As uncovered by Ronan Manly in a must read article, at least 50% of the “eligible” gold reported in Comex vaults actually will never be made available for delivery. On Friday the Comex vault report showed 14 million ozs in the “eligible” category. At least 7 million of this belongs to owners who the CME has determined likely have no interest in re-selling the bars.
As of Friday’s vault report, the Comex shows 18.6 million ozs of gold. Of that, 14 million was “eligible.” Roughly 4.7 million of the “eligible” gold is LBMA bars that have been supposedly allocated to Comex-approved vaults in London and made available for fake delivery under the 4GC “enhanced gold” contract.
Subtracting 4.7 million ozs from the eligible gold designation and using a 50% haircut on the remaining 9.3 million eligible ozs gives us 4.65 million eligible ozs plus 4.6 million “registered” ozs. The 9.2 million ozs of gold that is potentially available for delivery can disappear quickly if just 28.4% of the June gold contract longs decide to stand for delivery.
At some point large buyers looking for delivery of physical gold that can be removed from custodial vaults and moved to private safekeeping away from NYC or London are going to make a run on the vaults in London in NYC. The run on the LBMA vaults has been going on since well before the virus crisis. Chris Marcus of Arcadia Economics and I discuss this likelihood in our latest weekly conversation:
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