2014 total GLOBAL mine supply 877.5 million ozs. So Comex OI is now 110% of annual mine supply. What a sick joke. – Craig “Turd Ferguson” Hemke on Twitter
I need to make a slight correction to Craig’s analysis. 2014 silver production is already used up. 70% of all silver produced is used up in manufacturing processes. The other 30% produced in 2014 is sitting in jewelry boxes across India and China or in fabricated bullion form in private investment hands around the globe.
Because most silver is produced as a by-product of mining base metals, and because the world economy slowed drastically or contracted, it is likely that base metal mining production declined. It is thus likely that silver output is declining in 2015. Therefore, the open interest in silver futures on the Comex is likely even greater than the 110% of 2014 production cited by Craig.
Please note: any open interest in silver futures on the Comex that is in excess of the amount of silver available for delivery – i.e. the “registered” account in the Comex vaults – is considered a “naked short.” This is because paper obligations have been issued against physical silver that does not exist to be delivered. In any other market, this activity would be stopped immediately by the regulators – FINRA, the SEC and the Justice Department. But the regulators blatantly ignore the most manipulated in the history of the world. Click to enlarge:
This table above is the silver trading and open interest data from Friday’s Comex trading session in silver. It includes the electronic Globex trading plus the Comex floor activity. As you can see, the total open interest moved up to 192,527 contracts. This represents 962 million ozs of silver – 110% of 2014 global silver production but likely a much larger percentage of the current 2015 global silver production.
To put the 962 million ozs in context: the total amount of silver reported to be in Comex vaults is 179.8 million ozs; the “registered” and available to be delivered amount is 57.8 million ozs. Please note: the numbers reported by the Comex banks are suspect as to their validity, as banks have been successfully prosecuted for reporting fraud in other areas of their business activity and JP Morgan has been fined and censured by the CFTC for its Commitment of Traders data reporting.
Based on the numbers above, the amount of naked short interest on the Comex is 904.2 million ounces, which is the amount by which the total paper open interest exceeds the amount of silver – 57.8 million ounces – that has been made available for delivery. Anyone see a problem here with the integrity of the Comex and its regulators?
The amount of July open interest – 456.2 million ozs – is 7.8x greater than the registered silver and 2.5x greater than the total amount of silver on the Comex. The total open interest exceeds the registered silver by 16.6x and exceeds the total amount of Comex silver by 5.3x.
This market imbalance represents first and foremost a degree of market intervention and price-setting collusion that has never been witnessed in the history of any market, let alone the history of what is supposedly a country devoted to free markets and Rule of Law.
There’s a reason the Government is enabling this illegal activity to persist and to grow more extreme. I have a bad feeling that no one wants to see this reason and I have a worse feeling that we may find out this year.