Bank Participation In Futures Markets

[Pakboong]

Take a look at the material below. I was prepared to buy Thai gold as a hedge against a long term dollar position. I have some silver but not much and planned to get more. I have put plans on hold in light of the recent metal numbers. Now I am at a loss to understand how this bank activity in metals will affect the long term prices. I did consider gold puts a month or so ago and backed off. Now I am on the sidelings without a clue.

http://www.cftc.gov/marketreports/bankpart...ation/index.htm The relevant data is found in the July and August futures sections. I will condense it.

These facts speak for themselves. Here are the facts. As of July 1, 2008, two U.S. banks were short 6,199 contracts of COMEX silver (30,995,000 ounces). As of August 5, 2008, two U.S. banks were short 33,805 contracts of COMEX silver (169,025,000 ounces), an increase of more than five-fold. This is the largest such position by U.S. banks I can find in the data, ever. Between July 14 and August 15th, the price of COMEX silver declined from a peak high of $19.55 (basis September) to a low of $12.22 for a decline of 38%.

For gold, 3 U.S. banks held a short position of 7,787 contracts (778,700 ounces) in July, and 3 U.S. banks held a short position of 86,398 contracts (8,639,800 ounces) in August, an eleven-fold increase and coinciding with a gold price decline of more than $150 per ounce. As was the case with silver, this is the largest short position ever by US banks in the data listed on the CFTC’s site. This was put on as one massive position just before the market collapsed in price.