In another incident of deja vu, gold investors everywhere have seen their spirits crushed this week in the same old tired manner The Bullion Banks have employed for decades.
I could write about all of this again but I've done it so many times now that, frankly, I'm exhausted. I just wrote about this three weeks ago and I don't have the energy today to do it again.
In short, during periods of "speculator" demand for COMEX gold exposure, the market-making Bullion Banks create new contracts in order to dilute the overall supply and mitigate the price rise that basic economics predicts would follow from increasing demand. As soon as that speculator demand is exhausted, The Banks utilize any price weakness to exacerbate the selloff and panic those very same speculators into selling. As speculators sell, The Banks buy back and cover their ill-gotten shorts, total open interest declines and the entire process is reversed.
In this most recent event, the price of Comex gold rose $115 or 6.5% over the two week period of November 3-17, 2021. To dilute this spike in speculator demand, The Banks created and added 112,799 Comex gold contracts to the available open interest. This amounts to 11,279,900 digital/pretend ounces or about 351 METRIC TONNES!
Now that price has been managed lower over the past few days, open interest is receding and it has already fallen back by nearly 40,000 contracts as of Monday, November 22. Wash, rinse, repeat.
Rather than me type further on this, I think I'll turn over the rest of this week's article to a member of my TF Metals Report site. One of the fantastic elements of TFMR is the diverse, global nature of the membership base and this summary was written by one of our subscribers in The Netherlands. Is he logical in his conclusions? I'll leave that up to you to decide. However, he sources all of his market data from the CME Group's own website so that part of his post should be irrefutable.
Please take a few minutes to read on and fully consider how "Ira" has detailed the mechanics of this latest Bank price manipulation effort. He titled it: "We Just Witnessed A Gigantic Pump-and-Dump".
I was puzzled by a series of transactions on COMEX between 5 and 11 November. During 5 consecutive days, each day an extremely high volume of gold future contracts was traded via TAS. TAS is a channel via which traders can buy or sell contracts at settlement price. The volume of TAS trades exploded to a total of 172.254 in just 5 days or 160.000 above normal. For perspective on this gigantic volume: when this series of trades started, open interest was 511.333 contracts. These trades amounted to 31% of all open interest on November 4th. The position limit in Gold futures are a fraction of this: 16.500 contracts (varies with OI). At least 10 entities would have been needed on either side of these trades to stay within CFTC’s position limits, and only parties without any existing position. The CFTC’s Bank Participation Report stated that on November 2nd, 5 US Banks on average held a short position of 6,746 contracts. It is safe to assume that NON-US bullion banks held similar positions. So each bank would have been able to sell a maximum of 10,000 future contracts, in which case 16 banks would be needed to supply a total of 160,000 contracts. This is nonsense of course, position limits have been violated big time in these transactions.
But who sold these contracts and who bought them? And why? Had a 30 Billion USD hedge fund whale entered the market? Was the Exchange Stabilisation Fund wagging its 254 Billion USD tail directly in the Gold futures market? Or were the Bullion Banks planning something nefarious again? During the past 3 days, all became clear.
The COT reports of 2 and 16 November state that in the intermittent time frame, i.e. while these TAS-trades were executed, open interest skyrocketed from 507,616 to 612,612 (+104.996). Large spec longs were up 49,438. Bank shorts were up 72,728.
Why?
Since September 29 the Gold futures price had risen $65 (from USD 1.726 to USD 1.791) in 5 weeks. On September 28, the Bullion Banks held a net short position of 190,000 futures contracts, a position that ran up to 240,000 in the weeks leading up to November 4th (on average in October: net short 215,000). As price rose during the month of October, they watched their position melt down: -1.4 Billion USD. With potential futures losses mounting rapidly as the market gained momentum, something had to be done.
How?
A cunning plan was devised. Hence the massive buildup of short positions via the TAS facility. It was ammunition for the bombardment that was to follow. TAS was used to not influence the trading price in the market, despite blowing up the Exchange Open Interest with 31% during the preparations . The build-up phase of the operation consisted of these transactions via TAS:
Nov/05 29,966
Nov/08 33,352
Nov/09 38,169
Nov/10 39,310
Nov/11 31,457
Meanwhile Gold’s price had risen to $1875 on November 16. It was beaten back hard and the $1870 level was capped aggressively in the following days. The banks had their plan and they had to prevent Gold from gaining any more momentum at all cost, to protect the effect of their upcoming 'operation'. They knew what was to follow.
Execution
On November 17 Banks started selling contracts and build up pressure on the market. Price started dropping. After 2 days they released their nuclear bombs: several salvos consisting of thousands of short contracts were dumped on the market in very short time, driving the Gold price all the way down to $1790 currently.
Result
How much did they gain by this massive ‘pump-and-dump’? Price dropped from $1873 to $1790 or USD 83. In the latest COT report of November 16 the banks held a net short position of 287,539 short contracts. Their gain from this operation was 2.2 Billion US Dollars.
During the build up phase of the operation (from 4 November to 11 November) price rose further from USD 1797 to USD 1873 or $76 and they lost an additional 1,8 Billion USD.
So a total loss of -1,4 Billion (Sept. 9 – Nov. 3) - 1,8 Billion (Nov. 4 – 16) or 3,2 Billion is dampened by clawing back 2,2 Billion USD and counting (Nov 17 to date).
That’s how you get your money back!
The above scheme could not have been conducted without massive violations of position limits. By using TAS, this time they left a footprint. I will file a complaint with the CFTC, I hope you do the same. Even if the effect will be zero, if we allow the above to happen without giving a peep, we deserve what we get.
My questions for the CFTC:
- Which parties were involved with the below transactions in Gold Future contracts via TAS (data sourced form COMEX website):
Nov/05 29,966
Nov/08 33,352
Nov/09 38,169
Nov/10 39,310
Nov/11 31,457
- Did any of theses parties violate position limits as stated on CFTC's website?
- Were any of these parties involved in the:
a) capping of the Gold Future contract price at $ 1.870 in the days leading up to November 16
b) dumping of Gold Futures short contracts in the market between November 17 and 23.
"Ira" suggests that anyone interested in alerting the utterly-worthless and corrupted Commodity Futures Trading Commission about this matter should do so as soon as possible. If you'd like to do that, I'll conclude this week's article with the official CFTC listed below.
Thanks again for reading and for your willingness to continue fighting against The Bullion Banks and their fraudulent digital derivative and fractional reserve pricing scheme.
About the author
Our Ask The Expert interviewer Craig Hemke began his career in financial services in 1990 but retired in 2008 to focus on family and entrepreneurial opportunities. Since 2010, he has been the editor and publisher of the TF Metals Report found at TFMetalsReport.com, an online community for precious metal investors.