Bullion Bank Leverage Soars to Near 300:1

Just when you thought that the perversion of the paper "markets" couldn't get any worse...

The disgustingly-leveraged JOKE that is Comex reached another dubious milestone yesterday as Scotia Mocatta reclassified over 79,000 ounces (2.5 mts) of "gold" from their registered category. By journaling this "gold" into the eligible category, The Scoshe dropped the TOTAL registered stock of the Comex vaults down to a new record low of 151,384 troy ounces or just under five metric tonnes. That's all! Just five metric tonnes!

More significantly, the unlimited and seemingly infinite ability of The Bullion Banks to lever this "gold" reached a new all-time high yesterday. Monday's total open interest was 450,584 contracts. At 100 ounces of paper gold per contract, this total OI represents an obligation of 45,058,400 ounces of gold. However, as noted above, on Monday the total registered and readily-deliverable "gold" held in Comex vaults was just 151,384 ounces. Dividing the registered stock into the paper obligations yields a total leverage ratio of 298:1. Again, I ask: How is this legal? How is this NOT fraud? Please see here: http://www.tfmetalsreport.com/blog/7241/futures-market-fraud

Additionally, please be sure to note the total amount of gold allegedly held by The Scoshe in their Comex vault. In what can only be explained as a withdrawal of a perfect and precise, no-need-to-measure 100 individual kilogram bars, The Scoshe saw it's total vault decline yesterday to just 1,183,314 troy ounces. Recall that we've been monitoring this as a slow motion "bank run" since earlier this year when The Scoshe reportedly held over 3,000,000 ounces in their vault: http://www.tfmetalsreport.com/blog/7170/comex-bank-run-scotia-mocatta

Here's a CME Gold Stocks report from early March. Compare it to the one from yesterday shown above:

So where the heck did all of this "gold" go? The Scoshe vault is down almost 1,900,000 ounces or nearly 60 metric tonnes. Where did it go? Maybe 25% went to HSBC as their vault is up about 480,000 ounces over the same time period? But even if that's the case, where's the rest? And how about the total registered vault? In early March it was near it's "typical" amount of 700,000 ounces. Again, as of Monday, it was at an alltime low of just 151,384 and it's been near these levels for nearly two months: http://www.tfmetalsreport.com/blog/7131/guest-post-comex-facing-gold-crisis-dave-kranzler

Not to be cynical but clearly none of this matters to anyone. The Banks could lever the available gold to 500:1 or 1000:1 and it's doubtful anyone outside of TFMR would care to notice. Instead, The Specs and Banks will just keep buying and selling their paper gold while the media will keep reporting the paper derivative price. You and I know that this fraudulent scheme will one day fail...as all fraudulent schemes ultimately do...and when that day arrives, the true price of physical gold will be recognized. Until then, be sure to use the current pricing scheme to your advantage by continuing to acquire physical metal at these deeply discounted prices.

TF

16 Comments

ReachWest's picture

Old Yeller.

I see - old Yeller says the economy is doing well and that the Fed will consider raising rates in Dec. The farce continues.

Thanks for the post Turd - I say they should leverage the vaults up to 1000:1 and I bet you're correct - no one would care. Someday it will all end - at which point - even Turdites will wish it hadn't because it's going to end very poorly.

First too!?! 

Turd Ferguson's picture

For reference

MODERATOR

Here's the chart from ZH when the total Comex leverage was only 228:1

vonburpenstein's picture

damn...

...

cashonly's picture

Mind blowing

Excellent job Turd exposing the fantasy land for what it is.   Has there ever been another time in history when realty was so distorted?

But as you stated: does anyone really care? I have found that if the TV's on, credit cards scan and iPhones work, the masses don't give a flying F@#! about anything!

Owtovit's picture

Wish my local would leverage my beers...

wink

pforth's picture

If only that leverage chart...

If only that leverage chart was actually the price chart.....

Havenstein's picture

Oil futures

Oil futures leverage is 3:1 if I remember yesterday's Uncle Ted comments in the Miles Franklin's email yesterday.

G-Rod's picture

What's the bet that

Leverage will be above 600 by December the 1st, and above 1200 by January 1st, and above 2400 by February 1st?

Hyperbolic  growth in leverage here we come - unless they can do one of two things.

- Reduce the number of contracts (and increase the price of gold)

- Get more Physical Gold (probably requires an increase in the price of gold).

The Bullion Banks, CME, COMEX have a reasonably stable system that they can run to their benefit, but this leverage shift is  a growing systemic issue in my book.

I doesn't have to go back down to something under 50, it could go to 3000+ or something like that and I really think that if it goes up to "ridiculous" levels (well beyond the current "crazy") what  it will indicated is not default - but irrelevance as the price setting mechanism that the world references for gold shifts to the SGE or some other physical market.
 

Turd Ferguson's picture

ZH now on this story, too

MODERATOR
Dr Jerome's picture

One or the other

If the leverage graph did not look like this, the gold price graph would by now.

Patriot Family's picture

Zerohedge comment is priceless...

From the Zerohedge comments section:

"I have one ounce of gold worth about 1100 dollars....I am going to sell it to 298 people and promise to give delivery in the near future.  Then after I collect the 300 thousand dollars, I am gonna fill my gas tank, buy some food, and get out of town.   And start all over again in another city."

This should be completely legal, shouldn't it?  I mean, it's done in the open every single day while government regulators stand by with a rubber stamp of approval, right?

bookers126's picture

Comex

Can't it just stamp "X 300" on the bars? ?

lakedweller2's picture

No Regulators or Administrative Branch

No help in sight

silverflower's picture

Good one....lol

Had a good laugh, thanx

Syndicate contentComments for "Bullion Bank Leverage Soars to Near 300:1"