Tag Archives: CME

The Comex Has Big Problems

An article from Bloomberg was published 2 days ago which alleged that “New York Gold Traders Drown in Glut…”  The Comex is now reporting there’s 26 million ozs of gold in Comex vaults, 17 million of which is in the “eligible” account.  This is up from 9 million total ozs at the end of March, 5.5 million of which was “eligible.”

I find it amusing that the mainstream media swallows the Comex data reports without fact-checking or insisting on an independent audit of the bars.   Ronan Manly of Bullionstar published a research piece in which he dug up a letter from the CME to the CFTC which stated that the CME believes the deliverable supply of “eligible” is 50% of the reported number.  That’s if we take the CME’s estimate prima facie.

The world was told 6 weeks ago that it was impossible to transport gold bars oversees and a scheme was rigged to make London gold (400 oz bars) available on a fractional basis to satisfy Comex deliveries at the option of the party taking delivery. But the bars were to remain in London. Suddenly the Comex “found” several million ozs of gold in its warehouse stock report. Bars that are unaccounted for and supposedly sitting in London vaults.

In all likelihood, the 17 million ozs of gold added to Comex vaults is a product of double-counting bars in London. I know many of those reading this might find this to be “conspiratorial,” but it’s been long acknowledged that the LBMA is running a fractional bullion system.

That said, assume the 26mm ozs of gold are real. Discount the 17mm “eligible” by the CME self-admitted discount factor of 50% and that leaves 17.5 million alleged gold ozs available for delivery.  But the gold contract open interest is 510,000 contracts, or 51 million ozs of paper gold. In relation to the 17 million ozs of gold that may be available for delivery, it’s highly misleading – and probably intentionally misleading – to call the supply of gold in NYC a “glut.”

Add to this deceptive Bloomberg article a report from Reuters that CME banks are pulling back from the Comex.  To begin with, HSBC attributed its $200 million dollar hit from gold trading to its London operations. The article also claims that 400 tonnes of gold have been shipped to NYC despite the narrative in April that gold couldn’t be moved from London to NY.  I surmise the “movement” of gold is digital-based.  As Bill Murphy commented, “we were told there’s trouble getting gold to NY – now they say there’s too much…Don’t believe any of it – they are scared to death about something.”

There’s a big problem at the Comex and that’s why the bullion banks are pulling away from it.  ScotiaMocatta is closing its precious metals operations and taking a loss to do it. Mocatta Bullion has been in operation since 1684 and was one of the largest operators on the Comex in gold and silver.

I’m not sure it’s even credible to say the bullion banks are pulling away from the Comex. The gold open interest was over 800,000 contracts (80 million ozs of gold) earlier this year. The banks have been working hard to reduce their open interest and short exposure – that much is true. But historically the open interest on the Comex for gold has ranged between 200,000 and 400,000 contracts. In that context how can a drop in o/i to 500k contracts be considered “pulling back?”

Since late August 2019, the activity on the Comex has been what many of us consider strange, if not engulfed with the scent of desperation. The fractional 400 oz gold contract and the two articles discussed above are a few examples out of many. Recall the CME introduced the “pledged gold” category back in October 2019. “Pledge gold” is just another form paper derivative gold. HSBC jumped on that designation immediately. We find out a few months later that HSBC had impaled itself on its gold trading and custodial activities and required the “pledge gold” designation in order to meet the collateral requirements as a clearing member of the CME.

As with the fiat currency fractional banking  monetary system, the bullion market in London and NYC has become a fractionalized system of derivatives and other forms of paper gold (leases, hypothecation, lending) backed by a tiny amount of real physical gold relative to the amount of paper claims.  This fractional bullion system is crumbling at its core and the propagandist articles like the ones above being disseminated through the mainstream media are a reflection that something is seriously wrong at the Comex.

If you don’t have possession of the gold you think you own, you do not own it.  The world will eventually understand why that assertion is true…

CME Pledged Gold: Did The Comex Rescue HSBC

A couple days after the CME allowed clearing members to use warehouse warrants as collateral for the mandatory performance bond, the new form of collateral was implemented by HSBC.

With help from Craig Hemke (TF Metals Report) it appears as if the Comex activated a low-grade rescue of HSBC.  Chris Powell at GATA believes this “hypothesis fits the decades-long practice of the international gold price suppression scheme of governments, central banks, and bullion banks. That is, to keep metal moving around so fast that it can be applied to pressure points before its real owners notice that it’s missing — to make a single ounce of gold seem to be in as many as a hundred places at once.”

On November 4 authorization for traders on the New York Commodities Exchange to use “London gold” and Comex gold warrants as collateral was tripled, raised from $250 million to $750 million. HSBC now has used $340 million, or 45.3 percent, of its new collateral limit. It seems more than coincidental that HSBC took advantage of the collateral increase so soon after it was put into effect.

I see the rule change as a low-grade bailout of HSBC, analogous to the Fed’s low grade bailout of the big banks with the “repo” “quantitative easing.” The rule change also flags HSBC as the largest trader in the commitment-of-trader category that designates the percentage of the long and short contracts held by the four largest traders on the Comex.

Assuming, as is likely, that HSBC’s short position was largely put on at lower gold prices, the bank is probably getting hammered with a mark-to-market loss.

Here is the issue that needs to be answered but likely never will be: Do any of the warrants HSBC has pledged as collateral involve gold not owned by HSBC?

In my opinion, probably all the gold in these warrants is not really owned by the bank.

Most likely HSBC is using for collateral purpose gold that does not belong to the bank — customer gold. That is outright hypothecation.

I wonder if the agreement signed by the vault operators allows them to hypothecate gold held in the vault and not owned by the bank.

Now here’s where it gets even more interesting. Assume HSBC is short those warrants pledged as performance bond collateral and the price of gold moves a lot higher. Then HSBC is getting killed technically being short gold collateral it has pledged for its own liability but doesn’t own. How does the bank remedy this?

It uses an exchange-for-phyiscal or privately negotiated transaction using “London gold.” Since HSBC is the vault operator for the major gold exchange-traded fund GLD, this London gold EFP/PNT would likely use GLD vault gold that may or may not have been hypothecated.

HSBC is likely getting financially squeezed to a major extent on its Comex futures short position and the CME bailed it out by changing the collateral and performance bond margin rules.


Did the Comex Just Create More ‘Paper Gold’ For Price Suppression?

A mysterious “pledged gold” entry has just showed up on the Comex gold warehouse report. The definition of this new warehouse stock classification for gold is provided in Chapter 7 of the New York Mercantile Exchange rulebook.

In brief, “eligible” gold is a gold bar stored in a Comex vault that meets Comex specifications (quality, size, purity, and brand).

A “registered” gold bar is one that has been designated for delivery and for which a warrant has been issued. This warrant is evidence of and specifies ownership title to the bar. Warrants facilitate the transfer of delivery under a Comex contract.

“Pledged gold” is a bar for which a warrant has been issued but for which the warrant has been placed on deposit at the CME Clearing House as part of a required performance bond.

The Chicago Mercantile Exchange (CME) has its own clearing division through which all trades are confirmed, matched (counterparties being verified), and settled (money changes hands). Each contract has a long and short counterparty.

A clearing member of the exchange is typically a bank, hedge fund, or commercial entity that has been admitted as a clearing member. The clearing mechanism is the “lubricant” that enables any securities exchange to function.

Part of a clearing member’s responsibility is to assume “full financial and performance responsibility for all transactions executed through them and cleared by the CME.” If you execute a trade on the Comex and fail to pay, the firm that took the other side of your trade is on the hook if you don’t pay for the trade. Or if you have elected to take delivery of a gold bar but can’t pay for it, the Comex member that has the other side of your contract is on the hook for the money.

Each clearing member is required to post a performance bond, a specified minimum amount of funds or collateral value that functions as a reserve to reinforce a clearing member’s obligation to guarantee the trades the clearing member executes. Think of this as a margin requirement.

A warrant that has been issued, which signifies titled interest in a gold bar, can now be used as collateral for the performance bond requirement. A warrant used this way is the “pledged gold” in the warehouse report. The gold bars connected to a warrant being used as collateral cannot be used to satisfy contract delivery requirements of the entity using the warrant as collateral. But the gold connected to warrants is still counted as part of the Comex gold stock.

Additionally, Comex clearing members can use what is called “London gold” as performance bond collateral. The CME rulebook does not define “London gold.” Presumably these are the standard 400-ounce London Bullion Market Association bars stored in a London vault.

But the term “London gold” remains unexplained and nebulous, and recently the CME tripled the amount of “London gold” that can be used by a clearing member as performance bond collateral, increasing it to $750 million from $250 million.

Why has the exchange tripled the amount of “London gold” that can be submitted as performance bond collateral and included Comex gold bar warrants as assets considered acceptable collateral?

As has been well documented, the open interest in Comex gold contracts has just reached a record high. The current open interest, more than 716,000 contracts, is 85 times greater than the “registered” gold stock on the exchange and almost nine times more than the total amount of gold in Comex vaults, including “pledged gold.”

As a technical matter “pledged gold” should not be considered part of warehouse stock because it cannot be delivered. The financial risk assumed by the Comex CME clearing members escalates with each new contract of open interest, especially to the extent that the open interest is “uncovered,” meaning the Comex lacks enough gold to bear the risk of a delivery default.

For this reason the size of the performance bond posted by each clearing member increases pro-ratably with the rising value of the gold contract open interest. (That is, clearing members that process an increased amount of contracts require higher margin deposits.)

This raises the question of the quality of “London gold” as collateral. The issue with “London gold” is whether the gold is verifiably sitting in a London vault or if the posting bank — for example, HSBC — even has legal title to the bar.

Hypothecation is when a bank borrows a gold bar held in its custody for a client, a bar owned by someone else, and uses that bar for another purpose like a delivery requirement or perhaps for posting it as collateral on the CME.

What process is in place to verify that the bank has the right to use that bar, or to verify that the bar even exists?

Even if the entity posting “London gold” as collateral may have some type of documentation showing rights to the bar in London, that bar may have been borrowed — that is, hypothecated by the London vault custodian and sent to Asia or India to satisfy a delivery requirement.

Keep in mind that the Bank for International Settlements now allows “gold receivables” to be counted as gold in custody. This hypothecated bar may exist only as a receivable entry on the books of the London vault operator.

Finally, there is the question of big bank liquidity. The “repo” and money printing recently undertaken by the Federal Reserve Bank of New York reflect a liquidity squeeze in the banking system. I would prefer to receive cash as collateral against a performance bond if I were in the business of extending credit for trading activities. Anyone with a brokerage account is required to use cash as margin equity. Try using a piece of paper that says you have titled interest in a gold bar.

It’s quite possible that the ongoing squeeze in big bank liquidity has forced the CME to triple the amount of “London gold” said to be available to the exchange and to include Comex gold warrants as acceptable collateral in lieu of requiring cash or Treasury bonds. This is the only way the CME could present the appearance of financial integrity and security with respect to the soaring gold contract open interest — open interest that is created by bullion banks and hedge funds and that bears almost no relation to the underlying stock of physical gold — to help contain the gold price.

The timing of the expansion of the collateral package is curiously correlated directly with the rapid escalation in gold contract open interest and the recent liquidity squeeze in the banking system.

The tripling of the use of “London gold” and the inclusion of warrants as collateral suggest that the CME and its Comex are preparing to allow an even greater expansion in Comex gold open interest to increase the ability of Comex banks to engage in gold price manipulation. Why else would the CME allow the open interest in gold contracts to dwarf the actual physical gold in Comex vaults?

Ultimately, the use of “London gold” and Comex warehouse warrants expands the fractional-reserve gold banking system and further weaponizes “paper gold” in support of the longstanding bullion bank and central bank campaign to suppress the gold price.

Tuesday’s Paper Gold Raid And Fake Journalism

“Central banks stand ready to lease gold in increasing quantities should the price rise.” – Alan Greenspan, July 1998 testimony to Congress

At 8:39 a.m. EST 523,200 ozs of paper gold were unloaded onto the Comex in the space of less one minute:

Anyone who’s traded big positions on a trading desk knows that the best way to unload a position that is larger than the immediate liquidity of the market in which the security trades (yes, Comex contracts are “securities,” not actual physical gold) is to feed it out over time.

In that chart above, why wouldn’t the seller try to sell its position in a way that would enable it to get a price for the entire position that was in the vicinity of the market price at the time the sell-order was executed? After all, the market has clearly rebounded to the price level at the time massive sell-order bombed the trading systems, suggesting that the seller could have achieved much larger sell proceeds with a little bit of patience in its selling

This is all rhetorical, of course, because the all-too familiar “fishing line” 1-minute chart is the blatant footprint of market manipulation. Of course, Kitco’s “reporter” on the scene chose to attribute the sudden price plunge to a market “hamstrung by not much risk aversion in the world marketplace” Kitco.com.

It’s hard to believe an educated person wrote that commentary (“Gold Prices Sink To 4-Month Low On Scant Risk Aversion” by Jim Wycoff). Honestly, that headline makes me chuckle. Well then, Jim, the Dow is now up 153 points as I write this 5 hours later, which by your logic would imply there’s even less risk aversion than the “scant” risk aversion at 8:39 a.m.  How come, Jim,  the price of gold rebounded to the level where it was trading when fear of “scant” risk aversion triggered someone to unload 16 tons of paper gold in less than 60 seconds if indeed fear of scant risk aversion was the catalyst for sell order?

Will The New Bitcoin CME Futures Contract Benefit Gold?

The Chicago Mercantile Exchange (CME) announced a plan to launch bitcoin futures by the end of the year. The price of Bitcoin surged to a new record in response to the announcement. It was reminiscent of the dot.com era, when a dot.com stock would jump 10% if Maria Bartiromo merely whispered the name of the company on CNBC.

Ironically, the cheers for this new contract from the Bitcoin faithful could turn out to be analogous to chickens in the barnyard cheering at the appearance of Colonel Sanders. For those that aren’t sure about Bitcoin but interested in seeing what it has to offer – try websites like About Bitcoin to get a basic knowledge of how it all works.

GATA released an article about the new Bitcoin futures contract titled “So Long Cryptos.” I’m sure that editorial stance puzzled most Bitcoin price-momentum chasers. Crypto aficionados, for now, overlook the fact that CME futures are used aggressively to push around the dollar-based Comex gold and silver futures contracts.

As GATA points out, the ability to manipulate precious metals futures contracts by the official entities motivated to suppress the price of gold is reinforced by the volume trading discounts given from the CME to Governments and Central Banks who trade on the CME.

If there any reason to assume that the same volume discounts will not be extended to the Bitcoin contract? Another curious feature of the Bitcoin contract is that it will be settled in cash. I would point out the original intent behind futures contracts was to enable producers and users to agree ahead of time on a price that would be paid for the delivery of the underlying commodity associated with the futures contract. Futures were a financing tool intended to facilitate the production and distribution of the underlying commodity product.

The Bitcoin futures contract is settled only in cash – U.S. dollars. To wit, does this not theoretically sabotage the intended purpose of Bitcoin, which is to provide an alternative to fiat currencies? Why would you want to receive fiat dollars rather than delivery of the underlying?

Technically this is not a bona fide futures contract. It’s a derivative of the “index” price of Bitcoin but it does not facilitate the production and distribution of Bitcoin. As such, it’s an instrument of pure speculation. By definition, this opens the door to manipulation by the entities who might be motivated to control the price of Bitcoin. Oh, by the way, those entities can buy and sell the contracts at a price advantage to the speculators by virtue of the volume discounts.

At least with gold and silver contracts, the contract enables the contract owner to take delivery of the actual physical commodity connected to the contract. To a limited extent, this mechanism serves to prevent the complete unfettered manipulation of gold and silver via the Comex futures contract.

With the Bitcoin futures contract, the contract owner is paid cash. The absence of a requirement to deliver actual Bitcoins enables the issuance of an unlimited number of fiat dollar-based paper Bitcoin contracts which can be used to drive the price lower by increasing the supply of the contract relative to the demand. So much for the idea that Bitcoin supply issuance is firmly capped. This could actually be quite entertaining to observe

It’s also quite possible that Bitcoin futures could divert hedge fund trading volume away from gold and silver futures. This is why many are deciding to learn from those similar to what you can find at https://bitcoinrevolution.cloud/about/ about how to trade cryptocurrencies. This would be a blessing in disguise if this occurs. The price-momentum chasing hedge fund algo trading enables the Comex bank manipulation of Comex futures contracts. Remove this source of volume and it will remove to some degree the ability of the banks to push the price around by exploiting the hedge fund algos.

If the percentage of open interest in gold and silver Comex futures contracts becomes skewed toward the users of these contracts who actually take bona fide delivery of the underlying physical gold/silver bars because the non-delivery-taking users move over to Bitcoin futures, it could mitigate the ability of the banks to price-cap the price of gold/silver.

In this regard, investors who prefer to keep their wealth stored in physical gold and silver rather than fiat dollars or fiat Bitcoins will indeed welcome the new Bitcoin futures product.

Does your company rely on Blockchain technology and trade in cryptocurrencies such as Bitcoin? If so, you might be looking for ways to improve your business. To find out more, try speaking to a specialist blockchain consultant such as Blockchain Built.

The Comex Is The World’s Most Corrupted Market

While no additional silver was put on deposit at the Comex during the [past] week, The Banks sold contracts for 120MM oz.  This is fraud.  -@TF MetalsReport

If you were to poll the public about comparing the investment returns  between gold, silver and stocks during the first quarter of 2017, it’s highly probable that the majority of the populace would respond that the S&P 500 outperformed the precious metals.   That’s a result of the mainstream media’s unwillingness to report on the precious metals market other than to disparage it as an investment.

In reality, among silver, gold, the Nasdaq 100 and the S&P 500, the S&P 500 had the lowest ROR in Q1.  Silver led the pack at 14%, followed by tech-heavy Nasdaq 100 at 11.1%, gold at 8.6% and the S&P 500 at 4.8%.  Put that in your pipe and smoke it, Cramer.  Imagine the performance gold and silver would have turned in if the Comex was prevented from creating paper gold and silver in amounts that exceeded the quantity of gold and silver sitting in the Comex vaults.

As an example, as of Friday the Comex is reporting 949k ozs of gold in the registered accounts of the Comex vaults and 9 million ozs of total gold.  Yet, the open interest in paper gold contracts as of Friday totaled 41.7 million ozs.  This is 44x more paper gold than the amount of physical that has been designated – “registered” – as available for delivery.  It’s 4.6x more than the total amount of gold sitting on Comex vaults.

With silver the situation is even more extreme.  The Comex is reporting 29.5 million ozs of silver as registered and 190.2 million total ozs.  Yet, the open interest in paper silver is a staggering 1.08 billion ozs.  1.08 billion ozs of silver is more silver than the world mines in a year.  The paper silver open interest is 5x greater than the total amount of silver held in Comex vaults;  it’s an astonishing 37x more than the amount of silver that is available to be delivered.

This degree of imbalance between the open interest in CME futures contracts in relation to the amount of the underlying physical commodity represented by those contracts never occurs in any other CME commodity – ever.   Historically, when the amount of paper exceeds the amount of underlying commodity that is available for delivery by more than 20-30%, the CFTC intervenes by investigating the possibility of market manipulation.  But never with gold and silver.

The Comex is perhaps the most corrupted securities market in history.   It is emblematic of the fraud and corruption that has engulfed the entire U.S. financial and political system. The U.S. Government has now issued $20 trillion in Treasury debt for which it has no intention of every redeeming.  It’s issued over $100 trillion in unfunded liabilities (entitlements, pensions, etc) for which default is not a matter of “if” but of “when.”

In today’s episode of the Shadow of Truth, we discuss “The Big Lie,” which is also known as the “Comex,” and explain why those looking to protect their savings should be buying physical gold and silver now:

Is The CME Preparing For An Eventual Comex Default?

Orwell would blush over what’s being done to our system if he were alive.  – Investment Research Dynamics...I think a lot of precious metals futures contracts are going to undergo a disappearing act.  – John Titus of BestEvidence

The CME curiously reported that it received notice from the Federal Reserve that it is authorized to open an account at the Fed which would “allow it to better safeguard cash deposited by its traders”  CME/Fed Account.

This is event is notable for several reasons.  First and foremost is the fact that the CME was designated as a “systematically important” financial institution as part of the Dodd-Frank “hoodwink the taxpayer” Act.  If anyone can explain to me why a corrupted derivatives clearinghouse and trading exchange is “systematically important,” I will receive the explanation with an open mind.

To be quite frank, no bank is systematically important, especially the big banks which are continuously wrist-slapped for committing criminal acts of fraud and screwing the public. As has been demonstrated, the “systematically important” designation is nothing more that a guarantee to the banks that Taxpayer money will be tapped to ensure bonus payments may remain uninterrupted in the event of a bank collapse.

Another puzzling aspect of the CME’s decision to open a custodial account at the Fed is in the CME’s statement that the Fed account will allow it to better “safeguard” cash deposited by its traders.  Note that the account is limited to “clearing members proprietary margin” accounts.   This would be the cash put up by Comex clearing members – like the Too Big To Fail Banks (JP Morgan, Goldman, Citi, HSBC etc) – against margin requirements.

Why is a Fed custodial account any better than a custodial account held by a big bank?   Is this an unintended signal from the Fed that the big banks are no longer safe as custodians of cash deposits? 

To me this reeks of the CME enabling a mechanism that “ring-fences” any cash equity put up by clearing members for the purposes of protecting that cash against an event of default or bankruptcy.  It would give the CME control over this cash.   This is what occurred when Jon Corzine incinerated MF Global and JP Morgan was able to grab any and all available collateral for its own benefit.

Again, this suggests to me that CME is concerned about the risk embedded in the proprietary futures and derivatives positions of its clearing members.  I would suggest that the CME is specifically nervous about the precious metals futures positions held by JP Morgan, HSBC and Scotia.

With the absurd imbalance between Comex gold/silver contracts and the amount of underlying physical gold/silver bars held at the Comex for delivery, it’s not a question of “if” the Comex eventually defaults but a question of “when.”   Anyone who disagrees with this assertion is either in a state of pathetic denial or appalling ignorance.

Don’t forget that Comex contracts have a “force majeur” provision which enables the cash settlement of these contracts.  Given that the outrageously large short positions in gold and silver futures contracts are primarily held by the big banks, who also happen to be clearing members, the move by the CME to ring-fence cash collateral at the Fed which is deposited by the big banks who are short gold/silver futures expressly suggests that an event of default may be closer than any of us realizes.

The Comex Is Facing A Gold Crisis

Sure, you can’t eat a bar of gold and it just sits in storage like a Pet Rock that’s been cast aside by its bored owner.  But try selling the Indians or Chinese a paper gold bar and see how far you get.  You might end up with a knife in your forehead.

The stench has been growing stronger by the day.  Many of us have been writing for years about the extreme imbalance between the paper futures open interest vs. the underlying amount of gold being reported as available for delivery.   The latest disclosure from the CME is that the ratio of paper gold vs. the amount of deliverable ounces has spiked to over 200:1.

As of last Friday, JP Morgan had 89.4k ounces withdrawn from the  “customer”/ eligible account in its vault and it moved 122k ounces of gold from its “deliverable”/ registered account into its customer account.  What the true nature of those transactions were – i.e. who the counterparties were and did in fact any real gold actually leave JP Morgan’s gold vault – is anyone’s guess due the intentional opacity of disclosure on the Comex.

But the bottom line is that, as of last Friday, the Comex vaults collectively now show 202k ounces of gold in the “registered” / deliverable accounts of the Comex vault custodians.  As of today’s trading, the “preliminary” gold futures open interest rose to 419k contracts representing 41.9 million ounces of paper gold.  This would, preliminarily, put the ratio of paper gold to deliverable physical gold at an astonishing 207:1 ratio.

The amount of “deliverable” gold on the Comex is the lowest that I’ve seen it in the time I’ve been following the Comex data avidly since 2002.  Please note that the preliminary open interest is almost always revised, most typically a bit lower, by the time the Final report is issued the next day.  But based on many years of tracking this data, it is likely that any revision will not move the “needle” on that 207:1 ratio by much in either direction.

Nothwithstanding all the other information contained in this disclosure, this number represents the confirmation that the Comex is nothing more than a pure paper gold market.  It’s nearly 100% derivatives.  It’s the imposition of derivatives by the Fed and the U.S. Treasury – via their agent bullion banks – on the gold market in order to control the pricing discovery mechanism.

In other words, the Comex gold market is now a 100% artificial gold market.

I find it it quite interesting that the elitists overseeing this operation on the Comex are willing to advertise the 200:1 paper:gold ratio when they have the means at their disposal to hide that number or to make it look a lot smaller.

There’s some kind of message they’re sending to anyone who cares about this sort of thing. It’s either “f*ck you” we’re in control” or “help, we’re in trouble on our paper gold short position.”  Or a combination of both.

The implications embedded in all three of those possibilities are quite horrifying to contemplate.

It’s quite obvious that there’s a problem with the supply of physical gold that is readily available for delivery.  The same is true of the retail silver market, in which available supply at the retail level shrinks by the day.  Premiums on a simple roll of 20 silver eagles are now over $5 at big coin dealers claiming to have inventory.  Most dealers have been wiped out of most if not all of their entire inventory of silver SKU’s.

In my opinion, that head-splitting 200:1 ratio of paper to deliverable gold on the Comex is the surest sign that the market for gold and silver is in crisis mode. The term “crisis” also describes the state of condition of the U.S. stock market and, ultimately, the entire current U.S. financial and economic system.

SoT Ep 29 – Jeff Nielson: The Complete Criminalization Of Our System

[If you really study the patterns] you can actually see the when they turn on and off the algorithm program used to manipulate the gold and silver markets.  – Jeff Nielson, Shadow of Truth

Rule of Law has been completely abandoned by the Government and business elite.  What remains is a citizenry in this country that has been largely dumbed-down and taught ignore or deny the reality unfolding right before its eyes.

What’s left is an elitist club of political and corporate “leaders” who are using every possible means to keep our system from collapsing, enabling to them to steal or confiscate every last crumb of middle class wealth.  If you don’t have enough spare cash to own your own Washington, DC politician,  you are middle class – you are not part of “The Club.”

The Shadow of Truth hosted a fascinating conversation (at least we found it fascinating) with Jeff Nielson, of Bullion Bulls Canada.

The lies are getting bigger and bigger to point at which they are now ludicrous or even perverse.

The conversation ranged from the proposals by criminal Keynesian “economists” to abolish cash currency to Jeff’s “One Bank” concept.

With 46% of all transactions by volume in the U.S. conducted using cash – 23% by value – converting to an electronic digital currency system would turn our lives upside down.  But more insidiously, it would give the Government a lot more control over your life, not to mention the fact that it would make very easy for the Government to impose a bail-in of the banking system when that inevitability occurs.

Unfortunately, the majority of the zombie-like Americans will likely just shrug it off when the move is made to abolish cash, just like our citizens shrugged off the Patriot Act and ignored the imposition of the NSA into our lives.

Jeff’s “One Bank” concept is based on the fact that a cabal of ultra-wealthy bankers, businessmen and media moguls largely control the western financial and political systems.  Jeff explains the idea and how it functions.    In my mind, it all starts at the top with the Bank for International Settlements – the BIS.

The discussion include whether or not the Government will eventually make gold and silver illegal and try confiscate the public’s bullion.  Jeff sees it as an inevitability and necessary to support a fully electronic currency system.

Without question Jeff is highly intelligent, well thought out and articulate.  Whether or not you agree with some or all of his ideas, we can assure you that you will find this discussion to be thought-provoking.

Is A Giant Short Squeeze In Silver Brewing?

Steve St. Angelo wrote an interesting article reporting that U.S. silver imports have mysteriously jumped nearly 44% during Q1 2015 vs Q1 2014.  As he details, the big increase is not explained by the demand numbers for industrial silver, silver eagles or the Comex warehouse vault silver stocks.  (click on graph to enlarge; source: SRS Rocco Report)

U.S.-Silver-Bullion-Imports-2014-vs-2015I’m wondering if perhaps JP Morgan might be the source of the import demand.  JPM is the custodian of the SLV vault.  As of the latest data available from the NYSE, the short interest in SLV  is 20.6 million shares.  This is an 11% jump in short interest over the previous week’s report.  The short interest represents 20.6 million ounces of silver that are theoretically/potentially owed to the SLV Trust.  If large holders of SLV decide to turn in their shares for redemption of silver bars – and assuming they are not blocked from doing so by the Trustee – which I know is happening with GLD – the SLV Trust would find itself in an awkward position if it can’t honor deliveries.

Furthermore, JPM is also thought to be the largest source of short interest in Comex futures.  Many of us have been postulating that, because of the trading behavior in silver over the last 6 months or so, it appears as if there is a physical supply vs. delivery demand problem brewing in silver.  This group includes myself, GATA’s Bill Murphy and Sprott Asset’s John Embry.  James Turk has pointed out that silver is currently in backwardation in London, which means there is a short term shortage of physical silver available for delivery into LBMA forward contracts.

To put the Comex silver open interest in perspective, as of the latest open interest report, there were 116,606 open contracts for the July delivery month.  This translates into 583 million ounces of silver.   As of the latest warehouse stock report, there were 60 million ounces of silver available for delivery in the “registered” account.  click to enlarge:

SilverOpenInterestIn other words, nearly 10 ozs of paper silver has been sold to buyers for every ounce of real silver that is available for delivery.  This is just for July.  You don’t have to be Einstein to understand the potential force behind a short squeeze if just 20% of the longs on the Comex decide to stand for delivery in July because they are nervous about the dollar/economy.

Between the short interest in SLV, the high probability that a significant portion of SLV silver has been hypothecated in some form, and the enormous naked short interest position in Comex silver futures vs the alleged amount of silver stock available to deliver on the Comex, it’s entirely possible that a huge short squeeze in physical silver is fomenting.  Perhaps it was JP Morgan and other bullion banks who were responsible for the enormous amount of silver imported into the U.S. during Q1 2015 as a means of partially covering their naked short position in silver via Comex futures, SLV short interest and OTC silver derivatives.

I continue to stand by my prediction that silver will be the best performing asset in 2015.  If I’m right about the potential for a short squeeze in physical silver, this trade will be a slam dunk.