Why Is JP Morgan’s Gold Market Dominance Plunging?

On Saturday evening, Zerohedge published a post about JP Morgan “cornering” the gold market.  Of course, ZeroHedge knows that not a single one of the plethora of gold blogs that will repeat this story will look at the data, and not a single one of the millions of readers of all of these blogs repeating this meme will look at the data.  Except for me.

I saw the post, went to the free, public site where the OCC publishes the data therein, and looked for some context.  What I found is that JP Morgan’s dominance of the gold market is CRUMBLING.   Yep – their share of outstanding *gross* gold derivatives notional is at MULTI-YEAR lows.   ZeroHedge wouldn’t tell you that – because it doesn’t fit the agenda they are trying to push onto the precious metals world.   NONE of the charlatan regurgitators of this story will tell you that, because they don’t know and they don’t care:  they want confirmation bias, and this “story” gives them confirmation bias to sell to you.

Here’s the data for those who are interested:

data from OCC

data from OCC

 

If you prefer graphical form, this one should make it easy to see how much JP Morgan’s % Share of the gold derivatives market has PLUMMETED:

jpm_derivs_share

As you can see, JP Morgan’s “corner” of the gold market has plunged from the 80% range down to its current multi-year low of 60%.    ZeroHedge’s post, in typical fashion, also includes a completely meaningless graph designed to confuse and mislead their readers.  It looks like this:

JPM Gold Physical vs Derivatives_0

I present to you some more charts from the actual data, if you’re interested in the bigger picture.  First, you can see that JP Morgan’s gross derivatives outstanding in gold has PLUNGED over the last handful of years.

Plunging Gross Gold Derivatives Exposure - MM, not B (chart title is wrong)

Plunging Gross Gold Derivatives Exposure – MM, not B (chart title is wrong)

While at the same time, the amount of gold in their COMEX vaults has SKYROCKETED.

JPM_comex_vaults

You should already know that in 2008 JP Morgan didn’t even have a COMEX gold vault, and yet they were even more dominant in the global gold market back then.

If you want to be misled and fed out-of-context data that satisfies your confirmation bias, the ZeroHedge post at hand will be right up your alley.   If you’re interested in the bigger picture, in reality, in data context over time – well, this post is another freebie for you.

related:

Precious Metals Charlatans – Freaks of the Industry

-KD

 

 

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