Market Cornered: JPMorgan Owns Over 60% Notional Of All Gold Derivatives

Tyler Durden's picture




 

Perhaps the only question we have after seeing the attached table, which shows that as of Q3, 2013 JPMorgan owned $65.4 billion, or just over 60% of the total notional ($108.2 billion) of all gold derivatives in the US, is whether the CFTC will pull the "our budget was too small" excuse to justify why it allowed Jamie Dimon to ignore any and all position limits and corner the gold market?

 

And purely as a reference point, the chart below compares the total value of gold held in JPM's vault (registered and eligible) as of Friday's closing price with its reported gold derivative notional holdings.

 

Finally, for the purists out there, we realize that gross is not net... until there is a breach in the derivative counterparty collateral chain, and gross becomes net.

Source: OCC, Comex

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Sat, 02/01/2014 - 21:10 | 4392352 buzzsaw99
buzzsaw99's picture

counterparty is not a problem for tbtf

if it moves against them they will either aig it or bust the trades. jpm and the squid don't lose.

Sat, 02/01/2014 - 21:12 | 4392363 kaiserhoff
kaiserhoff's picture

They must be net short, as they are with silver, but by how much?

Not a lot of content here.

Sat, 02/01/2014 - 21:17 | 4392372 Winston Churchill
Winston Churchill's picture

Are you so sure ?

They talked it down all last year, and are they acting for the PBOC ?

Sat, 02/01/2014 - 21:26 | 4392387 kaiserhoff
kaiserhoff's picture

Not sure at all, and I think the whole concept of paper gold is a species of fraud, but position size doesn't tell us much of anything.  Four companies are on one side or the other of nearly all grain trades.  Are they trying to corner the grain market?  I think not. 

"Derivatives" is too broad a term to have meaning, and no, net does NOT become GROSS under market stress.

That's why god made options and spreads.  Where's the beef?

Sat, 02/01/2014 - 21:32 | 4392404 strannick
strannick's picture

But what about position limits? What about all Ted Butlers emails to the CFTC? How could Bart Chilton not have seen this? Was his hair in his eyes?

Sat, 02/01/2014 - 21:38 | 4392416 kaiserhoff
kaiserhoff's picture

I asked about that on another thread a couple of weeks ago.

As a rule, position limits do not apply to market makers, or hedgers.  They really can't.  Commodities are a different animal than stocks.  If ADM or Cargill own a hundred ships full of grain, they are damn well entitled to hedge that on the market. 

 

Sat, 02/01/2014 - 21:41 | 4392426 Ahmeexnal
Ahmeexnal's picture

The truth behind the banker "suicides" has been revealed:

http://www.whatdoesitmean.com/index1735.htm

The three Western bankers targeted for elimination by Obama regime “black team hit squads,” this report says, were Deutsche Bank executive Bill Broeksmit, 58, found dead at his home in Chelsea, south west London, on 26 January, JPMorgan Chase & Company vice president in technology operations Gabriel Magee, 39, who died after falling from his London headquarters on 28 January, and chief economist at Russell Investments, and former US Federal Reserve economist, Mike Dueker, 50, found dead at the side of a highway that leads to the Tacoma Narrows Bridge in Washington State on 31 January.

The “common link” between these bankers, this GRU report continues, began this past year after two JP Morgan whistleblowers confessed that their bank manipulates the gold and silver markets, which led to this past weeks stunning announcement that Europe's largest bank, Deutsche Bank, would withdraw from the appropriately named gold and silver price “fixing”, as European regulators investigate the manipulation of precious metals prices by Western banks.

Deutsche Bank executive Broeksmit, called among the “finest minds” in his field, and Russell Investments Dueker, ranked among the top 5 percent of economists by number of works published, this report says, were at the forefront of the European investigation into JPMorgan gold and silver price manipulation and had as their “inside man” JPMorgan tech guru Magee who oversaw his banks computer systems built for this crime.

Sat, 02/01/2014 - 22:01 | 4392470 NoDebt
NoDebt's picture

Let me get this straight.  You're saying the Obama administration is the anti-banking anti-gold-manipulation vigilante?

I just became a staunch Obama supporter.  But let me sober up before I totally make up my mind.

 

Sat, 02/01/2014 - 22:18 | 4392528 Soul Glow
Soul Glow's picture

Obama does what he is told and JPM can short gold whenever they want.

- Ben Bernanke

Sat, 02/01/2014 - 22:43 | 4392615 Pladizow
Pladizow's picture

"Concentration is the litmus test for manipulation." - Ted Butler

Sat, 02/01/2014 - 23:01 | 4392643 DoChenRollingBearing
DoChenRollingBearing's picture

As a non-professional student in the study of gold, in many forms, and for decades, I believe that I am comfortable with the below six assertions:

1) Everyone should own as much physical gold (and some silver) as they are comfortable with.

2) There is little doubt that severe manipulation is going on, but there are many MANY conflicting theories/conspiracy theories out there.  I am not sure which, if any, hold the most water

3) The enormous "paper gold"/physical gold ratios likely mean that some sort of a big crunch will happen when enough wake up and want their physical.  Around that time, the owners of physical will not sell until the price becomes very high ("$55,000").

4) Gold has been a Store of Wealth for around 5000 years.  I contend that it still is and will be for as far into the future as I feel comfortable making said judgement.

5) Gold has acted as insurance against financial malpractice for a long time.

6) The lack of regulatory action sure does look suspicious...

***

Is JPM acting in some nefarious illegal fashion?  It looks like it, but who knows.  We may not know for a long time.

Gold is the best investment, particularly if more buy it.  That lessens the ownership concentration.  When FEWER people own the gold, it is worth LESS, overall.

Buy gold!

 

EDIT:

Wow, that was a fast junk.  Serial junkers should show some courage and display their reasoning.  Unless they're banksters or Obama voters...

Sat, 02/01/2014 - 23:02 | 4392676 Skateboarder
Skateboarder's picture

Good post DCRB. For a moment I thought you were gonna go long bitcoin. Reality does not byte. ;)

Sat, 02/01/2014 - 23:11 | 4392691 DoChenRollingBearing
DoChenRollingBearing's picture

BTC is an interesting game that may work out, or may not.  My Au holding are well over an order of magnitude of my BTC.

Sun, 02/02/2014 - 00:14 | 4392831 Tall Tom
Tall Tom's picture

DCRB and Skateboarder...

 

OT but you have to see this. Best skateboarder...

 

http://www.gifbay.com/gif/cat_got_skillz-114061/

Sun, 02/02/2014 - 02:20 | 4393004 Skateboarder
Skateboarder's picture

My day is made.

Sun, 02/02/2014 - 07:45 | 4393154 GetZeeGold
GetZeeGold's picture

 

 

How could Bart Chilton not have seen this? Was his hair in his eyes?

 

Look.....but don't touch the hair. Do you have any idea how much work goes into something like that?

 

Bart has a photo shoot for Teen Beat magazine in support of My Ra. He needs to look good.

 

Check the insert on how you can sign up your parents for Obamacare on healthcare.gov and foil the identity hackers at the same time.

Sun, 02/02/2014 - 11:16 | 4393325 BaBaBouy
BaBaBouy's picture

Ahhh, The Barbarous Relics JPM Et AL Make Surface Again ...

This Story Is Far From Over Bitchies.

Will "LONDON Bridge" Get More Ornaments???

Just Accumulate Physical AU And Watch It ALL Unfold With De Light...

Sun, 02/02/2014 - 14:47 | 4393723 FEDbuster
FEDbuster's picture

Physical gold and silver maintain their values to a certain point, I often times find myself contemplating a world past that point.  Beans, bullets then bullion.

Paper and digital gold will find the same fate as paper and digital currency. 

"If you can't stand in front of it and defend it with an AR-15, you don't own it".  Ann Barnhardt 2011

Sun, 02/02/2014 - 14:31 | 4393702 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

That cat can skate, yo!

Sun, 02/02/2014 - 00:17 | 4392845 Atomizer
Atomizer's picture

Nice job.\repeat post..

 

  • Bankers saved, currency take nosedive. Good for gold
  • USD Currency saved, (4) major banks go under. Bad for gold.

Derivative exposure with banks is 4 times the amount of GDP. ;)

 

Sun, 02/02/2014 - 01:37 | 4392966 fockewulf190
fockewulf190's picture

Dollar is destroyed...derivative timebomb blows and takes the entire fiscal system with it...good for gold.

Banks blow up (4x Lehman warhead)...derivative timebomb blows and takes the entire fiscal system with it...good for gold.

Either way, humanity gets an unhealthy dose of SHTF as the Great Reset commences to wreck havoc.

Sun, 02/02/2014 - 06:50 | 4393078 Drifter
Drifter's picture

No "SHTF" and no "great reset".  Stop hoping for it. 

Gold derivatives are casino bets that can be paid off in dollars, and JPM has unlimited cash from the Fed to pay off any losing bet.

Dollar collapse won't be a "SHTF" moment either.   Dollar index won't show any collapse because all curriences in the index are manipulated to collapse together.

The only collapse will be in purchasing power, which isn't shown in the index. 

 

Sun, 02/02/2014 - 07:00 | 4393142 fockewulf190
fockewulf190's picture

I´m not talking about just gold derivatives, I´m talking about the entire $1 quadrillion+ derivatives market that is one black swan away from blowing up. When it goes (and four TBTF banks collapsing is easily a black enough swan to trigger such an event), it will take everything with it.  Lehman almost did it in 2008, and it was only stopped because of the monsterous amounts of fiat that were, and are, being printed out of thin air...but now the Fed´s ammo supply is almost gone.

I am not hoping for a collapse, because when it happens, it is going to be the death sentence for untold milllions of people.  I am only trying to prep and stack, and hope it will be enough to get through the Great Reset without ending up as another statistic.  I seriously doubt that the Fed is going to be able to maintain any type of control of this global fiscal system much longer, especially if the dollars they continue to print become worthless, and all international  trust in the dollar is lost

Sun, 02/02/2014 - 10:35 | 4393273 quikwit
quikwit's picture

"but now the Fed´s ammo supply is almost gone."

Could you explain why this is true?  Not a financial expert here.  My rudimentary understanding is: As long as the Fed can manage the bond market (so that US govt. has the credit it needs) and velocity of money supplied, or fudge the inflation numbers, they can print for a loooong time, right?

Sun, 02/02/2014 - 11:18 | 4393336 N2OJoe
N2OJoe's picture

Sheep exist to be sheared and slaughtered by their masters... as do sheeple. Do not feel sorry for them.

At least the 4 legged sheep didnt vote for their own shearing.

Sun, 02/02/2014 - 18:45 | 4394280 Liberty2012
Liberty2012's picture

The value of work is a definite thing. It does not derive its value from what it is traded for. As long as people continue to trade their work, things will be relatively well, regardless of the payment system in use at the moment.

Things only have value because people working created that value. Numbers only have value to the extent they represent reality.

People first, things second, numbers third.

No one starves - unless we let thugs take over.

We the People create the world we live in with every choice we make.

Truth => Individual => Choice / Responisibility => Freedom

Sat, 02/01/2014 - 23:05 | 4392680 Soul Glow
Soul Glow's picture

Buy silver!

Ha, haven't written that in awhile.

Sat, 02/01/2014 - 23:12 | 4392697 DoChenRollingBearing
DoChenRollingBearing's picture

Silver and platinum are both good.  For big money looking to play it safe, I would put the bulk into Au.

But, by all means buy silver if that's what you like.  Any PMs out of the hands of the banksters and in the hands of people who know value is all good.

Sat, 02/01/2014 - 23:20 | 4392715 Soul Glow
Soul Glow's picture

PM is the only long term investment to make right now.  Buy a house and land if you can nail your deed to a banker's forehead.  Buy stocks if you think corporations are going to inherit the economy.  Buy bonds if you think the governments and municipalities will stay solvent.  But buy gold if you want to handle your own money.

Sun, 02/02/2014 - 04:18 | 4393080 TheGoldMyth
TheGoldMyth's picture

If you are looking at taking gold out of the hands of the central banks who own 99% of the gold for the first time in history, only a people owned central bank that can print its own money might make a very small dint in the incredible ownership of gold purchased through endless money printing by the private central banks.

Sun, 02/02/2014 - 12:21 | 4393431 DoChenRollingBearing
DoChenRollingBearing's picture

Um, no.  Some 53% of the world's gold is held as jewelry, just 18% or so by the central banks.  Please either get your facts right, or cite your sources.

http://tinyurl.com/9a2fves

Sun, 02/02/2014 - 13:50 | 4393625 Payable on Death
Payable on Death's picture

While not agreeing with the criticism, I do wonder about a related point: Gold seems to be easily manipulated because it is a small market. These stats emphasize the point. Jewlery is not really a financial hedge as most who own it have very small quantities of low purity. Thus, the CBs own 38% of the remainder, which seems enough to dominate. CBs own more than half of "investment" stocks...

Sun, 02/02/2014 - 01:08 | 4392923 mt paul
mt paul's picture

6) The lack of regulatory action sure does look suspicious...

 

something to think about..

Sun, 02/02/2014 - 03:19 | 4393054 oooBooo
oooBooo's picture

You are correct that gold is best when more people own some. Gold based currency serves the rulers and bankers well when the gold is in few hands. That's why some reccomend silver based currency, it's in more hands. 

Sun, 02/02/2014 - 03:36 | 4393056 TheGoldMyth
TheGoldMyth's picture

DoChenRollingBearing, have you studied the fact that the central banks have become the "gold buyer of last resort"?

It is like real estate. When there are too many sellers during periods of austerity, those who default have to sell their assets and the banks lock the house and take it out of circulation to create an artificial scarcity. It is the same with gold. If the central banks do not buy thousands of tons to take it out of circulation completely then a massive gold crash/gold derivative crash.

Without the gold buyer of last resort, the price of gold would have crashed in a magnificent fashion ages ago. The Central banks have to work very hard to make sure the price remains high when people are selling their gold teeth to cover debt obligations.

In short there is no blood on the streets when for the first time in history the 1% own 99% of the gold and are working hard to prevent cheap gold on the streets.

Imagine what would happen to gold if there was no gold buyer of last resort. Or QE-Gold. ??

I advised my son to get out of gold at 1600 a couple of years ago from memory when i first caught onto this scam. That is why the central banks are buying thousands of tons of gold.

The margin calls on gold derivatives are another rant.

Sun, 02/02/2014 - 05:06 | 4393100 bunnyswanson
bunnyswanson's picture

http://www.israelnationalnews.com/News/News.aspx/176972#.Uu4Iwvtc5iR

Don't be so sure all will end as planned.  There is more to it that.  The 1% have done nothing to earn what they now own.  NOTHING.  In fact, they've taken the ~low road~ at every intersection.  It doesn't settle right in this world knowing these pieces of shit have all the gold.  This isn't over yet.  Sleep with one eye open and don't give any more advice.  This house of cards stand that has been erected by the 3rd generation scoundrels who murdered their way to the top are not fit to run a popsicle stand.

http://rt.com/news/israel-palestinians-boycott-settlements-us-519/

I don't shop often but when I do, I refuse to buy Israeli-made products.

Sun, 02/02/2014 - 10:58 | 4393303 kaiserhoff
kaiserhoff's picture

You're boycotting matzo balls?

Why didn't I think of that?

Sun, 02/02/2014 - 12:46 | 4393490 chemystical
chemystical's picture

"I don't shop often but when I do, I refuse to buy Israeli-made products."

Since July 2011 it's been illegal in ISR to call for a boycott of ISR products & services (most particularly those from illegal West Bank settlements - the primary object of the legislation).

In the USA it is illegal to directly or indirectly boycott ISR goods & services (see: the Export Administration Act, the Ribicoff Amendment and its succedents), and in fact it is illegal for you to even ask whether some item of commerce is from ISR, and furthermore if the vendor fails to report you to the government (via reports to the Commerce Dept) then it too has committed a federal offense.  That applies to individuals and to businesses and to foreign subsidiaries of US businesses.

"the criminal penalties for each "willful" violation can be a fine of up to $50,000 and imprisonment for up to ten years."

* Abraham Ribicoff (Likud-West)

 

Sun, 02/02/2014 - 14:46 | 4393720 Beatscape
Beatscape's picture

If I could, I would boycott Palestinian products, but they don't make any.  Their contribution to the world was the suicide bomber. 

Sun, 02/02/2014 - 08:57 | 4393201 Al Gorerhythm
Al Gorerhythm's picture

Damn! The mind boggles.

Superlatives escape me.

Sun, 02/02/2014 - 11:56 | 4393393 HungryPorkChop
HungryPorkChop's picture

@TheGoldMyth:  I freakin' knew it...  Those central bankers not only drove up the price of gold, since they were the buyer of last resort, but also did the same thing to oil, aluminum, copper, wheat, corn, oats and even cereal.   My gas and cereal have gone up exponentially during the past decade.

Could you do us all a favor and kindly ask them to quit buying up all the oil and cereal?  I'd really like for those prices to crash as well. 

Sun, 02/02/2014 - 23:32 | 4394783 TheGoldMyth
TheGoldMyth's picture

Thanks HungryPorkChop
In my capacity as a amateur self taught economic climate psychiatrist, i will ponder you question and hopefully provide an answer in the near future.

So far i have been working on your problem and this seems to address your need.

"You Can Buy A House For One Dollar Or Less In Economically Depressed Cities All Over America"

 

Sun, 02/02/2014 - 05:02 | 4393095 mumbo_jumbo
mumbo_jumbo's picture

The enormous "paper gold"/physical gold ratios likely mean that some sort of a big crunch will happen when enough wake up and want their physical.

 

sorry that makes me laugh.....has that ever actually happened?

Sun, 02/02/2014 - 05:33 | 4393108 Squid-puppets a...
Squid-puppets a-go-go's picture

dude, no - but for the very salient reason that they never rehypothecated gold to a 112:1 ratio before

thats why its never actually happened

or rather - it has happenned before in a way, in history when failing empires increasingly  diluted their gold coins with cheaper metals

Sun, 02/02/2014 - 06:23 | 4393124 eclectic syncretist
eclectic syncretist's picture

There will come a time when those who bought and paid for gold will call for physical delivery, but will be told that they will not be getting any actual gold, and will get a surrogate or nothing instead.

Sun, 02/02/2014 - 12:50 | 4393498 chemystical
chemystical's picture

..or in the instance of countries seeking to repatriate their gold, they will be told that it will take decades and that the first installment will be only 5% of their expatriate holdings.

Sun, 02/02/2014 - 05:59 | 4393116 TheGoldMyth
TheGoldMyth's picture

DoChenRollingBearing: you postulate: "When FEWER people own the gold, it is worth LESS, overall."

So now i can wait patiently for DCRB's/ZH's of any ilk  analysis of 'what happens when the central banks make up 99% (Figuratively speaking) of the demand ?', approximately. I call them, the central banks, "gold buyers of last resort".

If you can adress this question, it wil be the first time on ZH the matter has been taken up that i know of. I followed ZH for years before joining and think i might know a thing or two by now in a hobyist capacity. I joined just to find someone here with the intestinal fortitude to reason an answer to this very scenario we all face.

Maybe gold marketing has fossilised opinion so it cannot be questioned?

I am sure the JPM question will look after itself efficiently after this in my case

Thanks in advance..

Sun, 02/02/2014 - 11:02 | 4393306 funthea
funthea's picture

@ GoldMyth, I think you confuse the aggregate demand of paper gold for that of the actual physical, that you contend is being bought by the CB's to save the market (as a buyer of last resort). For one who professes to be an astute follower of the market and avid reader of ZH, I am perplexed that you have settled on this conclusion, as it shows a rather lack of understanding of the market and how the disconnect between paper and physical distorts the market. This price discovery method works only to the extent it allows for certain entities to manipulate the market in the direction of their choosing. One only needs to reconcile the existence of motive to complete the circle... for that we look to the FED, and motive be a plenty.

Sun, 02/02/2014 - 23:08 | 4394709 TheGoldMyth
TheGoldMyth's picture

funthea.....Thankjs!!...Another way of putting it is to compare the 1% who are not born into debt slavery and avoid it using QE, derivatives/etc with the 99% who are debt slaves in most cases before they are born.

These are the 1% or less who are the gold buyers of last resort. Generally, this species/class can print money or leverage assets. The problem for the 1% are margin calls, and maintaining scarcity of their chosen asset, gold, houses, or any other asset away from the 99%.

This 1% class have mastered and fine tuned the art, discovered quite by accident, of turning gold into lead. Or any other hard asset into lead.

In my opinion as a hobbyist economic climate psychiatrist.

 

Sun, 02/02/2014 - 11:09 | 4393316 GoldenTool
GoldenTool's picture

Trade wars, then real wars of course.  Nobody else wants gold which is why Germany has theirs and India dropped most of their import barriers and taxes on pms.  Libya, IMHO, is a very interesting case study on modern day pirating and how it never pays to advertise your holdings or run counter to the patch as you will be corzined.  This will go on for a very long time and most people don't have a clue even who the real players are.

"saltus in demonstrando"

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