JPM Continues To Hoard Gold

114
Tue, Aug 13, 2013 - 12:10pm

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: https://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 (https://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

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  114 Comments

Hunt brother
Aug 13, 2013 - 12:36pm

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

Aug 13, 2013 - 12:36pm

Thirty flippin years ago...

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

Hillsie
Aug 13, 2013 - 12:37pm

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
Aug 13, 2013 - 12:42pm

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
Aug 13, 2013 - 12:44pm

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
Aug 13, 2013 - 12:47pm

great analysis

Thanks for the great write up.

SteveW
Aug 13, 2013 - 12:51pm

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
Aug 13, 2013 - 12:53pm

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.

Aug 13, 2013 - 12:56pm

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
Aug 13, 2013 - 1:01pm

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?

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