“The information in this report is taken from sources believed to be reliable; however, the Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness. This report is produced for information purposes only.” – disclaimer now posted on the Comex gold and silver daily warehouse stock report as of Monday, June 3, 2013 – Investment Research Dynamics – June 4, 2013
Yesterday I published an article detailing the Comex gold futures to deliverable physical gold ratio that is now north of 200:1. But an erudite colleague of mine, John Titus of “Best Evidence,” correctly pointed out that: “They are probably bluffing. In other words, the real number is significantly higher than 200:1.”
For the record, John does more thorough research on the economic numbers and reports that he studies than anyone I’ve ever come across. And he does it with the trained analytic eye of a seasoned patent litigation attorney.
Let’s put everything in perspective. The numerical reports from which fancy graphs and and dry detailed data presentations are created originate from the Too Big To Fail Banks. I’ve said for quite some time that IF the bullion banks who control the Comex and the LBMA are submitting honest data reports for the Comex and LBMA, it would be the only business line in which they do not hide the truth and report fraudulent numbers. What is the probability of that?
JP Morgan was recently caught stuffing proprietary Comex futures short-sell trades into the “Managed Money” account category of the COT report. The CFTC scolded JPM and slapped them with a whopping $650,000 – LINK. Does anyone really believe that the CFTC wrist-slapping corrected any fraudulent data reporting by the likes of JP Morgan? Really?
Put your “think like a criminal hat” on for a moment. You know that the people who care about this sort of thing already know that the there’s a paper vs. physical problem in the market. So just show them a number that they’ll buy into and that will be “the number.” Most analysts will accept that number at face value and use that in their articles and blog posts. That number then becomes accepted in goldbug circles as the “real” number.
But the truth of the matter is that they are more than likely reporting numbers they want us to see, not the real numbers. For instance, the silver market is now seizing up from lack of supply. Please see this report from Greg Hunter and David Morgan if you are still skeptical: Retail Silver Has Seized Up.
Yet, the Comex bank custodians are reporting over 51 million ounces of silver available fore delivery – LINK. In fact, CNT – an official supplier to the U.S. mint – is showing 13.3 million ounces of deliverable silver. So why is there’s a shortage of silver at the U.S. mint? IF that silver were actually in the vault, the U.S. mint could buy a spot contract – September has a silver contract open – and take immediate delivery.
Also, why did the CME, unannounced, start slipping that little accuracy disclaimer into its daily gold and silver inventory reports in 2013? I’ll let you draw your own conclusion about the truth.
The silver market is seizing up which means that there’s a severe shortage of silver available. It is also showing up in the LBMA wholesale market based on the backwardation in gold and silver forward contracts that have been observed for several weeks. It means that any visible inventories reports from ETFs and Comex/LBMA banks custodial vaults are fraudulent. That includes SLV reports.
It also means that the recent discovery that the LBMA altered its gold refining flow statistics, revising what was originally reported to be 6,601 tonnes of gold cleared by the LBMA in 2013 down by 2,000 tonnes to 4600 tonnes, are likely off the mark. That’s a big miss, given that the total global mine production annually is around 2500 tonnes.
The significance of this is that it’s easier to explain how 4600 tonnes of gold was refined into bars and sent to Asia than 6600 tonnes, given that the total global supply of gold from mine production + scrap production was reported to be slightly more than 3000 tonnes.
From where did that extra 1600 tonnes come? The REAL question is, from where did the extra 2600 tonnes come if we use the original number? And is the 6600 tonne number a good number? Was the real number even higher?
The obvious conclusion is that the supply deficits in gold and silver are being remedied by hypothecating gold and silver bars from allocated accounts held at bullion banks, including the accounts held in behalf of the gold/silver ETFs, like GLD and SLV. This is why ABN Amro and Rabobank stopped allowing their physical gold account investors to take physical delivery of the gold they thought they have invested in – the gold was not there to deliver. This also occurred in 2013.
Now for the final blow to any skeptics. You’ll note that the LBMA revised down the amount of gold it cleared from refineries in 2013. But you’ll also note that the Comex inventory report disclaimer at the top of this post was first inserted into the daily Comex inventory reports in June 2013. See any coincidences? Bueller…
Bill Murphy and GATA have maintained for years that the fraud and corruption in the precious metals market would eventually be revealed as the biggest financial fraud scheme in history. It would seem that the cracks in the wall of this scheme are growing wider and it’s becoming easier to see rays of truth.
History tells us that all Ponzi schemes and market interventions fail. I believe we are on the cusp of a massive failure in the scheme to cover up the truth about the precious metals market.