Tuesday, November 30, 2010

Comex Open Interest Update...

As I mentioned in my late day addendum to yesterday's Comex post, I misread the product calendar in my haste to get a post written and jumped the gun on when first notice day is.  Today is first notice day so anyone not capable of receiving delivery of their position has to be out. 

Yesterday saw a bigger liquidation of December gold/silver than I would have expected given that gold/silver were pretty strong, relatively speaking.  With that said, the open gold o/i for December now stands at 15,195 contracts or 1.51mm ounces.  Given that the total available-to-deliver amount of gold stands at 2.6mm ozs, if even half of the open contracts take delivery, it will stress the Comex and likely push the price of gold higher.

In silver the open interest is 5,428 contracts.  This is 27.1mm ounces vs. the 48mm ounces available to deliver.  This is 56% of deliverable silver.  Again, if even half of the contracts demand delivery, the Comex will feel stress and the price of silver should squeeze higher.

Just for the record, many of us believe that the Comex is fraudulently reporting its actual amount of physical inventory in gold/silver.  Ted Butler has pointed out that SLV had a 6 million ounce withdrawal of silver last week and is speculating that this silver may be possibly intended to help cover silver deliveries on the Comex.  JP Morgan, not coincidentally, is the custodian (safekeeper) of the silver in SLV and just happens to be the largest short interest in paper silver on the planet, both via Comex futures and OTC derivatives.  You can make your own assumptions there.  It also just so happens that only 56 delivery notices were posted in silver yesterday - about 1% of the open interest - compared to gold notices which totalled 5,016 - about 33% of the open gold interest.

Again, the banks who are on the hook for deliveries have until the end of December to deliver.  Typically most of the deliveries occur early in the delivery period.  There's really not any good reason to not deliver the goods as soon as possible - that is, unless you don't have it in hand.  I will point out that our fund, twice in the past 18 months, did not receive our silver delivery until well after the contractual delivery period.  HSBC was the counterparty both times.  I have received emails from readers over the past year describing the same experience.  I think we can all see what is going on here and I believe it's part of the reason the metals are flying today.


  1. If nothing else it shows strong demand for the metal at these prices. To have any chance of smacking down the COMEX and reducing the oi they are going to have to let it blow off and bring in much weaker hands soon. The last blow off realy did very little for JPM this time they are going to have to go for a really big rise to dig themselves out.

  2. Dave,

    Speaking of flying metal, on August 23rd Silver was $17.78 and is now at $28. If a fellow held a contract worth of Silver his gains would be $51,600 over a three month period. Not bad for an average Joe. I have a feeling these are just the warm-up gains.

    Joe M.

  3. agree anonymous. good points.

    Joe, i was just looking at some charts on gold/silver - they look explosive. before silver took off earlier, i was chatting with Midas about how i thought Turk would only be off on his timing of $30 silver by a couple weeks.

    This stuff could really explode to the upside. The HUI may be doing what I thought it might start doing...the juniors are starting to really percolate.

  4. What I want to know is when are the producers going to start holding back their sales of gold. Can they not see that gold is going to go higher, and that they are starting to lose money by doing that? Rob did that at Gold Gorp in 2003, it was one of the reasons I bought shares of GG.

  5. Thought that the comments from Gene Arensberg is worth its GOLD;

    "Doesn’t that suggest that the price of silver is being determined elsewhere at the moment? As in the physical markets, not as much in the futures markets?"

  6. 11/30/2010 3:59 PM EST
    Rumor has it that the "major U.S. bank" that is the target of WikiLeaks is Bank of America. Someone supposedly unearthed a 2009 interview where WikiLeaks said it had acquired a BofA hard-drive. BAC CDS are 20bps wider on the day now, probably 12ish wider since this rumor started floating around.

  7. Eurasian Minerals popped! Up 39% today!

  8. Nothing will happen until bonuses were paid in full.

  9. Dave,
    Amidst all talk of shortage and default on comex due to Silver, there are ample 30Kg Chinese exported Silver bars available in Indian market. So, I feel it is bit too early to talk of default on COMEX.
    Just wanted to add my observation from a very far off place.

    From India

  10. Thanks for the input India. I agree. A true Comex default is likely not going to happen anytime soon. At the point the Comex defaults is the point when our system goes into collapse.