Sifting through Twitter, I came across a curious assertion posited as a reply to a post on “unemployment” on Steph Pomboy’s twitter feed (@spomboy). The tweeter asked, “have you noticed that gold is being dumped?” But was gold “dumped?” Perhaps the tweeter should have qualified the question with the adjective, “paper,” in front of the word “gold.”
I replied rhetorically with, “is actual physical gold being dumped or is it Comex is it paper gold?” Let’s have a look. (click image to enlarge)
The Comex is a futures contract trading venue. While the Comex vault operators issue daily vault reports which allege the presence of 100 oz gold bars in custody, we have no idea if all of the bars are sitting physically in the vaults or whether or not there are any sort of encumbrances attached to any of them. Very few holders of gold contracts ever take delivery and very little actual physical gold moves in or out of the Comex vaults on a weekly/monthly/quarterly basis. In short, the Comex is a paper gold trading exchange.
On Friday, after the primary physical bar trading markets – India and China – were closed for the weekend, large quantities of paper gold futures were suddenly being dumped into the CME’s Globex computer trading system, about 5 minutes before the Comex gold pit opened for the day (8:20 a.m. EST). You can see the action narrated in the chart above. It’s not uncommon for the price of gold to be smashed using paper gold on the Friday after an FOMC meeting, especially in the summer months when trading operations are likely only at half-staff and the rest of the world is gone for the weekend.
Over a 60 minute period from 8 a.m. – 9 a.m. EST, approximately 90,300 contracts were sold, largely indiscriminately hitting every bid in sight. This is the equivalent of 9.03 million ozs of gold. There’s only one problem with this: as of Friday’s warehouse report, Comex vaults were reporting total gold stock of 9.01 million ozs – only 507,453 of which were listed as “available to be delivered.” In other words, in just one hour, the total amount of gold allegedly held in Comex vaults was “dumped” in the form a paper derivatives. Worse, the amount “dumped” was 17.7x the number of gold ozs currently available to deliver.
For the entire day, Globex + floor volume, 495,364 contracts were “dumped.” This is 49,536,640 ozs of Comex paper gold. Again, I ask the tweeter who posited that comment on twitter, was gold really “dumped” on Friday?
For those who monitor the daily gold flow into India and China, I will bet any amount of money that both of those markets will be aggressively buying more than their usual daily amount of physical gold in order to take advantage of the lower price. Funny that Trump would enable the Chinese to buy cheap physical gold when he’s engaged in a rapidly escalating trade war with China…
I think IMHO that something is getting ready to snap.
The global bond market has inverted as the shorter term
paper makes up a larger part of the mix. This same inversion
was evident in 2007 right before the collapse started. Seems
like the masters of mayhem are starting up the smoke machines
to hide what’s rotting beneath the surface.
Pure in your face tyrannical lawlessness
There is no longer any need to hide this price suppression by forward paper trade
Everybody knows how it’s done and why
The only question is when and how it ends
I hope I live long enough to see the fireworks when it does
Reminds me of ’08. Something is unwinding in a bad way – derivative or hedge wise.
What a gift. I bought another silver bar. Who would have thought in all of history that a nobody peasant like me could have accumulated so much silver! I’ve got what for thousands of years would have been considered a King’s treasure. That much silver should really be unaffordable for someone of my social standing.
Keep on stacking – your grandchildren will do well
You are correct. One ounce was for years considered a day’s wages for a skilled laborer, or two days’ wages for an unskilled worker. It’s not even 1 hour’s work now.
That is my hope also. To see the financial “wizards” hung out to dry.
…being a Christian of partly of Jewish ancestry myself, I know that today’s “money” is all about Jews. For example…: https://www.youtube.com/watch?v=3_dSzS-gtTs
…about which THE KING OF THE JEWS said in reproach!: https://www.youtube.com/watch?v=eIhPdrZTNYc
Then why does Keith Wiener write “…do not take away from this that demand for physical metal was strong but someone pushed the market down $21 by selling futures. 25 bps means that the spread between the August future and spot dropped by about 41 cents.
Let that sink in. The market price dropped from $1,301 to $1,280, or $21. The spread between futures and spot fell by around 50 cents. The selloff may have been stronger in futures, but make no mistake. The selling in spot was nearly as heavy.”?
I realise that Weiner resolutely refuses to make any distinction between trading, “spot” and futures or paper and metal, but…this beggars belief.
Spending time on Keith Weiner’s work is a complete waste of brain cells and time. I’ve been doing this sector
since 2001 and I’ve been involved in a wide range of markets since 1985. Weiner is mind over matter: I don’t mind
and he doesn’t matter.