Tag Archives: Comex

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…

QE To Infinity Leads To A Systemic Reset Involving Gold And Silver

Scott Pelley, “60 Minutes:” “Where does it [money] come from?” Do you just print it?”

Jay Powell: “We print it digitally. So as a central bank, we have the ability to create money digitally. And we do that by buying Treasury Bills or bonds for other government guaranteed securities. And that actually increases the money supply…No, there’s really no limit to what we can do with these lending programs that we have. So there’s a lot more we can do to support the economy, and we’re committed to doing everything we can as long as we need to.”

I almost fell off my chair after I reading Powell’s comments on “60 Minutes” public relations stunt on behalf of the Fed. There’s two important points that stand out like like silent screams in Powell’s words: 1) 99% of the currency – not money – printed by the Fed goes directly to the banks or funds Government debt; a small trickle might get to Main Street to “support the economy;” 2) the Fed is willing to print an infinite amount of currency to keep the financial system propped up. In other words, the Fed is indeed printing helicopter money but it’s dropping it on the banks and not the economy at large.

This is why gold soared during and after Powell’s interview and it’s why the gold/silver price management team (Fed, ECB, BoE, BIS) has been working overtime in an effort to prevent gold and silver from going parabolic. That effort is doomed to fail.

Chris Marcus from Arcadia Economics and I discuss the Fed’s money printing and the likelihood that it will lead to an eventual reset of the global monetary system:

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Note:  I do not receive any promotion or sponsor payments in any form from the mining stock companies I present in my newsletter. Furthermore, I invest in many of the ideas personally or in my fund.

GLD / SLV Are Frauds – If You Want Gold And Silver Buy Physical

“If you want to buy gold and silver, why are you buying GLD and SLV? The best case if that you are going to index the price movement in gold and silver. But when you sell GLD they don’t  send you bars of gold, you get dollars in your account  – devalued dollars.  The dollar is being devalued everyday by the Fed. All fiat currencies are being devalued by Central Banks.”

GLD and SLV are “Enrons” waiting to happen. The ratio of paper gold liabilities to the availability of physical gold and silver is minimally 100:1.  The fraud in the paper gold/silver market is mind-blowing in its proportion.

Chris Marcus of Arcadia Economics and I discuss the why the bullion banks and the modern London Gold Pool is collapsing:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

Infinite QE, Bear Market Rallies, Gold, Silver And Mining Stocks

The precious metals sector continues to be glaringly ignored by the mainstream financial media and most “alternative” forms of media. This is a “loud” indicator that the fattest part of the bull move is yet to come. YTD gold is up 11.8%, GDX is up 16.4% while the SPX is down 12.6%. If the SPX were up 16% YTD, they’d be doing naked cartwheels on CNBC.Mining Stock Journal – May 14, 2020

The stock market is reflecting the expectation of a “V” recovery in the economy. The Trump Government, specifically Treasury Secretary, Steve Mnuchin, believes economic activity will be largely restored by the end of August. It’s nothing but propagandist fantasy.  I’d be stunned if he really believes that.  This bear market rally is a just that – a bear market rally. The same pattern occurred after the tech bubble popped in 2000. The Naz plunged 40% followed by a 42% rebound rally. When the bear rally ran out of steam, the Naz declined 42% over the next four months.

A lot of money is flowing into mining stocks, especially junior exploration companies. More investors are aware that the cat is out of the bag w/regard to the physical vs. paper situation in London and NYC. The money flowing into mining stocks – especially speculative juniors – is starting to go from a trickle to a heavy current.  A lot of stock deals that have been announced in the last couple of weeks have been up-sized by a considerable amount. This is highly bullish indicator for the precious metals sector.

Silver Doctors / SD Bullion invited me back to discuss the insanely overvalued stock market and the precious metals market:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

“I’ve always thought your newsletter is the best value in the junior mining world. It’s great to get your insight as things get moving here. Some of your suggestions are among my best performers.” – subscriber, “James,” to the Mining Stock Journal

The LBMA Is Just As Rigged As The Comex

Gold is going a lot higher, especially once India  – which has been absent from the gold market since the virus crisis started  – re-opens its economy . Silver is starting to wake-up and should outperform gold by a substantial margin going forward.

Chris Marcus (Arcadia EconomicsArcadia Economics) and I discuss the dubious credibility of the LBMA and evidence that it’s just as rigged as the Comex now:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

“I’ve always thought your newsletter is the best value in the junior mining world. It’s great to get your insight as things get moving here. Some of your suggestions are among my best performers.” – subscriber, “James,” to the Mining Stock Journal

LBMA Uses Unallocated Gold To Manipulate the Fix

“If you own gold, you have money. If you don’t own gold, you have a problem”  – (James Turk).  To that I’ll add:  If you don’t have physical possession of your gold, you do not own gold

A significant amount of gold is held as “unallocated,” which is when an entity buys gold and establishes an account that is credited with value of the gold purchased.  A gold bar is not actually stored on behalf of the “buyer.”  Rather the buyer has a “promise” from the bank vault custodian to deliver the bar or its cash equivalent when the entity decides to either take delivery or “sell” the bar.

Because an actual bar in the buyer’s name is not sitting in the custodial vault, the buyer does not incur storage or other related fees. BUT, the buyer does not have legal title of ownership to anything other than an account  showing the value of the “gold.”  Like a checking account, the bank is entitled to use the proceeds from the gold “purchase” for its business operations.

This arrangement is really no different than than Comex paper gold contract long position. In other words, an unallocated gold account is nothing more than security interest in the account – it’s a paper derivative.

In this regard, the LBMA is little more than a fractional gold banking system, just like the Comex. The advantage of the unallocated gold account system is that the entities that run the a.m./p.m. London price fix can use unallocated gold offerings to give the illusion that the price fix is based on bona fide demand and supply of actual physical bars. Yet, very little physical gold changes legal ownership or is moved from the unallocated accounts to allocated accounts when the fix process clears.

Ronan Manly has been knocking the cover off the ball with his research and analysis which exposes the fraud and corruption engulfing the  London gold market.  In this must-read article, Manly explains the process by which the LBMA uses its twice-daily price “fix” – which is indeed a “price fixing operation” and little more –  to artificially suppress the spot “price” of gold:

As the gaping spread between London (LBMA) spot gold prices and front-month COMEX gold futures prices persists for a sixth week triggered by the bullion bank EFP liquidity blow up on Monday 23 March 2020, one unappreciated aspect of this gold price discovery scandal is that daily London LBMA Gold Price auctions are deliberately ignoring COMEX gold prices when setting the Opening Price (starting price) in the twice daily gold price auction.

His work explains the factors which have caused the unprecedented price differential between the “spot” price and the Comex futures price curve. You can read the entire piece here: LBMA Gold Price benchmark ignoring market conditions, short-changing investors.

Why Did The CME Secure A $10 Billion Credit Facility?

The credit facility was put in place in November 2017. It was brought to the public’s attention when Marketwatch picked up on an SEC filing which renewed the credit facility.  I don’t know if there’s any correlation per se, but the credit facility was established after it was clear that the price of gold and silver had started their next big bull market move with several Comex clearing member banks potentially catastrophically short gold and silver futures contracts.

Ultimately, the CME has 2 or 3 “safety nets” to guard against a default from any one CME clearing member from disrupting the entire CME house of cards. The fact the CME was compelled to establish another $7-10 billion “cushion” tells me that the central counterparties should be held responsible for their trading decisions by putting up a much bigger performance bond. Chris Marcus of Arcadia Economics and I discuss what’s going with the CME, Comex and precious metals market:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

Hyperinflating The Money Supply Means Massive Upside For Gold And Silver

The Fed’s balance sheet is starting to “Weimar.”  Between mid-September 2019 and now, the size of the Fed’s balance has increased by $3 trillion dollars, or 81%.  The graph of the Fed’s balance sheet has gone vertical.  Gold is as cheap right now in relation to the money supply as it was in 1970 at $35 and in 2000 at $250.  Silver is historically cheap to gold.

Kenneth Ameduri invited me onto to his Crush The Street podcast to discuss the economy, oil and the precious metals sector:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

Is The Comex On The Cusp Of Defaulting?

“How did you go bankrupt?” Bill asked
“Two Ways,” Mike said. “Gradually then suddenly”
– Ernest Hemingway, “The Sun Also Rises”

And this could usher in the “suddenly” moment:  “The president of the Shanghai Gold Exchange (SGE) called for a new super-sovereign currency to offset the global dominance of the U.S. dollar, which he predicted would decline long term, while gold prices rally.” – Reuters, April 28, 2020

Chris Marcus of Arcadia Economics and I discuss the potential of a Comex default:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

A Run On Comex/LBMA Gold Bars Is Inevitable

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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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information