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MarketScreener Homepage  >  Equities  >  Nasdaq  >  CME Group Inc.    CME

CME GROUP INC.

(CME)
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Exclusive: JPMorgan dominates gold market with record $1 billion precious metals revenue

11/23/2020 | 10:04am EST
FILE PHOTO: An employee holds gold bars before the refining process at AGR (African Gold Refinery) in Entebbe

LONDON (Reuters) - JPMorgan has earned record revenue of around $1 billion so far this year from trading, storing and financing precious metals, vastly outperforming rival banks, two sources familiar with the matter told Reuters.

The coronavirus has created a bonanza for investment banks dealing in gold, silver and other precious metals by triggering massive investor purchases and rupturing the normal workings of the market.

But JPMorgan has dominated, growing its share of the market.

The U.S. bank's revenue by mid-November accounts for at least half of the $1.7 billion to $2 billion that consultancy McKinsey CIB Insights estimates the top 10 investment banks combined will make this year from precious metals, mostly gold.

Its commodities division is on track to bring in more than $1.5 billion this year and could challenge Goldman Sachs for the title of top earner, the sources said.

JPMorgan and Goldman Sachs declined to comment.

Individual investment banks have rarely made more than $1 billion in commodities in recent years, and none has ever before earned more than around $600 million in precious metals in a single year, said George Kuznetsov at McKinsey CIB Insights.

(For a graphic on Commodities bonanza, click https://fingfx.thomsonreuters.com/gfx/ce/xklvybeqqpg/COMMODITIES%20BONANZA%20Q3.JPG)

JPMorgan is the largest bank in the United States and one of the biggest in the world.

It sits at the heart of the global bullion market, and its activities span trading physical bars to derivatives, running vaults and clearing trades in London, the biggest trade hub.

REVENUE WINDFALL

Driving profit has been the clamour for gold and silver from investors, mainly in Europe and North America, worried the coronavirus pandemic and money-printing by central banks could devalue other assets.

These investors pushed gold prices to record highs above $2,000 an ounce earlier this year.

Added to that are profits earned on the Comex futures exchange in New York, where supply issues earlier this year made it more lucrative for those with access to physical gold to trade precious metals.

Banks such as JPMorgan took advantage of opportunities on Comex and helped clients do the same.

JPMorgan's client business dwarfs that of others.

Data from CME Group, which runs Comex, show JPMorgan's clients accounted for one-third of all trade in gold bars registered with the exchange in October, and more than two fifths in June.

Like other big banks, JPMorgan was able to get and ship metal cheaply and in large quantities when other, smaller traders could not, sources said.

The revenue windfall will likely fade as trading on Comex reverts to normal patterns, but high gold prices and interest from investors mean this business will remain profitable.

"2020 is going to be an outlier year," said Kuznetsov at McKinsey.

(Reporting by Peter Hobson; editing by Pratima Desai and David Evans)

By Peter Hobson


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
CME GROUP INC. -1.20% 191.82 Delayed Quote.5.37%
GOLD 1.28% 1834.117 Delayed Quote.-3.70%
JPMORGAN CHASE & CO. -1.79% 138.64 Delayed Quote.9.11%
SILVER 2.69% 24.881 Delayed Quote.-5.99%
THE GOLDMAN SACHS GROUP, INC. -2.23% 301.01 Delayed Quote.14.14%
All news about CME GROUP INC.
01/15CME : Oppenheimer Downgrades CME Group to Perform from Outperform
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01/12CME GROUP : Statement on the CME Group : Political Action Committee
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01/12Futures surge to highest since 2014 as USDA cuts its supply outlook
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01/12CME Group, IHS Markit Form Post-Trade Services Joint Venture for OTC Markets
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01/08INSIDER TRENDS : Insider Sales Add to 90-Day Trend at CME Group
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01/08CME : Deutsche Bank Downgrades CME Group to Hold From Buy; Price Target is $196
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01/07CME : JPMorgan Upgrades CME Group to Neutral From Underweight; Price Target is $..
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01/06CME GROUP : to Launch Six New Japanese Energy Futures Contracts on February 8
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01/06Corn tops $5 for first time since 2014 on dryness in Argentina
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01/06CME : Rosenblatt Adjusts CME Group's Price Target to $135 from $140, Keeps Sell ..
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More news
Financials (USD)
Sales 2020 4 909 M - -
Net income 2020 2 164 M - -
Net Debt 2020 1 503 M - -
P/E ratio 2020 31,8x
Yield 2020 3,12%
Capitalization 68 862 M 68 862 M -
EV / Sales 2020 14,3x
EV / Sales 2021 14,4x
Nbr of Employees 4 360
Free-Float 98,6%
Chart CME GROUP INC.
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CME Group Inc. Technical Analysis Chart | MarketScreener
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Technical analysis trends CME GROUP INC.
Short TermMid-TermLong Term
TrendsBullishBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 22
Average target price 190,30 $
Last Close Price 191,82 $
Spread / Highest target 19,9%
Spread / Average Target -0,79%
Spread / Lowest Target -30,7%
EPS Revisions
Managers and Directors
NameTitle
Terrence A. Duffy Executive Chairman & Chief Executive Officer
Julie Holzrichter Chief Operating Officer & Senior Managing Director
John William Pietrowicz Chief Financial Officer
Kevin Dean Kometer Chief Information Officer & Senior MD
Terry L. Savage Independent Director
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