Comex Paper Precious Metals Open Interest Is Going Parabolic

Since the end of May open interest has risen 14.23% while gold basis the stock market close has fallen 2.69%. Gold has been battered by a powerful short-selling campaign. MKS Geneva last night furnished the colorful remark:  “Shorts grew 12% last week to a new all time high. The position is about 3.6 times the size of the last 20 years average!!” – from John Brimelow’s Gold Jottings Report

The price level and trading activity in the precious metals market – gold and silver specifically – has reached mind-blowing absurdity.  Make no mistake about it, the fact that the U.S. mint had to suspend sales of 1 oz Silver Eagles until at least early August is definitive evidence that the natural market function of price as a mechanism to balance supply/demand has been completely destroyed by the western Central Banks using the big bullion banks as their agents of manipulation.
As we already know, the silver open interest on the Comex has soared to preposterous levels to an open futures level which far exceeds the amount of silver produced by mines globally in a year:

Silver OI 062415 As you can see from this graph to the left, the open interest in silver is historically correlated with the directional price movement of silver.  This correlation blew up and the amount of paper silver open interest on the Comex began to go parabolic last summer, while the price continued to head south.  This is direct evidence that that Comex paper silver is being used to push down the price of silver.

In fact, as we all know from the work by SRSRocco, India finds the price of silver so attractive that it is on track to import a record a amount of silver this year.

The gold paper open interest on the Comex has now begun to go parabolic.  As recently as April 3, the total gold paper open interest on the Comex was 382k contracts, or 38.2 million ounces of gold.  As of yesterday – July 14 – the open interest in paper gold had soared to 462k contracts, or 46.2 million ounces.  This is a 21% increase in the amount of paper gold. In fact, China finds the price so attractive that it is on track to “consume” a record amount of gold this year.

To put the gold paper open interest in perspective, as of yesterday Comex vault custodians were reporting an alleged 482k ozs of gold in the “registered” account and 7.8 million in total gold.  The open interest just for the August front-month gold contract is 235k, or 23.5 million ounces.  This is 48x the amount of physical gold that has been made available to back the August open interest.  The total open interest in paper gold on the Comex is 600% greater than the amount of total gold that could potentially back that open interest.

To describe as “absurd” this imbalance between the paper gold and silver contracts on the Comex and the condition of the global supply/demand for physical gold and silver is an insult the word “absurd.”  This is nothing less than complete criminal and fraudulent manipulation of the gold and silver markets by elitists and bankers who are now officially above all Rule of Law.

As my friend and colleague, John Titus, has concluded after pouring over several transcripts from the 2009 FOMC meetings around the time that QE started and which were recently released at the beginning of 2015:

The more I learn, the more I realize that the Fed is nothing but a criminal enterprise and the guys at the top know it.   Everyone within breathing distance of top slots at the NY Fed is a criminal. Remember, the NY Fed shares space with the ESF even though the latter’s formally part of the Treasury.

The real underlying issue with this manic and blatant manipulation of gold and silver is yet to be determined.  But when Janet Yellen announces that the Fed is on track to raise interest rates this year, when the economic reports released daily show an economy starting to collapse, and when an obscure and opaque “military exercise” across the United States begins on July 15, 2015 – yes, Jade Helm begins today – and the S&P 500 spikes higher while the price of gold and silver are slammed – then you know your system is doomed.

It’s pretty obvious by looking at the numbers above that the bullion banks – JP Morgan, Scotia and HSBC – are using paper futures to loot the gold and silver on the Comex.  If that’s not the case then I would urge them to allow us to conduct a physical audit of their vaults.  Otherwise please explain how the mint can run out of silver.   It’s also quite obvious that the Comex is headed for a force majeur cash settlement of the open interest.  There is no other explanation.

Several years ago a good friend and colleague of mine and I both asserted that we would know they’re ready to let the system collapse when they let the Comex default.  I would suggest that we drawing close to that time.

When you see that trading is done, not by consent, but by compulsion–when you see that in order to produce, you need to obtain permission from men who produce nothing–when you see that money is flowing to those who deal, not in goods, but in favors–when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed.  – Ayn Rand, “Atlas Shrugged”

 

8 thoughts on “Comex Paper Precious Metals Open Interest Is Going Parabolic

  1. Beloved quote, from “Russia House” by John LeCarre:

    “These days you have to think like a hero just to be an ordinary decent human being.”

  2. Dave, read an article recently on Koos Jensen’s site bullionstar, that there are now 92 ounces of “paper gold” per every 1 ounce of “physical gold” bullion on the COMEX.

    I’m sure the criminals who operate the crime-ex will try and push this ratio as high as they can. They will not stop. They cannot stop. It’s in their nature!

  3. The gold mining companies must go bankrupt unless taken over by the manipulators. In fact, if it costs $1200 to mine an ounce of gold, then it costs only $100 to buy an ounce for $1200 and sell it for $1100. This operation will succeed if the demand for physical gold from Comex is not to large. The manipulators do not need to satisfy the Asian demand. Only the demand on Comex needs to be satisfied.

  4. Good work, Dave. Thank you.

    I would add this, given the huge monkey wrench that the IMF has just thrown into the Greek “deal”:

    I have no illusions about the IMF, but this, in my view, is a good illustration of why this sordid game cannot continue much longer.

    When the power brokers begin to squabble amongst themselves publicly, something has to give.

  5. It looks like Chris Powell was right all along – he was way ahead of the curve when he said quite sometime ago; “There are no markets anymore, only interventions”.

  6. Yes, and it will be quite a circus of misinformation to watch the major media spin on this situation when the moment of untenability arrives. We may expect among other lies to be told that longs caused the problem and that only industrial users have any natural claim on possession of silver.

  7. Dave mentions that the correlation between silver open interest and price has been broken. Dave’s chart suggests that the correlation was broken on 4/15/2013. This is when the extreme manipulation started.

    Since then, the daily Silver volumes per netdania have been in the BILLIONS. Netdania shows the daily volume since then at about 5 Million contracts or 25 BILLION OUNCES PER DAY, or 25 years global mine supply per day. Obviously there is no physical silver being traded and these are just HFT wash sales between the bullion banks to fix the price.

    When the Comex fails then Silver will skyrocket and the dollar will hyperinflate, as there are about 5,000 electronic ounces of Silver being traded for each physical ounce in existence.

    See for yourself:
    http://netdania.com/Products/live-streaming-currency-exchange-rates/real-time-forex-charts/FinanceChartPopUp.aspx?symbol=XAGUSD%7Cnetdania_fxa&name=Silver,%20spot

    Make sure to it the volume button.

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