, wait for it, JPM.  So JPM was involved in 100% of the physical gold transactions on February 28, 2012.  To recap, JPM delivered a bunch of gold and took a bunch of silver, BoNS delivered silver and took gold.  That’s really all that happened, unless you believe paper-metal traders throwing confetti around  impacts things (spoiler alert: nope). 

So it all boils down to this multiple choice question:

A) JPM suddenly hates gold

B) BoNS suddenly needs/wants more gold

C) BoNS suddenly hates silver

D) JPM’s house account suddenly needs/wants more silver

Figuring out the correct answer is your job, but I will tell you that in the wake of the “Gold & Silver Crash!!!” hyped on TV,  BoNS has nibbled at silver (6 contracts),  and JPM customer(s) have taken back 47 gold contracts.  Maybe the Bank of Nova Scotia is looking to buy oil from Iran, or maybe despite everything you’ve been told, QE3 is very much on the table.  Either way, I highly recommend looking beyond the chart.

You can follow the action whenever the tools at the CMEgroup (who definitely picked the wrong week to stop sniffing glue)  feel like updating their data:

http://www .cmegroup.com/delivery_reports/MetalsIssuesAndStopsReport.pdf

http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsMTDReport.pdf

http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsYTDReport.pdf

The data delays, combined with missing and incomplete reports by the CMEgroup has gone from annoying (like all the Jamie Dimon knob-polishing  going on at CNBC…JPMs a “fortress”?  And how would Maria B know?) to downright disgraceful (which is what Jamie’s appointment to Treasury Secretary will be….just wait).

****

Update:  JPM House took delivery of another 187 silver contracts Friday 3/2/2012, bringing them to 813 for March and 1245 YTD net.    ….The big sellers were Jefferies (customer) and HSBC (house) who delivered 134(net) and 80 respectively.  Note: You have to save the reports to your own computer if you want them for future reference.

Other notes: Remember, a gold contract is 100 t oz., silver is 5000 toz (fifty times as much stuff).  6.2 million (the amount of t oz. silver JPM has taken so far in Q1) might not sound like a lot, but US production is only about 10 million t oz. per quarter.

Fun Facts:  As mentioned in the article, JPMs house account has not taken delivery of this much physical silver since September of 2010, when they took 1,630 contracts.  The last time the London Bullion Market Association (LBMA) silver fix was below $20 was September 13, 2010.  http://www.lbma.org.uk/pages/?page_id=54&title=silver_fixings&show=2010&type=daily

Funner Facts:  On November 23, 2011 JPM agreed to buy an additional 4.7% stake in the London Metals Exchange (LME) from the bankrupt MF Global for $38.9 million (read “dirt cheap”).  The purchase made JPM the largest shareholder of the metals exchange (which trades aluminium, copper, tin, nickel, zinc, lead, aluminium alloy and NASAAC, steel billet, cobalt and molybdenum), with a 10.9% stake.  http://dealbook.nytimes.com/2011/11/23/jpmorgan-said-to-buy-mf-global-stake-in-london-metal-exchange/ JPM is also the custodian for the iShares Silver Trust  (SLV), which is the World’s largest silver stockpile, currently with 313 million t oz.

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  1. So, what’s the answer to the M/C question?

  2. 3.33564095 nanoseconds

  3. There was QE on a massive scale by the ECB of 712 billion while Bernanke was telling the Americans that there was no need for any more QE for the time being. You could see the metals crashing while he is saying this but the printing was going on in Europe.
    Just type in ECB 712 billion to search, and the articles are abundant although this was covered up by our unique media in this country.

  4. Mark,

    Everthing you say is true, but that all happened 2/29. The massive position swap between JPM and BoNS noted in the article occurred 2/28. Whenever there’s a big move in PMs (2/28 was a big up day, if you recall), I go to the CMEgroup website to see who the players were that day. They issused reports that indicated no physical deliveries (I SWEAR TO YOU!!!!). i thought it odd. Anyway, the next day when Bernanke was talking and metals crashed, I went back to the CME website, and the massive swap was posted in the daily and MTD reports (not YTD however, which is generally the most useful report).

    I have saved several versions of fucked-up CMEgroup reports. Either these guys are incompetant boobs (a very real possibility) or they are deliberately obscuring data from the public. Quite frankly, I don’t care which it is.

    You say markets reacted to Bernanke, but JPM had “reacted” 24hrs earlier, and they’re piling into physical silver like QE3 is 2 months away. Go look what QE2 did to the Gold/silver ratio…..

    I could spell it out, but all the people who think they can get rich paper-trading PMs (or idiots as I like to call them) are always looking to “cash in”. Here’s the thing, you “cash in” by cashing out your fiat for real stuff.

    JPM dumped gold and bought actual, real silver BEFORE Bernanke said a word. Jamie Dimon’s a director of the NY Federal reveserve.

    http://www.ny.frb.org/aboutthefed/org_nydirectors.html

    The only question I have is how much say does the BoNS have?

  5. The whole story is the Federal Reserve Bank is near the end of its life. The paper “funny money” that has paid to get us into foolish wars and social experimentation is seen for what it is—a big nothing. The FED is nothing but a paper tiger that won’t be around in a decade.
    Forget the pape trading and blips on a chart. Only fools trade in paper silver or gold contracts. Someday they will be like Federal Reserve notes—thrown out on the street.

  6. The game is about over for the Federal Reserve Bank. It’s gas tank is empty. Its paper “funny money” that has funded endless wars is worthless script. Some day, Federal Reserve notes will be thrown out in the streets as today most people won’t pick up pennies
    on the sidewalk.

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