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Another Stunning OCC Report

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The new quarterly derivatives report from the Office of the Comptroller of the Currency, part of the US Treasury Department, was released earlier this past week covering Over-The-Counter (OTC) derivatives positions of US banks, for positions held as of September 30.

Some background data on this report. Always excluded are derivatives positions held by US banks on listed exchanges, so futures contract positioning on the COMEX is not included in this report. Also, the OCC report is incredibly non-specific in terms of whether OTC positions are net long, short or neutral – only the total notional value of the contracts held is provided. Compared to the remarkably-detailed COT report on COMEX positioning, the OCC report is like a Model T of yesteryear compared to a Tesla. Finally, the OCC report is always published with a three-month delay, compared to the usual three-day delay of the COT report.

Due to a change in methodology a few years back, gold derivatives holdings were removed from the precious metals category and put into the foreign exchange category, thereby rendering the gold derivatives positions of the US banks highly opaque and, effectively, worthless, at least to me. However, one of the unintended (I’m sure) consequences of gold’s removal from the precious metals category was that the change made much more specific the silver component of the precious metals category (which also includes platinum and palladium).

About the most redeeming feature of the OCC report is that it identifies the leading US banks by name (something the COT report doesn’t do) and how much of the total derivatives pie the 4 largest banks hold in each derivatives category by notional dollar amount. A standard feature of the report, which I have followed for 20 years or so, is how JPMorgan dominates each and every derivatives category – often to the tune of 70% to 80% of each category. I’ve always labeled JPM as the largest and most important bank in the US, and a quick perusal of any OCC report drives that fact home – it’s almost incredible how large JPMorgan is in every derivatives category. Over the years, the precious metals category most often included JPM and only one other bank.

Read the full article on SilverSeekAnother Stunning OCC Report

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