The Truth About Comex Data And CFTC COT Reports

Think about this:  bullion banks and large buyers of gold/silver deal in bars and tonnes. Think about how many silver eagles it would take to piece together enough to re-melt and fabricate into a meaningful quantity of marketable bars. Nothwithstanding the expense of doing this, it is an absurd notion that they would even bother with it.  Especially when the Comex and SLV have plenty of bars that are available for hypothecation.

The enormous quantity of silver eagle sales are going to the growing legion of individuals in this country and Canada who understand that the dollar is going to collapse sooner or later. It is poor man’s gold. It is more fungible as currency than 1 oz gold coins. Ultimately, it is a possible signal that eventually the people will rise up and overthrow a completely corrupt system of Government and banking.

A reader of my blog – a high profile money manager and market strategist – sent me an email with kind words about my statement criticizing Ted Butler’s  theory that JP Morgan is the entity that is the buying 1 oz. silver eagle coins in record quantities this year.

His comment stimulated a response about my view on the work being done by Ted Butler:

I believe Butler turned his ability to analyze the silver market – and the fact that he was one of the few people doing it for a long time – into a newsletter selling juggernaut. Now the only evidence he looks at and evaluates is the evidence that supports and promotes subscriptions to his newsletter. Although readers of my blog send me copies of Butler’s newsletter twice a week to ask my opinion, I stopped “absorbing” his analysis about 5 years ago.

1) His COT and open interest analysis relies on the all of the data being honestly and accurately reported. But from where is the data sourced? It’s provided by the big banks who run the Comex. If the COT, open interest data and warehouse stock data are accurate and honest, it would be the ONLY financial reports that come from banks that are honest. What are the odds of that? Butler refuses to question that premise and I’ve exchanged emails with him over the years pointing this out and he refuses to accept even the slightest possibility that the data is corrupt. In fact, he’s outright contemptuous of any thought that the data may be corrupt.

2) He refuses to consider the possibility that GLD and SLV lease and hypothecate their metal. He’s the only person I know who has read every word of either prospectus  who is willing to believe that the GLD/SLV metal inventory reports are accurate and honest. In fact, I find it hard to believe that Butler has bothered to even read the entire prospectus of either Trust. Again, ultimately, the reports which are used by the Trust accountants and which are published on a daily basis are generated and sourced from the banks (HSBC and JPM) who safekeep the metal. It states right in the Prospectuses that the custodians are the keeper of the financial reports connected to the custody of any metal. There are strict legal restrictions on ANYONE’s ability to visit the bank premises and inspect the files.

I will say that his method of analyzing the COT data was at one time original and informative. But that time has past by. I will also say that he did a lot to open the market’s eyes to the manipulation of the silver market. But ultimately, as the exercise of the market looking at, analyzing and absorbing the COT information becomes widespread, the information becomes quickly priced in, right? If a few people use and trade it, it works. If the entire market sees it and tries to use it, it prices in immediately.

I truly believe that, ultimately, the banks distort the COT and Comex data into a shape and form that they want us to see and believe – just like everything else they do. Butler refuses to acknowledge and accept this possibility because it would mean that his work has no value. It also means that there is a distinct possibility that the Comex banks are actually using Butler (unwittingly) as a tool to promote the credibility of the reports.

At the end of the day, our system is growing more fraudulent and corrupt by the day.  And the Government that is supposed to be in place to enforce the laws has actually become a partner with Wall Street and Corporate America in doing whatever it takes to steal as much wealth from the public as they can before the country collapses.   But don’t take my word on it, read a few history books and then read or re-read Orwell and Rand and decide for yourself…

12 thoughts on “The Truth About Comex Data And CFTC COT Reports

  1. Right on Dave. Smoke and mirrors, that’s what the COT is. Why not show COT everyday (now that would be way too transparent ?). Why have the cut-off day on Tuesday and release the “data” only by Friday? Bcs noobies / traders will chew it over on the weekend, get suckered in Monday long or short, and are probably stopped out by Tuesday by their HFT algos that harvest stops on the up and preferably on the downside (though getting harder and harder as the bottom is closer, it not in already)… Rinse, wash, repeat.

  2. If the COT report is fudged by manipulators, what kinds of signals can we expect to see from LBMA, COMEX, or an ETF that would hint we are approaching some sort of end game? I thought backwardation might signal something, but I’m not sure those numbers aren’t manipulated as well. If guys like Ted Butler are missing the boat with COT reports, are there any other signals we should be researching?

    1. Backwardation is being seen in Shanhai as well as London. The backwardation goes out to April 2015 in Shanghai. The Comex/COT data is derived from reports generated by the big bullion banks. Hell, two of the three primary Comex banks (HSBC, Scotia, JPM) sit on the London daily fix committee. BUT, backwardation is derived from the supply condition of the PHYSICAL market. It’s easy to fake paper-based data. It’s impossible to fake delivery of physical bullion to an entity that is demanding actual physical possession of what is being delivered.

  3. What you have pointed out, Dave, are some of the misgivings I have felt concerning Butler’s work (and the term ‘misgivings’ is a polite understatement .)

    Butler is quick to point out the manipulation of silver by the big silver players, but at the same time relies on the data from the COMEX to be accurate and truthful. For want of a better definition, it is like trusting a known burglar to install a security system in your home, SURE your valuables will be safe, just trust the nice man in the mask.

    Butler has put on blinders so that he sees only what he wants to see and ignores what doesn’t fit into his model of reality. Granted, we all do this from time to time, but eventually we learn the error of our ways and learn to try to see the whole picture. We may not like what is really going on, but unless we see past the illusion, we will have no one to blame but ourselves when the illusion fades away.

  4. Not a fan of Ted Butler. Anyone who worked for Michael Milkem and was charged with rigging the OJ market generally qualifies as being as trustworthy as a cut snake.

    However do recall seeing somewhere that in extremis the COMEX will take coins for delivery rather than bars. There is a hierarchy list and coins is number two so it may well be possible for JPM to use coins for delivery. I believe in the Bunker Hunt days delivery was being settled in coins.

    Given that the concentrate and scrap is being sucked in to China. I am told in Chinese flea markets coins, medallions etc. with hallmarks trade alongside eagles and other western collected coins. The Chinese are either unsophisticated or sophisticated depending on how you look at and treat western stamps without the same Western premiums – cash (Chinese for silver) is cash.

    In this environment JPM might indeed be forced to stockpile silver in the absence of bars.

    1. I’ll have to look up whether or not the Comex will take coins. Here’s the thing, if the Mint is selling 3-4mm coins per month, you have to assume that AT LEAST 2/3 of that is going to individuals, because the mint was selling coins at clip of 3-4mm month over the last 3 years and well before Butler came up with this wild idea. That would leave, at most 1mm/month going to JPM. The Comex is moving 2-3mm ozs of silver in and out of the vaults every weeks. I’m sorry, the U.S. mint coin sales is just not credible source of supply for JPM. Besides, SLV has plenty of bars that can be hypothecated if JPM gets desperate.

  5. I read a report on zerohedge that the London Silver Fix will close its doors on August 14. That seems like a signal that the game has changed even if it’s not coming to an end. I would love to hear some of your thoughts.

    1. LOL. Was just thinking about putting up a quick post on the matter. It would be more significant if they shut down the gold fix too but I think it introduces some implicit confirmation to the market that the London Fix is a rigged game.

  6. “Bank of America: Not if, but when, gold drops to $1,000

    May 14, 2014 at 12:17truthing
    Gold may have lost some of its luster, but if one highly respected technical analyst is correct, it’s about to get a lot worse.

    MacNeil Curry, head of global technical strategy at Bank of America Merrill Lynch, said in a note to investors, “It is time to sell gold.” He doesn’t think it’s likely the yellow metal will move above its May 2005 high of $1,315.70 per ounce and doesn’t think it’s possible bullion will break above its March 2014 high of $1,331 per ounce. Instead, he sees its downside target at $1,215.”

    It is this observers humble opinion that every bit of the activity that tries to be justified as ” The Truth ” has nothing to do with ” The Truth “….UNTIL certain greedy hands are forced from the controls of the present day money system…PERIOD.

    COT,CFTC,CME,IMF,FED,on&on , it’s all tied into the US dollar which is controlled~ allot of them are in cahoots together. Their motive – to keep the U.S dollar strong and running.
    “The Truth” will someday show gold and silver for what they represent…just not now.

  7. Some time ago, GATA made a big hoopla about Ted Butler coming out saying the U.S. Government is in on the silver price depressive activities. So? Ted was almost the last person in the country, on the long side, to step out of the fog as to that fact. He expressed at various times that the silver ETF could post serial numbers of 1,000 ounce (68.6 to 70 pound) bars and that would be proof the metal is there. Huh? Anyone can conjure numbers. A car dealer could conjure car titles also, without having to show anyone cars on a sales lot. A jeweler could do this with diamond certs. We have to have the hard evidence audited, otherwise, we must assume we’re being lied to. The latest “revelation” about Gene Dodaro of the Government Accountability Office shows that Ted is still in childhood as to believing the system isn’t completely corrupt. David Walker was head of GAO before Dodaro, and chose him to be his successor. Walker went to join the Peter G. Peterson Foundation. Peterson is one of David Rockefeller’s closest associates. Would Walker choose someone to take his place, who wasn’t acceptable to these interests? Please no more children’s cotton candy fantasies. The fix is in everywhere it needs to be to maintain the suppression.

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