Note: a commentor pointed out that tomorrow is first notice. I made an error in reading the product calendar on the CME website, which can be found HERE. My bad. The analysis below is still relevant, as I bet there was not a lot of liquidation today. We'll find out for sure tomorrow. Thanks to the reader who pointed out my mistake.
I have to allow for the typical accounting revisions that the Comex sometimes makes a day later. BUT, right now based on the o/i for gold and silver, the Comex is potentially insolvent.
Friday being the day before first notice, anyone with an account not funded to take delivery of a long position has to either sell or be liquidated by the end of last Friday's access session. I know this because I had a silver position liquidated a few years ago when I forgot what day it was lol. Any open long positions as of this morning are capable of taking delivery of gold and silver.
With that said, the open gold o/i as of this morning is 59,412 contracts. This translates into 5.9 million ounces. The Comex gold inventory shows only 2.6 million ounces of gold registered and approved for delivery. There is a total of 11.4mm ounces.
In silver, there are 17,208 open contracts. This translates into 86 million ounces. The Comex reports 48.5 million ounces available and approved for delivery, 107.2 million total ounces.
What does this mean, in the context of the cartel being unable to force liqidate a majority of the open gold/silver positions? Everyone reading this can use their imagination and I'm not willing to predict how this will unfold, but right now the Comex has a problem.
Monday, November 29, 2010
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17,208 is a bit too low to me. I wish it could go to like 30,000 sth to really squeeze the heck out of the evil empire.
ReplyDeleteAhahahahahahahahahahahaha Take THAT JPMorgan SCUMBAGS!!!!!
ReplyDeleteIf less that 26,000 contracts take delivery, then so what?
ReplyDeleteI promise to pay you later.
ReplyDeleteA lot of the so called ounces approved for delivery are in fact producer forwards. When the COMEX have to start delivering these notes in producer forwards to the longs the commercial users like Ford will know for sure that a genuine shortage is appearing in the commodity. Then like Palladium it can go up 20*.
ReplyDeleteThe real short squeeze will happen in London not on the COMEX which will go down with a whimper on the milk bill. In London, the Asian and Chinese buyers can offset delivery from the refiner pipeline so they can't be held to ransom like the longs on the COMEX.
Comex is only for price discovery = it is not to actually sell gold or silver. so, if they dont have it, they will settle in cash...so what...
ReplyDeleteAre you sure today is the first notice day? First notice day is the last business day prior to the delivery month. I think that should be tomorrow Nov 30.
ReplyDeleteNot to worry. The Crimex will move to a cash settlement plus they already have the ability to use SLV shares for physical settlement.
ReplyDeleteYou are right, today is the day before first notice:
ReplyDeletehttp://www.cmegroup.com/trading/metals/precious/gold_product_calendar_futures.html
my bad. i guess i have to change my commentary a bit but it's still relevant.
I've got a good imagination, but not enough experience to understand what all of this means. What do you guys think will happen and how is it that the comex can pay somebody with slv shares if the stand for delivery of the physical metal?
ReplyDeleteSorry all, I'm a newbie. Thanks for the hand holding :)
re newbie: what this means is that right now if all the open longs on the comex in gold and silver stand for delivery, the comex will default. i doubt that will happen this time around but eventually it will happen.
ReplyDeleteas for the SLV thing, the "issuer" or the party who is delivering silver/gold can offer the "stopper" - the receiver - GLD or SLV in lieu of actual physical gold, since theoretically it is possible to get your delivery from GLD/SLV if you have enough shares. BOTH sides have to agree to this. I have no idea how much this actually happens.
Here's the latest CME report: DEC OI has reduced to 5251 contracts. That's not exactly CRIMEX busting #. :-(
ReplyDeletehttp://www.cmegroup.com/daily_bulletin/Section62_Metals_Futures_Products_2010230.pdf
This is old news, its called naked shorting and it is how our entire system runs. This will not drive up the cost of silver and gold. In fact the dollar is in an uptrend and gold and silver will pull back. I wouldn't buy at these levels but that's just me.
ReplyDeleteDave in Denver - The comex will not default. There will be a cash settlement.
ReplyDeleteDelivery notice report for Dec 1st 2010 is out and shockingly only 0.3% of required amount of silver will be delivered.
ReplyDeleteAnd from this amount, over 60% will go to JP Morgan.
For entire analysis go to AgAuPM.com
Wrong Andy... You're thinking in the past when an increasing dollar index meant gold and silver automatically went the other way. Things have changed. The euro is tanking which automatically means the dollar index goes up. But the difference is gold and silver are now going up along with the dollar index and are in fact outperforming it. That's because people want something that will increase in real value while all the pieces of paper collectively get flushed down the toilet.
ReplyDeleteI'm not sure what everyone means when they say the "comex will default," but my understanding is that there's absolutely no guarantee one will get physical delivery when buying futures contracts. They have a "cash settlement" feature for a reason. The problem occurs when lots of contract holders stand for delivery but are forced to take cash because if they actually wanted physical they'll then have to scramble to find it on the open market which will at the very least drive physical premiums higher and will probably also result in the same players taking out more futures contracts to offset their future risk.
ReplyDeletere: cash settlement on Comex
ReplyDeleteTHAT is a de facto default. In fact, the fact that the COmex intalled the ability to deliver SLV or GLD in lieu of the actual metal tells you the Comex has a problem.
Look for exceptions to be made for those who have violated the law and can't deliver on their contracts. This is the world we live in. Both the media and the government actively support the corruption that exists, virtually ensuring the story will die in a whimper. Look for margin requirements to be raised dramatically in the days ahead to force liquidations of long positions in silver and gold. Also, accounts facing delivery obligations will be rolled over more easily to future months. Finally, a "cash determination" policy will be imposed on all long positions still in the game for physical product no longer available. Take it or leave it; either way, you have no say. And expect additional rule-breaking decisions as well, but not so much as a whisper about them in the news.
ReplyDeleteBUY Silver Bullion : http://silveristhenew.wordpress.com/where-to-buy-silver-as-an-investment/
ReplyDeleteDoes not matter world wide pressure will cause an increase in silver prices even with the games played here in the states.
ReplyDelete