The Fed Bailed Out The Comex With Hypothecated Gold

I’m not the only one who’s noticed a significant increase in the amount of anti-gold propaganda flooding the financial media.  Here’s a perfect example published by Bloomberg News just today:   Gold’s Technical/Fundamental Trend Is Down

Of course, nothing could be further from the truth.  You tell me, does this chart look “bearish:”


This graph does not reflect today’s spike higher in gold. The U.S. financial media has become disinformational in proportions that would make George Orwell or Joseph Goebbels blush with embarrassment.

Another critical fundamental variable ignored by the financial media – and even Koos Jansen for that matter – is deliveries onto the Shanghai Gold Exchange. Yes, withdrawals are the ultimate barometer of Chinese demand for gold – minus the PBoC’s demand, of course – and Koos has done brilliant work on that. But gold can not be withdrawn if it is not first delivered! As it turns out, just this week alone delivery volume onto the SGE has totaled 115.4 tonnes. John Brimelow of JB Gold Jottings describes this volume as “impressive.” Especially considering that the financial media and dolts like Scott Bauer would have us believe that seasonal demand in China is low. Clearly utter disinformation.

Avery Goodman has written a piece for Seeking Alpha that describes why it appears as it the Fed – via JP Morgan – bailed out the Comex from defaulting on gold deliveries under the June contract. I believe Avery’s article is 100% accurate based on my 15 years of researching, trading and analyzing precious metals trading on the Comex:

In an article dated June 1, 2015, I pointed out that COMEX clearing members had gotten themselves to the edge of a widespread default on physical gold delivery obligations. They faced net claims of 550,000 troy ounces against only 370,000 registered ounces left at the COMEX warehouses. That left a deficiency of 170,000 ounces, or 5.29 tons of gold.

That same day, JPMorgan Chase (NYSE:JPM) transferred 177,402 troy ounces of gold into COMEX registered gold stockpiles – just enough to cover the shortfall at maturity, plus some extra to cover the additional buying that always happens during an average delivery month. All this raises a question: Did JPMorgan Chase just engage in a bailout similar to John Pierpont Morgan’s 1907 bailout of the New York City banks?

You can read his entire article here – every assertion he makes is 100% accurate and verifiable:  The Fed Bailed Out The Comex

I wrote during the period just before first notice of deliveries that the open interest standing for delivery was unusually high.  I also suggested that the bullion banks would attack gold and coerce as many of those longs to sell as possible.  I also suggested that the Comex would find a way to avoid delivery default.   Both of my predictions were fulfilled.  Avery’s article explains how delivery default was avoided.

14 thoughts on “The Fed Bailed Out The Comex With Hypothecated Gold

  1. Dave,
    I just left the same comment in the HOV post from yesterday, but figured it more appropriate here.
    Any thoughts on why they would bail out comex this time, given all the rumors of them forcing cash settlements on people. A big chinese order maybe? or someone else? Although given the acknowledgement posted by one of your commenters yesterday from gata’s site, is this basically a comex default, in spirit, if not in the technical/legal sense?
    Also, it seems like this would be the point where speculators go for CME’s jugular.

  2. Dave,

    Very interesting take on the COMEX story! Thank you.

    Today I’m writing because of a technical problem which I don’t know how to handle: I bookmark your webpage for daily consultations. But it always opens on old entries of yours, but I know for sure you that you write every day! What I do now is I go to your Facebook page to find out what kind of new articles you have posted. Why is it your webpage continues to change? E.g. if I open right now, the article dated 29th May on the next Housing Crash is still coming up.

    Perhaps you can tell me what I have to do to come to your updates and all articles every day?

    Many thanks and keep up your excellent job!


    1. @Giovanni, you might try clearing your cache (in Firefox, Menu, Options, Advanced, Clear Now) for the Cache and History.

  3. As per Jim Willie from a few months ago, now might be a good time for the SGE to offer a 10%, 5%, 2%, 1% premium to comex pricing and watch the world melt down.

  4. Dave –
    so based on the article, how is it possible that the U.S. Gold reserves can possibly still be said to be the largest in the world (8000 some odd tons -yeah right!)????? thats not even considering the drain thats been on going since 08′ heading to the “anti-hegemons” – Russia, China, India, and the rest…

    its all bullshit…especially the phony paper price action of the only 2 forms of real money for what feels like an eternity….keep up the good work – u r appreciated…

    1. Kaiser,
      In Dimitri Speck’s very good book, The Gold Cartel, on page 86, he quotes from an October 1979 issue of Time magazine, as middle of the road a publication as you could get back then, which said:

      “Volcker . . . drafts plans for what could be the second massive dollar-rescue program the US has had to mount in eleven months. Among the steps under discussion: LARGER GOLD SALES. The 750,000 oz of Fort Knox bullion the US now sells monthly might be doubled, in hopes that this might help drive price down.”
      (The caps were in Speck’s book.)
      GATA also had a recent piece about the revelation of some Carter administration communiques around that same time which talked about the Fed dumping gold into the market to try to keep down its price in dollars.

  5. I guess you can call this a JPM “stick save”. Even so, I don’t think we ever see fair market value for Gold/Silver until there is a major USD crisis resulting in a loss of confidence.

    If we do indeed get a domino derivative run and Gradma Yellen tries to step in and stop the unstoppable this could be the final nail in the coffin for the USD.

  6. Ted Butler addressed the Seeking Alpha article in his subscription service and indicates it is a disservice to call the manipulation wrong when it cannot be substantiated. Butler is not denying that there are crooks manipulating the market, but they are not doing it with the Dept of Treasury physical holdings. Butler’s thesis is concentration and this statement from a month ago, “If you want to write to the CFTC, ask them how in is proper for the managed money traders (by definition pure speculators) to sell 20,000 net contracts (100 million oz) in just the past two COT reporting weeks.”

    1. Butler will also tell you that the COT and Daily Comex gold/silver trading and warehouse stock reports are 100% bona fide – as in that’s the ONLY area of a big bank’s business that they tell the truth ROFLMAO. His subscription service is a waste of money.

  7. Actually if this article is basing the fact on the graph provided, then the 3rd bottom has not hit yet….it should show it hitting under 1150 -1155…So gold is still in a downtrend if you look at it from the highs of 1900……the downward trend has not reversed yet.

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