Historically Low Gold OI Levels
I was going to post this into the previous note but then decided that it needed it's own thread.
The Gold Comex is dying. As we speculated late last year (http://www.tfmetalsreport.com/blog/3120/thought-experiment), confidence in the fairness of the CME and Comex is leading investors and traders worldwide to exit the exchange. Growing awareness of the paper game manipulation is surely affecting things but, in my opinion, the biggest driver of this exodus is the failure of the CME Group to adequately backstop customer accounts following the collapse of MFG last October and PFG last month.
The proof is in the numbers so let's go back and review some so that we can look at this in the proper perspective.
3/21/09 - QE is just beginning as the world is stabilizing following the events of 2008. Total gold OI is 388,000.
12/30/09 - Gold ends the year near $1100 and the total OI has risen to 491,712.
11/11/10 - Gold is now $1400 and QE2 has just been announced. Total OI is now 644,738.
1/25/11 - We had the huge and strange story about a massive, deferred month hedge being taken off and total OI fell 81,000 contracts in one day to 499,000. Very strange.
4/8/11 - As silver is set to move to a peak, total gold OI is back up to 514,000.
8/19/11 - Speculation in gold is rising after the S&P downgrade of the U.S. However, banks are looking to cover short positions even faster. Total OI is near 521,000.
12/30/11 - After being ruthlessly crushed from Labor Day to New Year's Day, total gold OI ends the year at 422,070.
2/28/12 - After a 2-month rally in price, total gold OI peaks at 479,044.
And now, here we are. As of Friday, August 3rd, the total OI for gold is just 389,679. The lowest total OI for 2012, down nearly 20% since late February, and the lowest total OI since The Great Financial Collapse of Autumn 2008.
For a change, I'm not going to tell you what I think this means. I want to hear what you think it means.
One more thing, silver OI remains nearly constant in this timeframe. It peaked near 150,000 back in early April of 2011 and has bottomed near 100,000 on several occasions. Curiously, since 6/28/12, the total silver OI has been in a tight, 3000-contract range between 121,ooo and 124,000, never once closing above or below those levels. Then on Friday, as gold OI sank to its lowest level of the year, the total silver OI broke out of this pattern to close at 124,503. Huh?
Anyway, maybe this is much ado over nothing but I find it all very intriguing. I look forward to reading your thoughts in the comments below.