Another Thought Experiment

About a month ago, I was maligned and pilloried by some detractors for having the audacity to suggest that the reported Comex vault stock numbers were obviously dubious. Other bloggers suggested that the deposits in question were easily explained by the deposit of 99.99% pure, Asian kilobars. OK, maybe. For fun today, I thought we'd take these folks at their word and see where it leads us.

First, some histoire....

Back in the middle of October, some very odd and very precise deposits were made into the eligible vault of JPMorgan. Over three days, the total amount of gold booked in was exactly and precisely ten metric tonnes. It looked like this:

These oddly precise eligible deposits prompted me to write this: http://www.tfmetalsreport.com/blog/5182/more-deception-comex

The chagrin and malignment came about when it was suggested that, instead of being "bullshit", these deposits are simply the reflection of Kilobars of gold being deposited at The Comex.  Of course, given that dealings on the Comex are so deliberately opaque that the CME Group itself "disclaims all liability whatsoever with regard to the accuracy or completeness" of these reports, there's no point in continuing to debate whether or not these are simple paper shenanigans or Kilobar deposits. We can't know for certain so, in the end, we are just arguing for arguments sake and getting nowhere.

So, today, I thought it'd be more fun to just simply take as fact and accurate the CME Group reports. Let's go ahead and presume that the deposits of late October really were perfect, one kilogram bars....and then let's see where that takes us. And, again, a disclaimer: I'm not claiming to have all of the answers here. This is just a thought experiment and I'm simply trying to lay out the information that I see every day and asking you for your opinion. What do you think?

POINT #1

Some have suggested a simple explanation for the 10 metric ton delivery in October. This addition was the gold that JPM stopped during the October Comex gold delivery process. Hmmm. OK. But here's the problem. JPM only stopped 1,054 contracts that month between their House and Customer accounts. That works out to be about 3 1/3 metric tonnes, yet JPM booked in 10 metric tonnes over the three days in question. Again, hmmm.

JPM also stopped 3,414 contracts in August and that's a little more than 10 tonnes. Could the October bookings simply be the delivery to their vaults of the August metal? That seems plausible, I guess, but more likely just leads us to...

POINT #2

Here's how the Comex math works. According to the CME Rulebook (http://www.cmegroup.com/rulebook/NYMEX/1a/113.pdf), this is how deposits and deliveries are accounted:

The contract for delivery on futures contracts shall be one hundred (100) troy ounces of gold with a weight tolerance of 5% either higher or lower. Gold delivered under this contract shall assay to a minimum of 995 fineness and must be an Approved Brand.

Gold meeting all of the following specifications shall be deliverable in satisfaction of futures contract delivery obligations under this rule:

  1. Either one (1) 100 troy ounce bar, or three (3) one (1) kilo bars.

  2. Gold must consist of one or more of the Exchange’s approved brand marks, as provided in Chapter 7, current at the date of the delivery of contract.

  3. Each bar of Eligible gold must have the weight, fineness, bar number, and brand mark clearly incised on the bar. The weight may be in troy ounces or grams. If the weight is in grams, it must be converted to troy ounces for documentation purposes by dividing the weight in grams by 31.1035 and rounding to the nearest one hundredth of a troy ounce. All documentation must illustrate the weight in troy ounces.

  4. Each Warrant issued by a Licensed Depository shall reference the serial number and name of the Approved Producer of each bar.

  5. Each assay certificate issued by an Approved Assayer shall certify that each bar of gold in the lot assays no less than 995 fineness and weight of each bar and the name of the Approved Producer that produced each bar.

  6. Upon receipt of the gold bar by the Licensed Depository who must also qualify and be designated a Licensed Weighmaster for gold, each gold bar shall be weighed in the lot measured to 1/100 of a troy ounce (two decimal points). In accomplishing such measurement, each bar shall be weighed to the nearest 1/1000 of a troy ounce (three decimal points); weights of 4/1000 of a troy ounce or less shall be rounded down to the nearest 1/100 of a troy ounce and weights of 5/1000 of a troy ounce or more shall be rounded up to the nearest 1/100 of a troy ounce.

OK, now this is getting interesting. There are several things to note here.

  • Comex good delivery bars are 995 fineness. This is important because the "Asian Standard" that so many folks are discussing these days is 999 fineness. A difference that is not insignificant. Because of this variance in quality, it would seem quite foolish for an owner of a 999 bar to "register" and sell it on The Comex.
  • Time for a little math. Point #3 from the rulebook states: If the weight is in grams, it must be converted to troy ounces for documentation purposes by dividing the weight in grams by 31.1035 and rounding to the nearest one hundredth of a troy ounce.  Hmmm. The actual math then looks like this: One Kilogram = 1000 grams. Divide 1000 grams by 31.1035 and you get 32.1507226 troy ounces. The CME ten says you can "round to the nearest hundredth". This give us 32.15. Multiply that by 1000 and you get...VOILA...32,150.000 troy ounces for every 1000 Kilobars deposited.
  • Problem solved.
  • Not quite.
  • Where I take issue with this is in the accounting. Remember, we're dealing with bankers and bean counters here. They often do not take kindly to "rounding errors". What if we don't "round to the nearest hundredth"? The math changes slightly. Not much to begin with but, with increasing size, it becomes significant.
  • 32.1507226 X 1000 ounces = 32,150.7226. Note that this is NOT 32,150.000. There's 0.7226 troy ounces of gold "lost" in each of these one metric ton bookings. For just one metric ton, that's about $1000. Maybe not much to you and I but, to a soulless, greedy banker, a $1000 rounding error should raise some eyebrows.
  • Then, when you book in ten metric tonnes this way, the error becomes 7.226 troy onces. At current prices this is about $9000. Now we're talking some more serious cheese.

POINT #3

Let's get back to the "fineness" issue. If we're dealing in Kilobars, it is very likely, given all of the reports of Asian demand and refinery backlogs, and given the method through which they were booked in, that the Kilobars allegedly deposited into JPM's eligible vault are of the 999 fineness variety. IF THAT'S THE CASE, these bars are not, and will not, ever be switched to registered. Why? Because the owner would be crazy to do so. If the minimum Comex standard is 995 then, as stated in Point #2 above, wouldn't it seem foolish to sell your 999 bars in New York? Therefore, the only likely way that a 999 bar would ever be registered and sold is if The Comex changes their purity rules. (Hold onto that thought. We'll get back to that in a minute.)

Perhaps here we have actually stumbled upon our answer to this entire riddle:

  • These really are Kilobars, temporarily held for safekeeping in the NY vault of JPM, before being shipped overseas.
  • They are the product of American refiners. They are perfect, brand new 1KG bars destines for China etc. The JPM bankers don't necessarily care about the rounding errors because the very same bars will soon be shipped back out of the vaults, to destinations East.
  • If this is the case, we should eventually see equivalent, ten metric ton withdrawals take place. So far though, in the 2 months since, this hasn't happened. In fact, quite the opposite, which leads us to...

POINT #4

Last Wednesday, JPM booked in another perfect and precise, two metric tonnes of eligible gold. But that wasn't the only day...the four days since have all seen identical deposits. This makes five, consecutive days of exact and precise, two metric ton deposits. It looks like this:

(As rounding errors go, now we're really getting somewhere. 20 metric tonnes X 0.7726 troy ounces/ton = 14.452 troy ounces. Misplacing/disregarding 14.452 troy ounces equals almost $18,000 at current prices.)

Again, some might suggest that this is simply the gold that JPM has stopped during the December delivery month. As we've painstakingly noted each day, JPM has now stopped exactly 5,000 of the total 5,207 December deliveries or 96%. Five thousand contracts is 500,000 ounces and, as shown above, over the past five days JPM has taken delivery of about 643,000 ounces.

But now what do you make of this? Below is the CME Gold Stocks report for November 29, right before the December delivery period began. Note the inventory levels of HSBC and Scotia. Why? Since this report was generated, the House account of HSBC has issued/delivered 2,939 contracts (293,900 ounces) and the House account of Scotia has delivered another 1,225 (122,500 ounces). Here's the 11/29 report:

And here's another look at the report from yesterday:

Note the changes. The amount of gold in the vaults of each have gone UP, not down. In fact, if you go back to the report of 12/9, you'll see that HSBC even got in on the 32,150.000 act:

POINT #5

And I guess this is the main point...These "markets" are broken. The futures markets were set up as a place where producers could hedge and manage risk. Speculators were free to take the other side of these trades if they felt they could profit. Underlying these exchanges was the promise to actually deliver the physical commodity. Without this promise and process, you have an empty shell...a "market" comprised of nothing but paper derivatives and deliveries made with book-entries and the shuffling of warrants and warehouse receipts. The Comex was not designed to "discover price" but that's exactly what it does, and it does so at the whim of HFT speculators and bullion banks. And this has real world consequences.

Look at the past two weeks of market activity. There has been tremendous volatility with price swings from day-to-day of 2-4%. The CFTC-generated CoT reports demonstrably show that all of this price action was due to the squeezing of Spec shorts one day, only to have them and replaced and put back on the next. Nowhere in this price action were the real world, supply and demand fundamentals of the producers ever in play. You tell me, did the fundamentals for silver mining production suddenly improve on December 10th, when price surged 62¢ or 3%? If so, then the fundamentals must have immediately turned back around two days later when price fell by 90¢ on December 12th.

The global pricing mechanism for precious metal is now almost entirely the domain of speculating hedge funds and bullion banks. They do this through The Comex where rarely, if ever, anyone has to deliver against a paper short obligation. By rigging and momo-chasing prices lower, the banks and hedgies are forcing mining companies out of business and real jobs are being lost, often in places where there is no alternative employment. Lives and families are ruined, all to prop up confidence in The Great Ponzi and enrich and fatten some banker bonus pools.

The good news is...Like all fraudulent schemes that distort the laws of supply and demand, this pricing structure will eventually come to and end. For me, it can't happen soon enough.

POINT #6

Just for fun, let's explore one other option....and this is pure speculation and conjecture.

So the question (thought experiment) becomes...Is China planning a takeover/buyout of The Comex? It would seem that The Chinese are readying themselves to dominate metals trading in the 21st Century...They own the LME already and Shanghai is supplanting London as the world's largest volume precious metal delivery hub. Why not take global control of precious metal futures, too?

IF that were to happen, what would this mean for price? With "control" of precious metals futures pricing and trading, would The Chinese perpetuate the manipulation or would they eliminate it? If The Chinese are moving toward the eventual backing of the yuan/renminbi with gold and/or silver, would it benefit them to have higher prices or lower, once they have physically taken control of the majority of the world's gold?

Whoa. That's some heavy stuff. I've been mentally compiling this post for about a week and then physically typing it for the past three hours. Can you now see why it has taken so long? Anyway, welcome to my world! Please roll this information and these ideas around in your head for a while. Let me know what you think. Once again, maybe old William of Ockham provides the best answer....Newly-minted, American-made Kilobars, temporarily stored in JPM's New York vault, on their way to wherever. Then again, maybe not...

TF

139 Comments

Mickey's picture

long post

metals getting killed now-probably time to buy

Danforth Coxwell's picture

YIKES!!!!!!

Interesting indeed.

why do I even bother's picture

WWF Smackdown!

The China Syndrome - it's gone critical, and the meltdown momentum is taking us to (and through) the Centre of the Earth

http://ia.media-imdb.com/images/M/MV5BMTY5NjU3MjIwOF5BMl5BanBnXkFtZTYwMDMxNDY5._V1_SY317_CR3,0,214,317_.jpg

Buy Buy Buy! (I just picked up 120 grammes at way below spot price from a panicked seller!)

ivars's picture

These tons into JPM vaults

These tons into JPM vaults are coming most likely  from USG controlled vaults, as October deal between government and international bankers presupposes gold price suppression will continue. I understand if JPM has more gold in COMEX vaults it looks like there is enough gold for delivery at usual ratio 1 oz delivered :100 Oz short contracts. 

Owners were either USG, unsuspicious ( not anymore) foreign owners or private wealth hoarders subscribing to deal ( their gain- real assets during coming deflation- deflation organized by USG together with FED). 

I do not think China will be let anywhere near this thing..though it can be used as threat, of course against USG. 

Dagney Taggart's picture

Sorry, I had to repeat....

I love this guy's Twitter feed....

https://twitter.com/RudyHavenstein

"I also tapered in 1923. One day I only printed 60,000 trillion marks."

Sorry I haven't been around lately. Our public sector contracts are getting a little, let's say, ...... odd. Our guv liaisons are acting, let's say ...... indecisive and paranoid? Unfortunately I cannot give any details. But I will if it shows up in the news.

@Turd: Goodbye guvs, hello corporatocracy. Who here actually believes that ruling party in China truly cares 1 cent about the financial health and wealth preservation of honest, productive people around the world?

PS. @ivars: I think I just saw Germany's rerererererererererererererere-hypothecated gold whiz by.

Mudsharkbytes's picture

Too bummed to say

sixth.

Turd Ferguson's picture

And if you're keeping score at home...

MODERATOR

The streak of consecutive days with identical, precise and exact 2-ton deposits stopped today at five. Today's sheet:
 

¤'s picture

Chinese takeover of Comex

No. That seems highly improbable.

The US wouldn't allow that to happen given the historic uneasy/confrontational relationship the countries have mostly had towards each other and especially so as a military/territorial dispute deepens over in the China Sea.

China seeks to marginalize the USD and US so I don't see why the US would allow a Comex takeover.

I mean after all....they're playing naval warship chicken at this point in time so a Chinese Comex takeover seems highly unlikely and given the Fed news today my focus is on that reality.

Another better gold price entry level seems close at hand....I hope! Sub $1180 at some point seems likely (not for long is my guess) as this new taper talk reality and news cycle is about to kick into another gear going forward well into 2014.

why do I even bother's picture

LME

Come on, Turd - you know that the LME doesn't trade in Precious Metals.........

If the Chinese were planning an international coup on the Gold markets, they would go for the Singapore Exchanges first....

To be frank, I wouldn't be at all surprised if the Kilo bars originally came from some 'dark pool' created during the Reagan era, and directly associated with Marcos / Contra / Bush Dynasty shenanigans. If you read up on how much physical bullion Marcos shipped out of the Philippines when he went into exile in Hawaii in the mid-80's, ANYTHING is possible. For their 24th wedding anniversary, Imelda gave him a handmade Gucci briefcase with 24 x 1 Kg Gold bars inlaid into it....

tyberious's picture

After 100 years of the

After 100 years of the Federal Reserve's secretive policies, I think it's about time you and I pull back the curtain and take a peek at exactly what the Fed is doing.

But Senate Majority Leader Harry Reid is just fine with keeping Americans in the dark about the Fed's activities.

With the cloture vote scheduled for Friday on Janet Yellen's nomination to succeed Ben Bernanke I hope you will take IMMEDIATE action to send a message to my colleagues that you won't stand for squandering another opportunity to bring transparency to the Fed.

So I hope you'll sign your emergency "Audit the Fed" fax petition right away.

After the trillions in bailouts and the disastrous easy money policies that have devalued the dollar and wrecked our economy, I think you and I have a right to know the extent of the Fed's manipulations.

And it's up to you and me to charge through Harry Reid's roadblocks.

That will only happen if I can flood the offices of your Senators with tens of thousands of petitions from Americans who are outraged that the Fed has been able to operate in the shadows without any hint of accountability.

Click to sign

Only a grassroots uprising can prevent Harry Reid from greasing Janet Yellen's nomination through the Senate without holding a vote on my Audit the Fed bill.

Will you stand with me in this fight?

You see, the Federal Reserve is in the spotlight like never before.

I can't imagine how my colleagues in the Senate could explain refusing to audit the Federal Reserve.

So help me stand up to Harry Reid blocking transparency at Fed by signing your emergency "Audit the Fed" fax petition right away.

Send a clear message to your Senators that MUST vote against cloture for Janet Yellen's nomination as long as Harry Reid refuses to schedule a vote on Audit the Fed.

Thank you for your action.

In Liberty,

Senator Rand Paul

P.S.  After you sign your petition, please chip in a contribution so I can continue to lead the fight in the Senate to Audit the Fed.

Turd Ferguson's picture

Did you read the post?

MODERATOR

IT IS CLEARLY STATED THAT THE LME TRADES INDUSTRIAL METALS.

"And, just last year, the London Metal Exchange (LME), the world's largest market for industrial metal futures, was purchased by....wait for it...Hong Kong Exchange and Clearing Limited."

"It would seem that The Chinese are readying themselves to dominate metals trading in the 21st Century." NOTE THAT I DID NOT SAY "PRECIOUS" METALS, JUST METALS.

Response to: LME
SamSchlepps's picture

Young Grasshopper - the circle is now complete

Gold is recycled from "China friendly hands" to eligible to registered to specific deliveries back to "China friendly hands". Thank you again JPM - always working for its customers

Gold manipulation can continue and leverage / banking system intact, more physical gold can be attracted to "China friendly hands" with continued low prices, Goldman Sachs can be right even if they are part of the instigating crowd, the USG can pursue its reserve currency take, and war is advanced in desolate islands and Saharan desert climates.

The USA blinked and lost Syria and Ukraine. Then they folded to Iran. Now they have stepped way way back from the Iran deal, crossed paths (ship wise) with the Chinese, on the verge of a "lets spend more now" budget.

Situation normal - we do live in interesting times.

And to paraphrase Santelli's last words today - We have had and are going to have eight (8) years of zero interest rates - what does that say about the US and world economy? Situation normal?

bullion only's picture

I'll post again

From the previous thread:

816 tons of gold at Gld if in fact they have all they say. In a week or so we will see a 7 handle on it. Maybe that is a psychologically significent number like old going up in the early days each 100$ milestone was a point of great resistance. 

So at this rate maybe two years til empty but no one waits til empty to panic. Remember the saying, "He who panics first, panics best"?

So I wonder what the inflection point will be. 500 tons? 400? But it won't be 0 tons. Too late then.

But the real question is where will the physical come from to satisfy Russia, China, India and the middle east?

Will a mysterious 1000 tons show up from somewhere?

We shall see. Sooner or later we shall see.

RT

So does that mean there will always be gold to meet the comex deliveries? From this dark pool of gold?

When will this ever end? Will the dark pool fund the next accumulation of physical from GLD?

My goodness what a racket. 

At least we are not bitcoin. Would not have wanted to buy in at the top.

Of course bitcoin will be regulated. How else can it be taxed. Just like cash. If you want to use any large amount in the system you have to prove how you got it and that you paid taxes on it.

Called paying the vig.

tyberious's picture

Yamashita's gold

A court judgment convinces me!

Rogelio Roxas lawsuit

In March 1988, a Filipino treasure hunters named [Erwin Yabut and Alvin Calma] filed a lawsuit in the state of Hawaii against the former president of the Philippines, Ferdinand Marcos and his wife Imelda Marcos for theft and human rights abuses. Roxas claimed that in Baguio City in 1961 he met the son of a former member of the Japanese army who mapped for him the location of the legendary Yamashita Treasure. Roxas claimed a second man, who served as Yamashita's interpreter during the Second World War, told him of visiting an underground chamber there where stores of gold and silver were kept, and who told of a golden buddha kept at a convent located near the underground chambers. Roxas claimed that within the next few years he formed a group to search for the treasure, and obtained a permit for the purpose from a relative of Ferdinand, Judge Pio Marcos. In 1971, Roxas claimed, he and his group uncovered an enclosed chamber on state lands near Baguio City where he found bayonets, samurai swords, radios, and skeletal remains dressed in a Japanese military uniform. Also found in the chamber, Roxas claimed, were a 3-foot-high (0.91 m) golden-colored Buddha and numerous stacked crates which filled an area approximately 6 feet x 6 feet x 35 feet. He claimed he opened just one of the boxes, and found it packed with gold bullion. He said he took from the chamber the golden Buddha, which he estimated to weigh 1,000 kilograms, and one box with twenty-four gold bars, and hid them in his home. He claimed he resealed the chamber for safekeeping until he could arrange the removal of the remaining boxes, which he suspected were also filled with gold bars. Roxas said he sold seven of the gold bars from the opened box, and sought potential buyers for the golden Buddha. Two individuals representing prospective buyers examined and tested the metal in the Buddha, Roxas said, and reported it was made of solid, 20-carat gold. It was soon after this, Roxas claimed, that President Ferdinand Marcos learned of Roxas' discovery and ordered him arrested, beaten, and the Buddha and remaining gold seized. Roxas alleged that in retaliation to his vocal campaign to reclaim the Buddha and the remainder of the treasure taken from him, Ferdinand continued to have Roxas threatened, beaten and eventually incarcerated for over a year.[3]

Following his release, Roxas put his claims against Marcos on hold until Ferdinand lost the presidency in 1986. But in 1988, Roxas and the Golden Budha Corporation, which now held the ownership rights to the treasure Roxas claims was stolen from him, filed suit against Ferdinand and wife Imelda in a Hawaiian state court seeking damages for the theft and the surrounding human rights abuses committed against Roxas. Roxas died on the eve of trial,[11] but prior to his death he gave the deposition testimony that would be later used in evidence. In 1996, the Roxas estate and the Golden Budha Corporation received what was then largest judgment ever awarded in history, $22 billion which with interest increased to $40.5 billion.[12] In 1998, The Hawaii Supreme Court held that there was sufficient evidence to support the jury's finding that Roxas found the treasure and that Marcos converted it. However, the court reversed the damage award, holding that the $22 billion award of damages for the chamber full of gold was too speculative, as there was no evidence of quantity or quality, and ordered a new hearing on the value of the golden Buddha and 17 bars of gold only.[3] After several more years of legal proceedings, the Golden Budha Corporation obtained a final judgment against Imelda Marcos to the extent of her interest in the Marcos estate in the principal amount of $13,275,848.37 and Roxas’ estate obtained a $6 million judgment on the claim for human right abuse.[13]

This lawsuit ultimately concluded that Roxas found a treasure, and although the Hawaiian state court was not required to determine whether this particular treasure was the legendary Yamashita’s gold, the testimony relied upon by the court in reaching its conclusion pointed in that direction. Roxas was allegedly following a map from the son of a Japanese soldier; Roxas allegedly relied on tips provided from Yamashita’s interpreter; and Roxas allegedly found samurai swords and the skeletons of dead Japanese soldiers in the treasure chamber. All this led the United States Ninth Circuit Court of Appeal to summarize the allegations leading to Roxas’ final judgment as follows: "The Yamashita Treasure was found by Roxas and stolen from Roxas by Marcos' men." [14]

http://en.wikipedia.org/wiki/Yamashita%27s_gold

why do I even bother's picture

Reading the post

Calm down, Turd

the gist of my Comment was about the putative origin of the 1 kilo Bars - I thought your LME remarks were simply Red Herrings, and whether or not that exchange would or would not be relevant in the context of a Chinese attempt to doninate world metals trading, my point was that I am sure they would try to secure control of the Singapore exchanges first

A propos the Olly North / Iran / Contra / Marcos 'dark pool' I mentioned - on March 17, 1986 the Archdiocese of San Francisco in California announced that they had uncovered a gold deal involving 5,000 tons of gold bullion allegedly connected to the government of deposed president Marcos. http://www.bibliotecapleyades.net/sociopolitica/secretgoldtreaty/letter_appendix8.htm

Taking away the October and December deposits in JP Morgan's Eligible account, that leaves around 4,990,000 Kilo bars floating around and waiting to be laundered onto the open market

Dagney Taggart's picture

Sitting here, face-palming

How can I help but sit here and laugh at such gullibility?

I hope our American friends here will make a mental note that this will not end with a whimper. The globalist criminals doing the manipulating have not come all this way in countries around the world to simply pack up and disappear in the middle of the night with the wealth and quietly hand power back to whoever gets to the empty throne first.

This whole show was all preconceived for a reason. The manipulators appear to be losing. And what do cornered paranoid psychopaths do when they are on the verge of being caught? Get rid of the useful idiots doing their dirty work and burn the house down is what. See Nero. See Kissinger's sentiments toward American soldiers.

When the plug is pulled (marked by yet another hollywood-worthy circus routine), are Americans going to wet their shorts and buy the "it's the terrorists' fault" meme again or will they finally blame their own gullibility and lack of historical knowledge?

RockerBoxer's picture

Purple Oil for tomorrow...

ApcuXaQ.png

Guy's picture

Would China allow JPM to store their gold?

Hi Turd,

Again applying Occam's razor to the matter, if you were China, would you allow a bunch of bankers from JPM to hold your gold in NY? And allow it to be sent to you over seven years like Zee German Gold?

Nah, didn't think so - you probably would ask for it expedited to Beijing/Shanghai/Hong Kong pronto on the next flight.

IMHO, probably paper gold from GLD entering the vaults instead of the real stuff.

MountainMan's picture

Brace For Impact. $1200 Set to Fall.

Next stop, $1100.

agNau's picture

Spot on DT.....

They will never accept blame.
As simple as predicting the sun's rise.

Incoming!

kardnul's picture

A scary..scary thought

So the question (thought experiment) becomes...Is China planning a takeover/buyout of The Comex?

-----------------------------------------------------------------------------

Whoa Turd that is a really scary thought...one that should give the Exchange Stabilization Fund nightmares...lol

Doubt they would allow that...just my opinion, however.

Great post BTW...love those thought experiments.

abguy4's picture

Kabuki Theater to keep the masses diverted?

I see no reason the Chinese can not, or would not, take over the COMEX. In fact it would serve TPTB very nicely.

I totally disregard the Kabuki theater with war toys going on in the S. China sea. Keeps those stiff backed brain-washed soldier puppets occupied and feeling powerful doesn't it? Makes them feel part of the game. That's all that amounts to.

I was studying that map of the location of the Central Bank franchise locations. There are more than a few CB's in China - more than in the US of A. So no big deal if they have a paper transfer of ownership of a metals exchange from one local to the other. See the LME 'sale' for confirmation of that. And besides, it would be perfect timing to close-up the 'American' COMEX and open the 'CHINA' COMEX, since the sh_t is about to hit the fan for the American criminals running that faux exchange. A "Sale" would be a perfect cover-up for all those criminal activities, and it would be sooo much cleaner than  a forfeiture or default. As turd said, the 'sale' of the London LME went un-noticed, and all those despicable criminals snuck off into the night with all their ill-gotten gains, did they not? So the plan appears to be, let the Chinaman take over the exchanges. It's just a change of hired actors in the Big Play. The question remains; do the Chinese even pretend to make the Big Players play fair? That would represent a direct confrontation with JPM/US Treasury/da Fed/bullion banks.

Boy, from where I sit---Not likely.

And so, I ask the question back to the peanut gallery; Is the,''political stalemate/confrontation", (cough-cough) between US and China, anything more than just more of the same ole Kabuki Theater to keep the masses diverted? Ever see Kabuki theater where the guy in the ''Good'' mask exchanges masks with the guy in the "Bad" mask? And the Play just goes on.................................

SilverRunNW's picture

If I wanted delivery of just

If I wanted delivery of just one comex gold contract, and I received 3 kilo bars, I'd be short 3.5478322 ounces of gold.   Hmm, would they give me cash to make up the difference?

Turd, you covered a lot information and obviously put in a lot of work and thought energy into this.  I appreciate the hard effort and mental stamina to put it all together. 

I just can't understand how 5,207 DEC deliveries so far this month have occurred, yet the inventory has magically increased.  When a delivery actually gets "stopped", how many days are required to get the delivery out the door (or warrant/title transfer), and the actual inventory reduction entry in the CME reports?   When the month closes, those reports may change significantly.  But who really knows?

What an opaque farce!

buzlightening's picture

Dagney Taggart

Yup! I call it the scortched earth but we're on the same page.  Cry baby losers will kick the entire playing board over.  Just a game for those past feeling and can't even take losing a game.  Well, what will it take to run a blazing infernal smoke screen from the black hearted?  Any one with a conscience couldn't go there, so it will be as always.  Something so incredible, horrific, and monstrous; anyone with a soul will never believe who's really behind it.  My! Oh my!  With the taper today which so many said was impossible for the fed, you and I both know we're very close to whatever?

chucka's picture

Turd, Do you still expect the

Turd,
Do you still expect the june loes to hold?

4 oz's picture

Thanks Turd

Thanks Turd, as always you are a fun read.
 
Plenty of things out there to catch and distract the eye.
Maybe I'm too simple of a person; Just want to keep the main thing---the main thing.
Seems to me the rubber meets the road question still is, are PM's available---can I get some today If I choose to??
Turd Ferguson's picture

I'm guess I've become a

MODERATOR

I'm guess I've become a little sensitive to things being taken out of context or inaccurately repeated.

Response to: Reading the post
Kcap's picture

Lets make sense of today's FOMC decision to "taper"

The "taper" of today is the Fed's alibi of tomorrow.

What...Kcap?

Let me explain.

When the Fed tapers today, it sends the message all is getting better.  This is why the stock market roared higher.  Bonds sold off and the 10yr is at about 2.9%, soon to crest over 3%.

Then they telegraph that future "tapers" will happen at subsequent FOMC meetings.  Again, their alibi.

When you look back on this time, you will see a Fed, confident that the economy was getting better and the stock market was strong.  Thus, the taper.  (Time to take the economy off life support)

HOWEVER....

The economy desperately needs this life support.  Without it, it will crumble.  They know this.  So, when the next crisis hits (sometime between now and tax day or so), they can say, we were WELL ON THE PATH TO RECOVERY....and refer to December 2013 when they started to taper.  They'll say....see?  and we were all set to taper more, until.......(fill-in-the-blank-crisis hits)  Its their alibi.  Now....its off their shoulders.  Their temporal marker of all is well, is now staked into history at this time.

But, when this next crisis hits, it will start slowly and the envelop everything, taking so much of todays system with it.  A new monetary order will be rolled out, with people practically begging, but not before QE goes ballistic in a very quick 1-2 year or so blitz.  Then reset.

Gold/silver will do fine.  2014 for a bit, may not be so great.  It'll be clear when it is.  EOY '14, should see G/S within striking distance of all time highs.

Merry CHRISTmas to you and yours.

Kcap

why do I even bother's picture

This article explains a lot, in very clear terms

http://rikgreeninvestorforum.blogspot.co.uk/2013/12/comex-gold-futures-settlement-activity.html

I have been trying to keep up with Jesse, Harvey and Turd - but even by their own admission, divining COMEX inventories is a Black Art rather than a science

What I get is approximately as follows

  1. Trying to track Open Interest in the DEC13 contract vs Registered Inventory is a hiding to nothing - they can just attach a Warrant to Eligible and switch it into the deliverable category
     
  2. Even when a contract is Stopped (i.e. delivered against), there probably isn't any discernible corresponding shift in Registered inventories, because only the Warrant changes hands, whilst the physical metal stays put
     
  3. JP Morgan may already own Warrants in respect of most of the Registered gold currently held in all of the other dealer inventories; with 2,000+ contracts still left to settle, this may put some pressure on Scotia and HSBC, and that may perhaps explain the repeated switches from their Eligible into their Registered accounts (presumably reflecting Customer business, rather than prop trading)
     
  4. JP Morgan can say pretty much whatever it wants to say - 2 tons comes into Eligible, the own x thousand ounces in Registered, the Moon is made of Cheese - nobody is holding them to account, nobody is auditing their figures, COMEX has a blanket disclaimer, and the regulators are quite clearly oblivious to the fact that JP Morgan has cornered 96% of the December market
     
  5. Turd is almost certainly right that the day-to-day spikiness is just JP Morgan joshing with the Specs; however, it is almost certainly not just one game that is being played, and the Systematic Suppression theme remains dominant. As we all know, Fundamentals are, like, soooooooo old-fashioned, and all we can do is hunker down until something snaps and the market turns upwards again. It could be a long, lonely wait
     
  6. This nonsense can't go on for ever, and the Pass-the-empty-Parcel (i.e. Warrant) game is sure to come to an end when the music stops and can't either cover their position or deliver. I am with Jesse in believing that this is far more likely to happen in London (GLD) rather than on COMEX, but it's COMEX's business franchise which will collapse
     
  7. And so, where is China in all of this? China the country of 1.3 billion people certainly is hoovering up physical metal - I live there, and I can buy Pandas in the UK and sell them retail in Shenzhen for close to $150/oz markup. How about China the Communist Regime? I'm not so sure that they either have a Master Plan to dominate the PM world, or that they are planning to Gold-back the Renminbi any time soon, but they would be fools if they weren't hedging - against inflation, collapse in the US$ and, for that matter, things hotting up in the South China Sea. Their last recorded Reserves were tiny, and some people suspect that they may by now have amassed as much physical gold as Germany; personally, I suspect they may have passed that milestone some very considerable time ago
     
  8. And so, to Germany. To my mind, the critical point of the '7 years to find 300 tons' debacle was not that the Fed Reserve didn't have enough Gold, but that the Germans already knew that, and that's why they called their bluff. All financial markets operate on faith, trust and credibility, and if the Germans trusted the USA, then why did they ask for their gold back?
     
  9. One thing is for sure - whether or not the price is manipulated, Gold still remains at the very core of monetary policy, economics and investor sentiment; if the Fed and the IMF didn't care about it, then why go out of their way to discredit and suppress it?
     
  10. But my overall conclusion is that we only ever get to see what is going on through a glass, darkly. There is more physical Gold sloshing around out there than ever meets the eye - whether laundered for Russian oligarchs by Deutsche Bank, or by UBS for Imelda Marcos - and the whole paperchain of leasing/naked shorting/'investing' physical gold has led to a complete distortion of the market (see for instance Finland and France's recent statement about their respective Gold reserves). This stinks to high heaven, but we can do nothing to counter it, and precious little to navigate through it. But it will change, and, as a firm believer in The Madness of Crowds, I find inspiration in the 'Bulls vs Bears' sentiment metric - as someone on Zerohedge keeps pointing out, who are you going to sell to once everyone is already short to the gills? This will change, we will cash in at a later date, but it will require the patience of a saint to hang on in there, because - unlike Turd - I sense there is further downside in this sucker yet. If Goldmans tell you its going south, that doesn't mean it should, but I still suspect that it means it will. This whole game is rigged from start to finish - as a retail Investor you only have one card to play, and it is a Trump Card: timing. Hang on in there, and He Who Laughs Last will Laugh Loudest
Dr Jerome's picture

Mountain Man

In April of 2011 a number of turdites here were calling for the price takedown. Many of us, including your's truly, ignored or shouted them down. I don't like to repeat my mistakes, but I do want to hear your rationale for 1100 gold... then we can measure it against Turd's call for 1260 in the near future.

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