JPM Continues To Hoard Gold

The gift that keeps on giving. This is so unusual that I had to write about it again.

Recall that back in July, JPM suddenly had an interest in acquiring silver through the Comex. (I say "suddenly" because, prior to July, JPM had not been nearly this active in taking Comex deliveries. See for yourself here: http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsYTDReport.pdf)

For the July silver delivery month, JPM stopped 2,824 contracts into their house account. This represented 82% of the total for all of July. If you add in the 216 additional contracts they stopped into customer account, they took down 88.3% of all July silver deliveries.

Again and for perspective, for the prior three silver delivery months, the JPM house account stopped a total of 1,250 contracts. This was just 12.7% of the total Dec12, Mar13 and May13  deliveries of 9,864 contracts.

In gold, for Dec12, Feb13, Apr13 and Jun13, the Comex delivered a total of 37,824 contracts. During those past four delivery months, JPM stopped into their house account 2,162 contracts or 5.7%. If you add in the contracts stopped into the JPM customer account, the number rises to 4,230 or 11.2%.

Yesterday, there were 58 deliveries of the August Comex gold.

The JPM house account took 53 of them.

53!

Over the past six days, there have been 874 August deliveries made for 87,400 ounces or 2.718 metric tonnes. The JPM house account has stopped 827 of them for 82,700 ounces or 2.572 metric tonnes. Stated another way, over the past six days, JPM has absorbed for itself  94.62% of all August Comex gold deliveries.

For the month, 2836 contracts have been delivered.

The JPM house account has stopped 2,033 and JPM has also stopped 263 for their customers.

Thus, for the entire month, between its house account and its customer account, JPM has stopped 2,296 of the 2,836 deliveries. That's 81%.

So, let's put all of this back together....

  • For the prior three silver delivery months, the JPM house account had accounted for just 12.7% of all Comex deliveries. In July, that number skyrocketed to 82%.
  • For the prior four gold delivery months, the JPM house account had accounted for just 5.7% of all Comex deliveries. So far for August, that number has skyrocketed to 71.7%.

And finally today, chew on this for a moment. The total amount of Comex contracts delivered last December was just 3,253. In February, we all sat up and paid attention when the number soared to 13,070. This trend continued into April when the Comex delivered 11,632 and persisted into June when the Comex delivered 9,869. Yesterday was the 12th of August. After an initial surge of deliveries in the first two days of the month when over 2,000 contracts were delivered, as noted above only 874 contracts have been delivered over the past six days.

  • Is August simply reverting back to a slow delivery month like December? The August contract still shows 1,577 in open interest (http://www.cmegroup.com/trading/metals/precious/gold_quotes_settlements_futures.html) though it's still possible for those seeking immediate delivery to "jump the queue", put up 100% margin, buy a contract and take delivery this month.
  • Jumping the queue is not unprecedented, in fact it's a normal occurrence. For example, back in April 6,601 contracts initially stood for delivery. Yet the final delivery total was 11,632 (nearly a double). And in June we saw 4,946 standing on First Notice Day yet the delivered contract total reached 9,869 (again, nearly a double). August initially had 3,960 standing. The Comex has settled 2,836 and open interest is still 1,577 meaning 400 or so have jumped the queue so far this month and bought August gold for delivery after FND.
  • What happens if, over the next few days, another 4,000-5,000 contracts suddenly appear for delivery? This would simply bring total August delivereis into line with Feb, April and June. What in the world would happen if this occurs again over the  next two weeks?
  • And if it does, what percentage of the total will JPM stop into their own accounts?
  • And from where will all this gold come given that total Comex stocks are already dwindling?

We'll have our answers soon, I suppose. Rest assured, I'll be right here keeping track of everything and keeping you updated.

TF

114 Comments

القراع عصفور's picture

first

i never before got to be first.  i will now go to the end of the line. smiley

but secondly, i agree with TF that the game has changed, and there is significance to JPM being the big stopper.  another poster believes that the western bankers have made a deal with China, and that is what i believe too. 

SilverTree's picture

I continue to hoard gold too.

I continue to hoard gold too.

ReachWest's picture

Interesting

Thanks Turd. So is JPM acquiring all this physical for themselves or for the Fed or some other inside player? What on earth is driving this behaviour? I believe the answer to that question is the lynchpin to everything that is about to unfold moving forward.

Turd Ferguson's picture

Posted into Pining's thread

MODERATOR

And I'm reposting it here.

Koos is a nice guy and well-connected into the Asian markets. Please be sure to read: http://koosjansen.blogspot.nl/2013/08/chinese-state-press-on-how-fed-has-been.html

Also, please be sure to read this from JS Kim: http://www.smartknowledgeu.com/blog/2013/08/the-incredible-shrinking-comex-gold-warehouse-inventories/

Turd Ferguson's picture

I believe you are 100%

MODERATOR

I believe you are 100% correct, my friend.

Lots and lots of smoke. Is there a fire anywhere other than the JPM basement?

Response to: Interesting
SRSrocco's picture

SOMETHING INTERESTING IS GOING TO UNFOLD AT THE COMEX

I have been watching the strange 8-9 million oz movement of silver from other registered vaults in JP MORGAN over the past 3 weeks.... something odd is going on.

Furthermore, I just watched one of the best damn videos on the history of money as well as the SEVEN STAGES OF EMPIRE.  Even though I have been investing and researching GOLD & SILVER for over a decade, I still learned something new from this video.  I highly recommend it:

MUST WATCH: Hidden Secrets of Money – Episode 2

http://srsroccoreport.com/must-watch-hidden-secrets-of-money-episode-2/must-watch-hidden-secrets-of-money-episode-2/

Turd Ferguson's picture

All who listened to yesterday's podcast...

MODERATOR

...were warned that today would not be a Happy Tuesday and that the price of gold would likely retreat to $1320 or so.

Hmmm. The Blind Squirrel is having a good day...

Turd Ferguson's picture

Thanks, Steve

MODERATOR

Yes, everyone should watch that!

SRSrocco's picture

TURD...BY THE WAY....

Turd... have you noticed that strange 7-8 million oz shuffle of silver in and out of the registered category every since QE3?  Here is the chart showing this strange trend:

What on earth is going on here?

steve

Hunt brother's picture

Repost from June 27....

Silver, 21 to 9 to 49 to 18.5 to 150 by Hunt brother

6 weeks 4 days ago Nietzsche was right: adversity makes you stronger    

Turd Ferguson's picture

There's been a lot of talk about backwardation

MODERATOR

Maybe...maybe...too much talk. This song is not a rebel song. This song is Sunday Bloody Sunday.

 

Contract Last Change Open High Low Volume Prev. Stl. Time Links
Cash (GCY00) 1320.63 -17.32 1337.51 1341.15 1318.84 0 1337.95 11:21 C / O / T
Aug '13 (GCQ13) 1320.7 -14.0 1331.9 1339.1 1320.2 196 1334.7 11:19 C / O / T
Sep '13 (GCU13) 1320.0 -14.9 1337.1 1340.6 1318.7 444 1334.9 11:19 C / O / T
Oct '13 (GCV13) 1320.3 -14.0 1335.6 1340.9 1318.0 3535 1334.3 11:21 C / O / T
Dec '13 (GCZ13) 1320.1 -14.1 1336.0 1341.0 1317.8 128634 1334.2 11:21 C / O / T

 

Turd Ferguson's picture

Thirty flippin years ago...

MODERATOR

At least I've got more hair left than The Edge!

Hillsie's picture

Ammunition?

Although I'd hate it and I'm long dec gold and silver I have a niggle that JPM is either accumulating metal to pay back the leases for the smash down or for one final kitchen sink moment when all this new metal is dumped onto the market in one almighty attempt to drive down prices to scare people out of the metals.......

I do hope that this a capitulation event and were headed quickly higher as I just bought 70000 December $27 covered warrants but like I said....I do have a niggle.

any thoughts turd?

Strawboss's picture

Someone posted somewhere

Someone posted somewhere (cant remember who or where) that JPM is still trying to fill old contract obligations for physical metal and are currently buying future metal to resolve past obligations (robbing Peter to pay Paul).  No idea if its true/accurate, etc... but it does make sense based on the partial information we have available to us.

Who knows...

Hillsie's picture

Payback

If this metal is for past contracts then wouldn't it go into the JPM comex registered vault and not the house vault?

CarlC's picture

great analysis

Thanks for the great write up.

SteveW's picture

Position limits?

I don't suppose the CFTC is about to impose position limits, especially for naked shorting, so that JPM is replenishing the vault in order to continue to control the PM markets?

No that's just unbelievable.

Cononish1314's picture

Sweeping pawn stars from the streets

"A chain of  high  street  outlets set up  by the  UK's  biggest pawnbroker to take  advantage of  a surge in the  price  of gold could shut down in the next 12 months after the market slumped.

Gold  Bar,  which is owned by  H&T, now has just five sites compared to 55 last  year after  being hit by a  crash in the price of the  precious metal as well as competition  from  payday  lenders.

H&T, which has 193 outlets overall,  said  pre-tax earnings  in the first half  of  the  year  were  down  39% to  £14.8  million."

[Glasgow Herald, 13 Aug 2013]

So supply isn't  just tightening in the mines.

JY896's picture

For those curious about SIFO

From the JS Kim article on ZH linked above by Turd:

"On November 2, 2012, when the LBMA stopped reporting SIFO rates because the SIFO rates "were indicative rates only and therefore not dealable rates unlike GOFO rates”, the 1, 2, 3, and 6-mo SIFOs were respectively listed as 0.62%, 0.616%, 0.618% and 0.612%. First of all, it was nice for the LBMA to finally reveal that the SIFO rates were not dealable rates, and in essence, meant nothing, when many people for years, had assumed that these reported rates were dealable rates. Secondly,  On August 12, 2013, according to data I pulled today from Thomson Reuters, the 1, 2, 3, and 6-mo SIFOs were respectively nearly unchanged from the November 2, 2012 rates nearly 2 years ago at 0.600%, 0.585%, 0.584%, and 0.595%.  The rates that used to be quoted were median rates among a very wide range of rates and thus not dealable rates. Because these silver forward rates available from Thomson Reuters are nearly identical to the last reported rates by the LBMA nearly 2 years ago, I tend to deposit them in the “rubbish” category of unusable inaccurate data."

They own the building, the pavement leading up to it, the sewers (and tunnels, don't forget the tunnels) beneath it, the people that come to work there every day, the information that comes out of it, the airspace above it and the advertising surfaces on and around it. You'll believe whatever they WANT you to believe -- and LIKE IT.

It's a good thing there are still some people who don't play that way...

atadheavy's picture

What does "Stopped for their own account" mean?

How can JPM step in and "stop" gold that someone else has already indicated they want to take delivery of? Doesn't the party giving notice of intent to take delivery have a contractual right to said gold? Said differently, how can JPM (re)direct it into their own account?  Can someone please explain?

Quixote2's picture

JPMoron

has to start acquiring for some customer the 300 MT of German gold that has to be delivered.

Turd Ferguson's picture

Stop

MODERATOR

"Stopping" is just the term for taking delivery.

In this case, they have "stopped" (taken delivery) for their own account and they also "stop" metal into their customer account.

JY896's picture

@atadheavy

To "stop a contract" in this context means to take delivery of. While no doubt done for nefarious purposes ( ;-] ), in this case JPM is merely utilizing the system in a way that seems a bit, difficult, shall we say for 'normal' folks sometimes: they are buying futures contracts, giving notice, posting collateral and receiving delivery. Or rather all of this is done on ledger (see my note above about ownership of the building and its contents), but theoretically all in line with how the 'system' is supposed to function.

Turd had a note on this recently, just can't find it now.

EDIT: (see TF's note above... he was the quicker draw)

tonyw's picture

Hoarding

just remember I prepare prudently, you stock up, they/he hoards criminally.

Nick Elway's picture

Could I say it any better myself?

From the In Gold We Trust article
Quote:
The Bundesbank shipped back to gold, the purpose is to get the right to hold gold and gold lease in the case of gold can be leased, even if nominally holding gold, but gold is not in their own hands, the difference is huge for the gold the Fed and other central banks, even if the Fed agreed to lease gold, and the Fed did not take your gold overdrafts leased out, you have to lease gold short at least have valuable information leaked to the Americans Moreover, timeliness, to the Fed what to do, you can not operate immediately, but also the face of the Americans, Americans may also make use of hedging instruments in the market targeted operation in a competitive position, especially the euro and the dollar today, Americans hold the lifeblood of very uncomfortable, not to mention the gold lease the right to choose who is a transfer of benefits, so Germany is an urgent need to grasp the initiative in the financial markets back to the gold shipped from the Federal Reserve, which is to limit the possibility of the Federal Reserve gold lease means of the so-called security reasons, I believe that an excuse factors more real security problems.

My takeaways: 

1) To be channeling Yoda, Google translate appears.

2) Even if the Fed has not leased out other country's gold as American gold, when those countries lease out their gold the Americans get valuable information as to the market operations being undertaken by the other countries.

3) Germany should be uncomfortable with Americans holding the lifeblood(gold) of the German finances and the possibility that the Americans could be leasing German gold out as if it were American gold and the Germans would not know.

The8thHabit's picture

As Turd said...

As soon as Comex closed... rally is on... right at 1:25PM...

ancientmoney's picture

The fractional reserved aspect of banking has permeated .. .

the gold industry since futures markets for gold and silver were created in mid-1970's.

Prior to this, gold was international money til Nixon ended it in 1971.

The fractional reserved system allows bankers to make money by lending out that which they don't have. It has been legal for a long, long time.

However, when the trust in the system goes away, and the people who own gold want to put their hands on it, the bankers must react accordingly.

Of course, only a precious few can actually receive phyzz; the rest must be paid out in fiat, or forced/encouraged to sell into dropping prices, so the bankers can either obtain phyzz or cancel out paper contracts.

So, why wouldn't JPM want to stop as many PM contracts as possible? What surprises me is that other banks don't do the same.

Is there some reason, some agreement that JPM is allowed to take phyzz, and other banks not allowed?

Maybe JPM is not acting for the Fed, but for BIS/IMF--the international central bank for other national central banks . . .

ancientmoney's picture

Are we seeing the preparations for a new gold-backed system?

China was allowed to obtain gold to backstop their humongous fiat reserves . . . (they had hardly any gold before Geithner went there in 2010 and again in 2012--since then, massive movements of Gold to China).

Severe price drops created by bankers so there is little interference from myriad, small investors who would clamor to get in in a rising market . . .

Demand for phyzz surprises the PTB, so they must step in to buy up PMs before too much disappears forever (bankers have unlimited fiat with which to still be able to buy anything at this point in time) . . .

It seems to me that the CBs and their aides, the BBs are trying to distribute gold across the world, to important, powerful countries.  Any guesses as to why???

ctob's picture

This may be stupid

I am not certain if this even makes sense, but it is possible that:

JPM has decided to go long physical, while these other banks are basically concentrating on making some quick fiat and thus they are allying together.  Where JPM helps them make money off of GLD contracts in the near term in excahnge for whatever physical they are willing to trade for.  So if these other banks are still short JPM help them get some money off those shorts, flip the position in a bit and then JPM and its allies just lets the ETFs crash and burn.  Where JPM goes one way and has physical and the other banks go the other way get get a pile of fiat and escape any hurt?

benque's picture

Whatever it is...

...it is evil and illegal, in the generally accepted set of Western values.

Remember how squidward (Blankfein) went secretly long WTI against his very large, and very short hedge fund customer, only to margin-call them out of existance while absorbing their short position...right at the top, no less?

Remember how Berskank and Turbo-Timmy stopped off in india on their way to China in 2010?  Remember how long after that it was that India started imposing import taxes on gold?

This recent morgue acquisition action has a real stench about it in my snuffler.  Hope it is, at least, something we can profit from.

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