In Ted Butler's Archive


This week’s COT report indicates that the concentrated long position in COMEX gold is the largest it has ever been compared to the concentrated short position. I never thought I would see this happen. This increases my confidence that JPMorgan is holding a record net long position in COMEX gold futures of 85,000 contracts (8.5 million oz). Counting what they have in GLD and elsewhere, it’s 20 million ounces of gold or $26 billion. I have been making a big deal out of JPMorgan’s newly acquired massive net long position in COMEX gold because nothing even comes close to being as important. The hard data tells me that JPMorgan has, effectively, cornered the gold market.

I am calculating that JPMorgan holds 85,000 contracts based upon previous COT and Bank Participation Report data. In simple terms, JPMorgan holds more than 25% of the entire COMEX gold futures market on a true net basis. There has never been a more concentrated net long position in any major regulated futures market in history. Not even the Hunt Brothers in COMEX silver in 1980 or the Sumitomo copper trader, both found to have manipulated markets by means of a corner, held as much a share of the market as JPMorgan holds now in COMEX gold futures. If a 25% net share of a market does not represent a corner, then that term has no meaning. I’m not alleging that JPMorgan owns 25% of all the gold in the world, as that would be impossible. Heretofore, I would have insisted that owning 25% of the COMEX gold market was impossible, but no longer. And there’s more.

On a $300 up move in gold, JPMorgan would stand to make $6 billion and $2 billion for every $100 on top of that. I would remind you that these sums might seem outlandish for most entities, but for JPMorgan these are not out of scale. After all, this is a bank that makes $25 billion a year in net profits (even after paying out billions in regulatory fines and settlements). With profits under pressure from encroaching and long overdue regulations, a timely gold score would come in handy for the bank, although I still believe it is in silver that the bank is most exposed to on a regulatory liability basis and the one they are most eager to wash their hands of. While I can analyze what positions JPMorgan holds based upon the documented data, I can’t know its intentions. That is where you come in. I can tell you what the set up looks like and what I think will occur because of it, but I’m not a prophet or guarantor. It looks to me that JPMorgan has amassed such a massive long position in gold and such a massively reduced short position in silver that expecting a price explosion seems most reasonable.

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