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April 30, 2024 | Losses

No one has followed the silver market trading mechanics for as long or as closely as Ted Butler.

The Office of the Comptroller of the Currency’s Quarterly OTC Derivatives report covers the over-the-ccounter derivatives positions of the U.S. banks. For many years, the only two banks that mattered in the precious metals category were JPMorgan and Citibank. About three years ago, Bank of America burst onto the scene, as a giant new participant in both silver and gold. It quickly became clear that BoA had established an OTC short derivatives position on silver in excess of one billion ounces (mostly as a result of lease/short sale arrangement with JPMorgan). The position was so large that I wrote to the OCC (and other regulators) through my congressman’s office. The OCC replied, but neither confirmed nor denied my allegation that this was an extremely dangerous position for BofA but did agree that it was a serious matter.



Months later, in a move I believe was intended to obfuscate the matter, the OCC changed its categorization of gold in its derivatives report back to the precious metals category from the Forex category, in an attempt to make BofA’s big short silver position impossible to decipher. The move backfired, as all the category change accomplished was making it clear that BofA also held a 25-million-ounce short position in gold. From February 27 to April 23rd’s close, the open losses to Bank of America on its 25-million-ounce gold and billion-ounce silver OTC short position have grown to more than $20 billion ($15 billion in gold and $5 billion in silver). This open loss to Bank of America on its OTC gold and silver short positions is separate and distinct from its near-$20 billion open loss on the COMEX in gold and silver futures, although both losses are directly due to the run-up in gold and silver prices over the past 7 weeks.

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April 30th, 2024

Posted In: Butler Research

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