Wrapping Up July Comex Silver Deliveries
As we first reported two weeks ago, deliveries of July silver on the Comex were quite unusual. And the rest of the month only served to add to the spectacle.
Back on July 15, this initial post on July silver deliveries was made: http://www.tfmetalsreport.com/blog/7000/another-comex-oddity
Though I urge you to review the entire article, the crux of the post was this:
MARCH 2015: 3,142 still open at expiration. 1,539 still open after FND. 2,583 total deliveries. 82.2% of the total from expiration.
MAY 2015: 3,371 still open at expiration. 1,727 still open after FND. 2,840 total deliveries. 84.2% of the total from expiration.
Again, do you see how this works? And let me assure you, this is how it has always worked for as long as I have followed the Comex delivery numbers.
OK. Now let's look at what is taking place here in July.
The total amount of July15 contracts still open at contract expiration on June 29 was 2,699.
The total amount of July15 contracts still open at the close on First Notice Day June 30 was 2,077.
Using history and experience as our guides, we should expect about 2,250 total deliveries over the course of this month. Ready for the surprise/anomaly?
So far in July, through last evening, the CME shows that a total of 3,267 total deliveries have been made. What's more, the CME also shows that there are still 117 contracts left open. If all of these remaining contracts stand for delivery...and provided no one else shows up wanting some immediate silver...the total number of deliveries this month will be 3,384.
Well, guess what? With the delivery month now completed, the total number of July silver deliveries actually came in at 3,637. Not only did the "117 contracts left open" stand for delivery, another 253 jumped the queue for immediate delivery, as well.
In the end, following the same format as used above, here's how the remarkable and unusual July deliveries finished out:
JULY 2015: 2,699 still open at expiration. 2,077 still open after FND. 3,637 total deliveries. 134.7% of the total from expiration.
Again, I can't overstate how unusual this is and how different it is from the norm. In a "normal" month where total deliveries came in at 85%, we would have seen about 2,300 total deliveries. Instead, we saw 3,637. Therefore, we're left to conclude that and additional 1,300 contracts were demanded for immediate delivery in July. This means that someone or something funded their account with 100% margin, jumped the "queue" and demanded immediate delivery of 6,500,000 ounces of silver. At prices ranging around $15/ounce, that's nearly $100,000,000.
Now, admittedly, 6.5MM ounces of silver isn't very much in the grand scheme of things. However, what is significant is the timing. Please allow me to remind you...For as long as I've monitored Comex deliveries, I've never seen this before. The total amount of deliveries in silver (and gold, for that matter) NEVER exceed the number still open when the contract goes off the board and moves into delivery. NEVER. And yet this month...July of 2015...when price is being stomped down yet anecdotal reports continue to stream in about supply issues...suddenly, the Comex delivers 135%??
So is this just another indication of tight (at least temporarily) supply? Yes, it would definitely seem so. However, does actual supply and demand matter? At this point, it's hard to say that it does when global silver supplies run a three-year deficit yet price falls by 60%. (https://www.silverinstitute.org/site/2015/07/28/upticks-in-silver-demand-seen-in-first-half-of-2015/) As long as the current, corrupt paper derivative pricing system remains in place, fundamentals will remain secondary to the whims of the HFT algos and the trading desks of Citi and JPMorgan.
On the bright side, only physical demand will/can break this fraudulent system. All of these anecdotal reports of extreme demand combine to chip away at the foundation of the scam. Let's hope it continues and that, one day, a true and fair price for silver will finally be realized...a "price" that actually reflects its true value.