By: Chris Powell and Adrian Douglas
-- Posted 20 December, 2010
Dear Friend of GATA and Gold (and Silver):
GATA Director Adrian Douglas, publisher of the Market Force Analysis letter, today published a letter he has sent to U.S. Commodity Futures Trading Commission member Bart Chilton, disclosing that even as the gold and silver short positions of U.S. banks have been declining over the last year, gold and silver short positions lately have been increasing dramatically among banks headquartered outside the United States. The strong implication is that the major shorting banks are moving their activities behind foreign fronts, as your secretary/treasurer speculated a week ago well could happen:
Douglas' letter to Chilton is headlined "Letter to CFTC Commissioner Chilton on Trends in Bullion Bank Gold and Silver Short Positions" and is shown below.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
LETTER TO CFTC COMMISSIONER CHILTON ON TRENDS IN BULLION BANK GOLD & SILVER SHORT POSITIONS
By Adrian Douglas
TO: Bart Chilton, Commissioner of the CFTC
From: Adrian Douglas, Director of GATA
Date: Dec 13, 2010
I would like to bring to your attention some very disturbing trends in the BPR before your meeting on December 16th regarding position limits.
In figure 1 below I have charted the silver short position of the US banks (blue line) and the non-US banks (green line and right hand scale) and all reporting banks, US + Non US (red line)
Which non-US bank(s) has increased its short position in silver so massively? What is that entity’s relationship to the US Bank mega-shorts, JPMorgan and HSBC? I know you can’t answer those questions publicly but these are questions the CFTC should be looking into. It looks suspiciously like the US Bank silver short position is being shifted to a bank or banks that are out of the jurisdiction of the CFTC. To further add to my suspicions the Financial Times has out-of-the-blue published an article that declares that JPMorgan is reducing its silver short position on the Comex.
That is impeccable timing don’t you think? And this newspaper has never once mentioned that JPMorgan Chase even holds a massive short position in silver but now confidently declares it is reducing it!
But the irrational exuberance of non-US Banks to suddenly massively short precious metals is not limited to the silver market. They have felt a similar compunction with respect to gold also.
Again I urge the CFTC to investigate which non-US bank(s) has increased its short position in gold so massively? What is that entity’s relationship to the US Bank mega-shorts, JPMorgan and HSBC?
A review of historical data indicates that non-US banks have not been major participants in the precious metals markets and have generally held fairly balanced positions between short and long holdings. The sudden and massive increase in their short positions in both metals is conspicuous when compared with historical trading patterns. The fact that it occurs at a time when the US banks that are mega-short appear to be covering makes it doubly intriguing. It looks like a strategy to shift suppression and manipulation of the market to banks that are not under the direct supervision of the CFTC. Will these non-US banks be expecting to receive an exemption to position limits where US banks might not be successful?
I consider that these trading patterns warrant investigation by the CFTC.