J.P. Morgan, Scotiabank, & Silver with Ed Steer
Published in July 20, 2017on
00:00:00 Good afternoon and thank you for coming. I don’t know how many of you here would hear what you had to say, but the prices of all commodities have matter in the world are set in New York on the COMEX. Once a week, its required by law that the largest traders, anybody with more than a 150 contracts, report their long and short positions. The report comes out on Friday.
00:00:35 The traders themselves, this is a report that comes out. I'm not going to spend a lot of time on it. I just wanted to point out a few things. The large traders are the banks and everybody else. The large traders are broken to the three categories. Here we go. There's the commercial category. That's J.P. Morgan, Scotiabank, HSBC, you name it, Goldman Sachs, Morgan Stanley, the big, big, big traders are all in the commercial category that have more than a 150 contracts either short or long.
00:01:17 Everybody else has got more than a 150 contracts regardless is called the non-commercial and that includes the other investment houses. There's the other position here which is the non-reportables. Anybody has got a position on the COMEX long or short of less than a 150 contracts, automatically falls into that category. You got these three groups of traders and the commercials which is Scotiabank and J.P. Morgan and their big bullion banks.
00:01:43 They have been net short silver in this trading report forever, okay? They have never been long. What this report shows here? It breaks down the number of traders you got the commercials, the non-commercials and the small traders and their positions long or short. There's 37 traders short in the commercial category. Of course that would include J.P. Morgan. Then Page 2 of 12 the non-commercial category, there's 52 on the short side. You see, there's not a lot of traders.
00:01:43 In the small trader category, there's thousands of them. I ask Ted Butler, I said, 'Conservatively, when I stand up in front this crowd, what can I tell people?' He says, '2,000 minimum.'
00:02:28 In the small trader category, there's 2,000 plus traders in here but in the commercial and non-commercial category, there's less than a 100. What this report shows, it shows three important things which I'm going to get into right now. It shows a total open interest right now which is 203,000 contracts which is I'll get into that in a minute in ounces and its broken down into all of these categories.
00:02:57 What it shows, it shows the concentration of a large eight traders. What it shows is eight traders or less. Eight traders out of thousands are short 44.4 percent to the enter COMEX Silver Market, the entire open interest. The four large traders are short 31.4 percent. You've got eight traders that basically run the market and they are all banks investment houses either foreign or U.S.
00:03:30 You have the total open interest of 203,000 contracts and a short position held by only eight traders out of thousands are 44 percent, okay? Contracts told me in lots so I converted it two days of world, silver production. You take 200,000. You got to take the spread trades out which you could either be long in the market, short to market or you can have a spread trade on which means you're long one month, in short another. As far as the COMEX is concerned, you're market neutral if you're – have a spread trade on. There's a lot of spread trades and so I subtracted them out because they are market neutral. Page 3 of 12
00:04:09 I took the 203,000 contract, total open interest, subtracted out the spread trades. This is for silver, okay? This committed with traders, the part we're looking at was for silver. There's 203,000 minus the spreads of a 168 deed of most by that by 5,000 'cause every contract in silver is 5,000 ounces. When you divide by the number of ounces mind in the world every day is 2.43 million and the open interest net of spreads is 347 days of World Silver production. That's what the total open interest in silver is.
00:04:47 Now, I'm going to the next slide. This shows the COMEX all the open interest for all the commodities, the 15 commodities have traded on the COMEX. This is the total open interest. This is the short. This is silver. This is platinum. This is palladium. This is gold. Over here in the far left is crude oil. You can see that the total interest is 24 days of World Silver production and the four largest traders are short with – three days overall crude oil production. The big eight are short four days.
00:05:21 As you go across, it gets larger and larger. Here is soybean, oil, 75 days of World Silver production is total open interest on the COMEX. The large traders are short 16 days. The large four and the big eight are short 22. Once you get into gold, it gets much larger. The open interest 165 and the big traders are short for 47 days in the big eight or short 65. Look at silver here. This is enormous.
00:05:52 You got four traders, short a 131 days of silver production which is what? Four months, three months? You've got eight trader short 181 days. I think that number is. These are absolutely enormous numbers and this number up here, 419 is the growth of open interest. I didn’t take the spread trades out of this, okay? It's actually 347 which we down here some place.
00:06:18 The next chart, all I did was take these last four. The last four commodities which are gold, silver, platinum, and palladium and they've always been on Page 4 of 12 the far right hand side of this chart. They have never been anywhere else. These are the most shorted commodities in the world.
00:06:36 There's gold. This is what each the spreadsheet is taken out. Now look how different this bar looks. It's much shorter. Four traders are short 131 days of World Silver production, eight traders are short a 186 days, and the total open interest that is spreads is 347. What it shows is that silver, in silver, eight traders out of thousands are short, more than half of the COMEX silver market, futures market in silver.
00:07:07 I don't care what the small traders do. The banks all traders one. They all go long and they all short at the same time so it doesn’t matter what the other thousands of traders are doing. As you can see, this supplies in platinum, palladium and gold. These are huge numbers.
00:07:29 In gold, the big four traders are short 29 percent of the entire open interest in the COMEX futures market. The big eight are short 41 percent. In palladium, platinum and silver, the big eight are short 52, 54 and 54 percent. The reason the commitment of traders report is generated and why it shows the positions of the big four and eight traders is to prevent concentrations like this from billing up so it becomes obvious to everybody that their trading that somebody is trying to corner the market. Now the CFT is known about this for about 20 years but they refuse to do anything about it.
00:08:05 This is called a short side corner on the market and this occurs in all four of those commodities. If you remember the big chart I showed you which is this one here, okay? There are the four here, but if you get down in here, they're very, very tiny. The total open interest versus the positions of the four and eight traders. It's only when it gets up into here that it becomes really large, okay? Page 5 of 12
00:08:29 As Chris Powell said when he gave his speech, as long as you control the price of gold and the price of all precious metals, you can control the entire price of the commodity complex and everything that's going on and all the developing they used to say the world, making them pures of woods and drawers of water for the United States, the empire.
00:08:49 Okay, we got 347 days. I'm going to go to the next slide now and all I've done in the next slide is I've taken the silver bar here just the silver all by itself. How much time I've got? 11 minutes? I've got lots of time.
00:09:04 Okay. The Big 4 are short a 131 days. The Big 8 are short a 186 days and the difference in those two numbers is 55 days. The 5 through 8 traders in this category are short 55 days. What I've done in this chart, the next one is just taking silver and I broke it down flashily. The commitment of traders report states categorically. These are numbers that come from the Government from the CFTC every week. That the four traders in the 5 through 8 categories, although there was the smallest four traders. Their total short position has to add up to 55 days. If you sit down with the pen and paper, you could try this on your hotel room tonight. Try to break this down so that everyone is not exactly the same because they're not going to be exactly the same.
00:09:59 Below, the smallest one in the left and the biggest one on the right. This is the only way the numbers work out within a day. This, when I presented this chart in January, this is – the numbers are exactly the same now within a day that they were in January. These numbers never changed to the 5 through 8 ever. 00:100:21 In the Big 4 category like I said, there's a 131 days of World Silver production that the Big 4 are short. Ted Butler has able to compute J.P. Page 6 of 12 Morgan short position from what is called the monthly bank participation report. I know the report well and I know how he does it and I agree with him. The other thing that Ted Did was about 10 or 15 years ago, he outted Scotiabank as the second big short. When I computed this, Ted and I knew, Ted knows exactly what J.P. Morgan short position is. It's about 37 days of World Silver production, okay? I know the Scotiabank is the largest short.
00:11:07 They're short position hardly ever changed. It's around 53. It could be 50. It could be 56 or whatever. The fact of the matter is Scotiabank, our beloved Scotiabank here in Canada is the biggest short in the COMEX Future's Market. These other two bars here. These are a guess. It's an easy guess when you have to sit down and figure out the numbers.
00:11:27 First of all, the fourth position has to be bigger than this one. That’s just mathematics. This charts just goes from the large – the biggest eight traders. They're all going to be different. This one has to be bigger than this one by just by the straight math. This one here, these four charts here, four bars here have to add up to 131 days. That’s what the CFTC COMEX Commitment of Trader Report shows. Four traders are short 131 days World Silver Production.
00:11:58 That’s what these number show. Now Scotiabank could be what? 47 days. It could be down here. It could be overestimated this. If that’s the case, we already know this. It's in this extra six days going to this one and that one. In regard as these four have to add up to 131 and these four have to add up to 55 which is a 186 days World Silver Production which is the big eight are short. I can absolutely guarantee you my entire net worth that if I knew the actual numbers the chart would look exactly like this or a very close proximity. Page 7 of 12
00:12:31 These four would be right on. It's only whether – whether this one would be here or these would be up a bit more. You're looking in the reason why silver prices and the gold one would look the same and so will the platinum and so will the platinum except they're much smaller. Silver is the biggest one of all. Now when I presented this in January – when I presented this in January I had a laugh. When I was looking at comparing the charts because the only difference in January when I presented this and in May is the fact that J.P. Morgan, Scotiabank was still a 53 but J.P. Morgan was up here I don’t know, 68.
00:13:11 The only thing that happens on these charts is that J.P. Morgan and Scotiabank changed position. J.P. Morgan never gets into number three and Scotiabank never gets to number three. Prices are controlled mostly by J.P. Morgan. Scotiabank remains about the same all the time. They've been that way for 15 years. J.P. Morgan is the one that runs the show. Now this is a – I wanted all to show you two things on here. This is the bank participation report for silver. It looks complicated. You don’t have to remember very much.
00:13:49 It starts in 2000 and – 2000 I think. Yeah, 2000. This is the U.S., United States Banks short positions in Silver. The blue bars are their long positions in silver. This is the same positions up here. These red bars are the U.S., same as down here. Before when Bear Stearns when under in 2007, 2008 they didn't go under. They got bailed out J.P. Morgan. The reason they got bailed out is because J.P., that Bear Stearns was the big short in the precious metals market. Ted Butler didn't know.
00:14:30 When J.P. Morgan was forced at gun point by the Treasury Department to take over Bear Stearns Morgan Stanley. Bear Stearns is not a bank. It would never show up in the bank participation report because they don’t have to report to them. The moment that J.P. Morgan took over the Page 8 of 12 positions because they are a bank Bear Stearns Position show up and showed right there. Before American banks were hardly even in here. There was a bit of spike here.
00:14:56 For the year and half two years in this space here the American banks weren't even present in the Silver market. Then all of sudden J.P. Morgan shows up with a short position they inherited from Bear Stearns. As you can see there was a short position that’s been going up and down. That’s all J.P. Morgan in there plus before that there was no banks at all in here. All these action you see in here is strictly J.P. Morgan. Now, if you go back to this chart the blue bars are the foreign banks.
00:15:24 There's the U.S. banks and the foreign banks that report. You can see the blue bars. There's a lot more foreign bank activity than there was in the American banks. That continues right along here. You can see the little blue bars. That’s all the foreign banks, okay? This is their long position and this is their short position. All of a sudden on October 2012 the short positions or the non U.S. banks blew up. That was because the CFTC forced Scotiabank who had bought a company called Scotia Mocatta which is the metal – precious metal brokerage firm back in 2001 or 2002.
00:16:02 They kept them at an arm’s length. They didn't incorporate their business model in terms of so they could – they weren't part of Scotiabank at least that’s what they tried to pretend. The CFTC came along and said look. This is horse manure. You guys are a bank. You're going to report your short positions in Scotia Mocatta regardless of whether they're arm’s length corporation or not. In October Scotiabank was outted. There's the increase in their short position.
00:16:32 Here's where we are today. This is current as of yesterday's commitment of traders report right there. You can see over a period from where Bear Page 9 of 12 Stearns got taken over by J.P. Morgan and Scotiabank was outted here that there was almost no activity short or long by foreign or U.S. banks from 2000 up until 2008. The short positions were still there. They were held by non-banking entities. They don’t have to report it. The moment that Morgan took over Bear Stearns and the moment Scotiabank was outted with Scotia Mocatta they all showed up.
00:17:05 Now we can see it. I could tell you right now this represent these bars – these blue and red bars all in here guarantee you that 95 percent of that is Scotia Mocatta or J.P. Morgan. If you want to know why this precious metal prices aren't going anywhere that’s the reason. Ted's calling for a silver price explosion because J.P. Morgan is going to walk away from their short position because they've really twiddled it down over the last few weeks.
00:17:36 You can see from this chart the two big events that occurred over the last ten years involved J.P. Morgan and Scotiabank. These are just for fun and entertainment purposes. Four days before the drive by shooting on May 1st of 2011 when the markets opened in Japan on Sunday night and the price silver went down $6 in five minutes. Four days before that J.P. Morgan opened their first silver law, they've ever owned. Before that they never owned an ounce.
00:18:08 This is April 26th. I remember the day because I went back and looked to my column. April 26th they went from zero to 108.1 million throwing ounces today. That’s how much. They're the largest by far. They owe more than 50 percent of all the silver in the COMEX. It's Ted Butler's estimation through skimming out of SLV, buying silver make believes and gold and silver Eagles they have amassed 500 million ounces of silver on top of this. This is GLD. I've been included it because I want to compare it to SLV. Page 10 of 12
00:18:48 This goes back to 2006 when it was first formed. You can see the blue line. That’s the gold price, okay, more or less with some obviously abnormalities here. The amount of gold in GLD rose until a price got finally got sold off here and then down it went to here. GLD went all the way down. Boy it lost what? 60 percent of it's deposits over the space from 2006 to 2016. Over 10 years. And now it's back up to about here. Now here's SLV. All started at the same, 2006. Look at that puppy go.
00:19:34 There's was the drive by shooting point right there. That is May 1st, 2011 when J.P. Morgan showed up. They killed the silver price from $49 an ounce down to – they made it down to 12 or 13. Here now it's what 60? What happened to the silver inventories? They went up, up, up and they went down. But they only went down to there. Why didn't they fall in the GLD one? Look what happened to GLD. Here's SLV. It dropped to here sure.
00:20:07 It started to sat in quiet cohesant period where it didn't do anything even though the silver price went from $49 here down to $13 here. Why weren't people selling SLV. Then of course it went up to here. It's fallen down a bit. Generally since about June of 2011 the amount of silver and SLV has risen. Why didn't this price – the amount of silver go all the way down like this like it did in GLD? The reason is very simple. Somebody was buying every share of SLV that was falling off the table that people we're selling in the panic.
00:20:48 The entity that was buying that was J.P. Morgan Chase. All the silver that would have normally been sold down to here in this whole are here along with the silver maple leaves, along with the silver Eagles is now in the hands of J.P. Morgan Chase or some large entity. Ted it's J.P. Morgan. He traded commodities in New York for 25 years. He's been following the silver Page 11 of 12 market for 30 years. He is a world authority on this. Ted says that’s what it is. That’s what it is.
00:21:22 You can see the prices not only controlled on the COMEX. It is controlled specifically by J.P. Morgan. I'm just going to go back in the slides here because I want to make this point again. Like I said when I did this chart the large four trades – the small four traders here from my January report when I stood up here in this podium are unchanged. They haven't changed one IOTA. What has changed is J.P. Morgan has gone from being number one to being numbers two.
00:21:48 Scotiabank is this big lump here. It had around 53 days of World Silver Production. Like I said it can vary. It can be 50 or 47. It could be 55 or 56. Basically there are a lump. J.P. Morgan is the only one that changes. We can see that in the bank participation report every month. We can see it in the commitment of traders report. They are the kingpin the silver market. It's Scotiabank is sitting there like a lump, our beloved Canada Scotiabank.
00:22:20 When this thing does finally end somebody in this category and it ain't J.P. Morgan because they got 600 million ounces of this stuff stashed away quietly is these seven other traders including Scotiabank are going to be left to burn in hell. At least that’s the way Ted figures it. That’s why Scotiabank and J.P. Morgan are the biggest silver shorts in COMEX Future's Market and that’s why silver is $16 an ounce then gold is at 1,200.
00:22:51 Before I go I would just want to mention that Gotti is having a little whiner roast over at the Lion's Gate Pub tomorrow starting five o'clock. Is that right Chris? 5:00 o'clock, Lions Gate Pub. If you get there before Chris and I do there might actually be some food left, okay? You're more than welcome to come along and have a few drinks. Page 12 of 12
00:23:15 Thank you very much for having me. I appreciate it.