ed steer of casey research comments on the silver and gold markets:

As silver analyst Ted Butler has pointed out to me and everyone else on several occasions...silver is at the center of the precious metals universe for the bullion banks. As I mentioned in my closing comments yesterday morning, the price got hit shortly after the London open, and didn't see rock bottom until about 11:40 a.m. in Comex trading in New York. Like gold, silver recovered quite a bit of its losses by the close...but the damage had been done. With the new low [for this move] set in mid-morning trading, quite a few more longs threw in the towel and sold their positions...with the 'da boyz' standing there and covering their shorts. This is S.O.P. for the bullion banks.

The open interest changes for Thursday finally showed some real improvement...but fell well short of what either Ted or I expected. Gold o.i. fell 7,134 contracts to 366,909...on big volume of 114,238 contracts. In silver, o.i. fell 2,082 contracts to 98,809...on 21,561 contracts traded. Hopefully there will be further improvement when Friday's numbers are reported on Monday.

Of course the latest Commitment of Traders report [for positions held as of the close of trading on Tuesday, July 7th] was published yesterday. In silver, the bullion banks decreased their net short position by 3,052 contracts...which is a hair over 15 million ounces. But the entire Commercial net short position shows that the bullion banks are still short an eye-watering 37,432 contracts...187.1 million ounces of silver. But this situation has certainly improved greatly in the three days since the Tuesday cut-off. The full-colour long-term COT graph is linked here.

In gold, the bullion banks decreased their net short positions by 6,511 contracts...not a lot. As I've mentioned before, it's the gold short position that concerns me, because it has been declining at glacial speed since the top in the gold price during the first week of June. As of this COT, the bullion banks are still net short 191,307 contracts...19.1 million ounces. This number has also improved since the Tuesday cut-off. The full-colour long-term COT gold graph is linked here. This particular chart takes a while to load.

Another report that I'd been eagerly waiting for was the Bank Participation Report. It, too, came out yesterday...the same as the COT report...for positions held at the end of trading on Tuesday, July 7th. So we can compare apples to apples for this one week. This report shows, in grade 4 arithmetic, the huge short positions in silver and gold held by two or three U.S. bullion banks.

In silver, two U.S. bullion banks hold 32,407 Comex short contracts and 527 long contracts, for a net short position of 31,880 Comex silver contracts. Those 31,880 Comex silver short contracts represents 31.8% of the entire Comex open interest in silver!!! This number would be at least 50% higher if all the spread trades were taken out of the COT to give you a 'net net' position. Four paragraphs ago, where I discussed the net short position in silver from the COT report, I said that the "net short position in silver was 37,432 contracts. Two U.S. bullion banks are short 85.1% of that entire net short position. The banks are JPMorgan and probably HSBC USA.

Those are the two U.S. bullion banks. What are the rest of the world's banks up to in silver in this report? Well, there are 12 other banks in the world that have positions on the Comex. As of Tuesday, they held 7,979 Comex long positions and 1,210 short positions between all twelve of them. These non-U.S. banks are net long the silver market by 6,769 Comex contracts...that's barely 500 contracts each.

Now let's turn to gold. The Bank Participation Report shows that three U.S. bullion banks hold 116,895 short contracts on the Comex...but they only hold 528 long contracts. That leaves these three banks with a net short position of 116,367 contracts...which represents [as of Tuesday] 31.2% of the entire Comex open interest!!! The COT report I mentioned earlier shows that the net short position in gold was 19.1 million ounces. Since 116,367 contracts represents 11.6 million ounces of gold, straight division shows that three U.S. bullion banks hold 60.7% of gold's net short position on the Comex. The U.S. banks involved are JPMorgan, HSBC and maybe Citi a bit.

As for the non-U.S. banks, there are 22 of them that have positions on the Comex. Between them...and as of Tuesday...they held 25,425 Comex long contracts and 36,250 Comex short contracts, for a net short position of 10,825 contracts. This works out to each non-U.S. bank holding [on average] 492 Comex short contracts apiece.

It's as plain as day what's going on here. Two or three U.S. banks are sitting on the gold and silver prices...and the CFTC's own reports show that!!! [And the OCC's quarterly derivatives reports confirm it! - Ed] This is not rocket science...it's just plain common sense! Even Stevie Wonder could see this! But as my quote on Thursday said..."There are none so blind as those who will not see."

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