More Deception at The Comex

219
Thu, Oct 24, 2013 - 11:25am

This latest move is so brazen in its audacity, even I am stunned. But, since no one else is talking about it, maybe I'm just crazy. Let me lay it out for you and you can decide for yourself.

OK, before we get started, we'd better go back and cover the basics.

The Comex is a futures exchange that does, occasionally, make physical deliveries. To provide for these deliveries, five banks maintain depository vaults in New York. Updates on the daily changes to the amount of metal in these vaults is provided by The CME Group, which owns The Comex, and can be found here: https://www.cmegroup.com/trading/energy/nymex-delivery-notices.html

Within these vaults, metal is delegated to two categories, eligible and registered.

  • Eligible metal is metal being vaulted at the bank warehouse but NOT eligible to be used in the delivery process.
  • Registered metal is metal that is recognized by the CME as available for good delivery against futures contracts.
  • I went searching for a concise explanation of the eligible/registered process and, in the short time I had this morning, the best article I found comes from BullionVault. The article was meant to downplay the significance of declining Comex stocks. Many folks, myself included, would disagree with the author's conclusion. Regardless, that's a topic for another day. In this instance, what's helpful is the background info the author provides. The full link is here but please read through the C&P below: https://goldnews.bullionvault.com/comex-gold-stocks-072420136

    First question: How does gold get into warehouse stocks of the futures exchange? Although it's a lengthy process, the answer is actually quite simple. Gold is recovered either from mine output or scrap jewelry and other products, such as bars and coins, at a refinery. The refiner then produces gold bars to the standard and specification of the exchange, in this case the CME Group.
    These gold bars belong either to the refiners themselves, meaning they have bought and own the gold. Or they belong to the refiner's customers, who bought and owned the gold at the refinery, hiring it to make that metal into saleable bars.
    Now, for this particular refinery to deliver metal onto the commodities exchange, it must be a registered acceptable brand, such as Heraeus, Johnson Matthey or Metalor Technologies to name a few.
    Once these gold bars are produced, the metal must then be transported to the warehouse by exchange-approved carriers such as Brinks Inc., Via Mat International or IBI Armored Inc. There is no other way for the gold to get onto the exchange. Gold may move between Comex-approved warehouses, such as those operated by HSBC Bank, Brinks Inc., and Scotia Mocatta Depository. But any moves made between these warehouses must be made using the same approved carriers. No gold can enter the marketplace from outside of this refining loop.

    Once gold is removed from an exchange-approved warehouse and held somewhere outside of this circle of integrity, there is no way for the CME exchange to guarantee the bar's quality. This means that once a person or investor removes bars from the warehouse, then to return them to the exchange they would need to start at the beginning again. By going through the hands of the gold processor and refiners, this provides guarantee of the standard and quality of the material being delivered on the exchange.


    So with the gold inside the warehouse, second question: When is the gold considered eligible or registered on the commodities exchange?
    Answer: When acceptable bars are brought into an exchange-approved warehouse they become "eligible" for settlement of gold futures contracts traded on the exchange. So at this point, the owner of the bars may deliver them onto the exchange, and warehouse receipts are created. That is when the gold bars become "registered" stocks.

    Eligible gold stocks may or may not ever become registered stocks. Why? Because the warehouse is still a warehouse and the owner may simply want to vault their metal securely, before using it to meet demand elsewhere – for manufacturing, or from investors in another marketplace, such as Asia. This eligible gold may belong to an investor, a refiner, a hedge fund, a bank or producer. Many times these people are holding the metal for their end customers. And it may move at any time, and is much more flexible than the warehouse receipts that are registered stocks.
    The CME, the exchange, does not have any direct control over nor interest in the size of eligible stocks. Registered stocks however are officially recognized by the CME for good delivery on the exchange. That means that this inventory exists and is set aside to make delivery against gold futures contracts. Traders who stand for delivery, rather than cash payment, when their contract settles take delivery of the warehouse receipt. This does not change the quantity of registered stocks inside the warehouse. It remains registered, but the receipt changes ownership.
    If a gold futures buyer wants to take physical delivery of the gold and "break" the receipt then this is possible. But it is a process and takes time. Once broken, if the gold remains in the exchange circle of integrity – meaning the exchange-approved warehouse – then those bars become eligible stocks. But if the gold bars are removed from the exchange-approved warehouse then they no longer are eligible and are no longer tracked in any way.

    Third question then: How do the warehouse receipts work?
    A warehouse receipt is a bearer instrument much like a check. It can be endorsed from one party to another. The holder of the receipt pays the storage costs. Most times when people take delivery of a warehouse receipt they leave it with their brokers. In some cases people may want to take possession of the warehouse receipt themselves. This is rare, just like with equity or bond certificates; no one actually takes delivery of the documents any longer. But it is still possible for a fee.
    If a person owns a warehouse receipt, the gold that it represents is still in the registered stocks, even if they have taken physical delivery of the document. They can always redeliver these receipts onto the exchange by selling contracts.

    OK, hopefully this all makes sense because now I'm going to present to you the problem. In the article and on the CME website, the notion of paper gold is never addressed. Yes, there are warehouse receipts that some fools willingly accept at delivery, thinking they have a claim to actual gold. BUT...the metal that is "held for storage" in the depositories is assumed to be REAL METAL, held there on behalf of REAL CLIENTS. Registered gold backstops the delivery process of the exchange. Eligible gold may, one day, become registered and ready for delivery. More likely, it is simply being vaulted at the depository for safekeeping. Please take a moment to go back up and re-read the BullionVault piece, paying particular attention to the sentences I've underlined.

    As mentioned above, each afternoon the CME Group issues a "Gold Stocks" and "Silver Stocks" report. Some typical reports are posted below. Note how some days there is minimal activity and some days have significant activity. However, note the attention to detail. All bars are assayed and weighed to within thousandths of an ounce.

    First, let's study the report from October 8, 2013. Click on it to enlarge it and notice that vault movements are all measured in thousandths of a troy ounce. For example, on this day Brinks received into their registered vault 1,699.940 troy ounces and JPMorgan saw 708.704 ounces removed from their eligible vault.

    Below are two other reports, dated 9/30/13 and 10/17/13. Again, note the precision of the measurements as great caution is apparently taken to ensure that the metal is properly logged and accounted for.

    So, now, here's where the fun starts. Back on Friday, we noted an unusually large addition to the JPMorgan eligible vault. The sheer size of it caught my eye and you can see it on the report below. Note the other reported vault movements that day and then see if anything about the JPM data catches your eye.

    Hmmmm....While HSBC and Scotia posted the usual moves in thousandths of an ounce, the JPM eligible addition is a flat, round number. Not only that, the round number in question is 192,900.000 troy ounces. What is so significant about that number? Well, the generally-accepted number of ounces in a metric ton is 32,150. If you multiply that number by six, you get 192,900. So, last Friday, JPMorgan booked into their eligible account exactly and precisely six metric tonnes of gold. Now, maybe by some magical occurrence they weighed and assayed each bar and the total amazingly came to 192,900.000 but to me that seems statistically improbable. But with no access to the vaults we're left with simply taking their word for it.

    Imagine my disgust shock when I saw the next gold stocks report on Monday. Not only did JPMorgan magically book in another precise and round number, the actual increase in eligible gold was reported as 96,450.000 ounces. You're probably pretty good with math so I imagine you've already figured out that that is precisely three metric tonnes. Willing (forced) to give JPM the benefit of the doubt on Friday, we can no longer do so here. EXACTLY SIX METRIC TONNES ON FRIDAY. EXACTLY THREE METRIC TONNES ON MONDAY.

    And then we get to yesterday. After a non-event, empty report on Tuesday, what do you think we saw yesterday? Could JPMorgan have the audacity to report another round number multiple of one metric ton? Nope. They simply reported one metric ton! Again, nothing to the right of the decimal point. Just 32,150.000 troy ounces, exact and on the nose.

    So what do we make to of this? We're supposed to believe that, over the last four days, JPMorgan has brought in EXACTLY 10 metric tonnes of gold into their eligible account. In precise and detailed fashion, this massive deposit of gold from a customer(s) measured out to be exactly 321,500.000 troy ounces. RRRrrrrright.....Only the most ardent Cartel apologist and disinfo agent would be willing to swallow that one.

    Here's what I think is going on:

    • The deposits are bullshit. Either completely fabricated and falsified OR simple paper claims. It's one or the other due to the simple statistical improbability of three consecutive round numbers totaling exactly 10 metric tonnes.
    • Recall that back in 2007, Morgan Stanley paid $4.4MM to customers to settle a lawsuit brought by customers who had been charged storage fees on paper metal. https://www.reuters.com/article/2007/06/12/idUSN1228014520070612
    • Is JPMorgan pulling the same trick now? Given the laundry list of their other fines since 2011, I wouldn't put it past them. https://www.thedailybeast.com/articles/2013/05/08/jpmorgan-chase-s-crazy-fine-tally.html
    • If this isn't another JPM client-screwjy awaiting a lawsuit, then The Comex and, by extension The CME Group, is allowing JPMorgan to fraudulently goose their warehouse stocks ahead of the all-important December delivery period to give a false impression of solvency. The World Gold Council-owned BullionVault may not think that the lowest stocks since 2005 is a big deal but plenty of other folks due, most notably Jesse. He's been diligently tracking the daily changes for months. Click this latest update and be sure to review the charts: https://jessescrossroadscafe.blogspot.com/2013/10/tremors-and-warnings-in-gold-market.html
    • Lastly, the brazenness of the operation must be noted. No effort is made to conceal it. The CME Group simply reports the statistically-outrageous numbers and no one notices or cares. We're just supposed to believe that JPMorgan's eligible vault can nearly double in size in just over two weeks and that's all fine, dandy and business as usual.

    Well, it's NOT business as usual. The extraordinary and counter-intuitive price raids, the massive depletion of the GLD, persistent backwardation in the GOFO rates and JPMorgan's cornering, 70,000-contract, NET LONG gold futures position all warn you that we are in uncharted territory and major changes are afoot. This eligible gold deception currently being employed by The Comex is just another indicator.

    By the looks of it, the end of the fractional reserve bullion banking system is rapidly approaching. Keep stacking and prepare accordingly.

    TF

    November 4 UPDATE:

    In the past week, much has been made that the opinions stated above could be somehow construed as fact. Though I clearly began this piece with the disclaimer of "decide for yourself", some still seem to think this post needs a counter-argument. Since all of the Comex data is deliberately opaque and, in the words of The CME itself "not reliable", I figured I might as well give some attention to an alternate theory first supposed by Bron Suckeki of the Perth Mint.

    Bron thinks that the entire 10 mts of eligible stock can be easily attributed to 1-kg bars. OK, who knows? Maybe he's right. His primary points are below:

    TF, which of these do you think are facts and which are opinions one could be right or wrong about:
    1. Comex rules allow for 1kg bars
    2. A 1kg bar weighs 32.15oz
    3. 32.15 x 6000 = 192900
    4. 192900 is therefore not statistically impossible


    I'm not looking for an apology, but I think given the above facts, your original post requires a note to inform future readers that while you think Comex stocks are "bullshit", the round 192900 figure is possible and can't be used to prove the stocks are "bullshit".

    So, anyway, there you have it. An alternate theory. Take it or leave it and, as originally stated, decide for yourself.

    TF

    About the Author

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    tfmetalsreport [at] gmail [dot] com ()

      219 Comments

      Refresh
    HeirHelmutBron Suchecki
    Oct 25, 2013 - 8:09am

    Re: Why deposits can be in exact tonnes/ounces

    Bron Suchecki,

    thanks for this important clarification, that the straight number means nothing but my assumption about LBMA bars stand corrected.

    I have a few additional questions:

    Do you know if a Comex bar leaves this circle, if it must be remelted to enter the circle again or is it handled like Central Banks usually handle it: as long as the bar number and weight is correct, it is accepted as original bar?

    Do you know, if several owners can hold separate fractions of a Comex bar?

    If the Comex inventory is changing, does this mean the Gold is necessarily flowing in and out of the vault or are other institutions also able to use the same vault as customers and could the change only be a change in ownership and therefore on paper?

    SilveryBlueatarangi
    Oct 25, 2013 - 7:51am

    Coriander aka Cilantro in USA

    One of the favourites always. I am not familiar with rag head? Can you please give a link?

    Oboma
    Oct 25, 2013 - 6:59am
    atarangi
    Oct 25, 2013 - 5:58am

    N.S.A. search

    Coriander - a term favoured by ragheads and non g.m.o. types who do not support Monsanto. Coordinates are still being processed but are expected to be available soon. Thank you for your interest in our list of potential turmeric and cumin users. (herbalists)

    SilveryBlue
    Oct 25, 2013 - 5:06am

    Back from the garden

    and focusing on the bitchslappin going down between the players

    How about this:

    There are shortly going to be many hundreds/thousands/millions of startled people wondering why things are getting bad. They are going to take to the internet in droves searching for answers.

    Search engines are easily manipulated. How better to confuse than to promote bad first impressions about our soothsayers than to load the search results with bad press/discouraging keywords? The newbies will not search far - warned off by the bad press.

    Turd - the searchers will find this site via zerohedge etc. Please pay close attention to trollwork in the public threads, especially any keywords that can be targeted by search engines.

    This site is a rare find and it should be shared in all it's opinionated/speculative/deductive glory

    Coriander (that's for Bollocks LOL)

    Hammer
    Oct 25, 2013 - 5:03am

    EU says distrust of US on

    EU says distrust of US on spying may harm terror fight   Image cannot be displayed

    Angela Merkel: "Once the seeds of mistrust have been sown it doesn't facilitate our co-operation... it makes it more difficult"

    US spy leaks

    EU leaders meeting in Brussels say distrust of the US over spying could harm the fight against terrorism.

    A statement agreed by the leaders says that "a lack of trust could prejudice" intelligence-gathering co-operation.

    France and Germany are pushing for talks with the US to find an "understanding" by the year's end.

    A number of allegations against US intelligence agents have surfaced this week, including the bugging of German Chancellor Angela Merkel's phone.

    In addition there have been claims that the US National Security Agency (NSA) monitored millions of French telephone calls.

    On Thursday, the UK's Guardian newspaper also reported that it had obtained a confidential memo from the NSA suggesting it had monitored the phones of 35 world leaders.

    The various allegations have overshadowed the EU summit in Brussels

    https://www.bbc.co.uk/news/world-europe-24668286

    atarangi
    Oct 25, 2013 - 4:30am

    The stressed out gorilla

    A small zoo in West Virginia obtained a very rare species of gorilla.

    Within a few weeks the gorilla, a female, became very difficult to handle. Upon examination, the veterinarian determined the problem... The gorilla was in heat. To make matters worse, there was no male gorilla available.

    Thinking about their problem, the Zoo Keeper thought of Bobby Lee Walton, a redneck part-time worker responsible for cleaning the animal cages. Bobby Lee, like most rednecks, had little sense but possessed the ample ability to satisfy a female of any species. The Zoo Keeper thought they might have a solution. Bobby Lee was approached with a proposition. Would he be willing to mate with the gorilla for $500.00?

    Bobby Lee showed some interest, but said he would have to think the matter over carefully.

    The following day, he announced that he would accept their offer, but only under five conditions: "First thing", Bobby Lee said, "I ain't gonna kiss her on the lips." The Keeper quickly agreed to this condition. "Second", he said, "She must wear a 'Dale Earnhardt Forever' t-shirt." The keeper again readily agreed to this. "Third", he said, "you can't never tell no body 'bout this." The keeper again readily agreed to this condition. "Fourth", Bobby Lee said, "I want all the children raised Southern Baptist." Once again it was agreed. "And last thing," Bobby Lee said, "I'll need another week to come up with the $500.00."

    Hammer
    Oct 25, 2013 - 4:11am

    MEPs vote to suspend US data

    MEPs vote to suspend US data sharing   Image cannot be displayedLeaked documents allege bank data unrelated to terrorism was shared with US

    Related Stories

    The European Parliament has voted to suspend the sharing of financial data with the US, following allegations that citizens' data was spied on.

    The allegation forms part of leaked documents from whistleblower Edward Snowden.

    The vote is non-binding but illustrates MEPs' growing unease over how much data was shared with the US.

    It comes a day after it was alleged that German Chancellor Angela Merkel's mobile phone calls were monitored.

    The European Parliament voted to suspend its Terrorist Finance Tracking Program (TFTP) agreement with the US, in response to the alleged tapping of EU citizens' bank data held by the Belgian company SWIFT.

    The agreement granted the US authorities access to bank data for terror-related investigations but leaked documents made public by whistleblower Edward Snowden allege that the global bank transfer network was the target of wider US surveillance.

    MEPs also want to launch a full inquiry into the alleged spying.

    https://www.bbc.co.uk/news/technology-24652419

    Merkel phone

    The row over exactly how much snooping was done on European citizens appears to be escalating.

    Spartacus Rex
    Oct 25, 2013 - 3:45am

    Switzerland’s Gold Exports Go Through The Roof By Mark O’Byrne

    Today’s AM fix was USD 1,336.25, EUR 968.79 and GBP 825.76 per ounce.
    Yesterday’s AM fix was USD 1,333.00, EUR 968.68 and GBP 825.13 per ounce.

    Gold fell $6.90 or 0.51% yesterday, closing at $1,333.30/oz. Silver slipped $0.12 or 0.53% closing at $22.56. Platinum rose $2.94 or 0.21% to $1,433.24/oz, while palladium fell $1.50 or 0.20% to $742.50/oz.

    Gold inched up in London as the dollar fell to a two year low against the euro. The yellow metal is on track for a four week high, as investors buy precious metals on increased safe haven demand. Gold Krugerrands (1 oz) are trading at $1,403.75 or premiums between 4.75% and 5.5% and Gold Kilo Bars (1 kilo) are trading at $44,354.53 or premiums between 3% and 3.5%. Premiums are holding steady.

    The poor economic data published recently in the U.S. is signalling that the economic recovery is on shaky ground, and this has increased the allure of bullion.

    Koos Jansen's blog, "In Gold We Trust" explores the recent surge of bullion exports from Switzerland.

    In it he notes that Switzerland holds four of the largest gold refineries on the planet - Metalor, Pamp, Argor-Heraeus and Valcambi. These refineries are estimated to be responsible for 70% of the world's refining nestled in the Swiss Alps, and therefore a major amount of the world's gold is distributed there.

    If you look at 3Q, Switzerland has imported 808 tons of gold in 2013, and exported 680 tons. Year to date the country has imported 2,420 tons and exported 2,184 tons.

      Image cannot be displayed
    Courtesy of Koos Jansen’s - “In Gold We Trust”

    Jansen notes that this is a new record for exports for the small country with a yearly estimate of 2,912 tons for exports. It is surmised that 1,100 tons of the gold bullion is set to flow East to China or Hong Kong.

    In 2013 from January to August published figures list Hong Kong as having imported 598 tons from Switzerland. Jansen writes that although most of this is sent forward to Shanghai, however the Chinese are also importing directly from the Swiss.

    This is verified from Shanghai Gold Exchange (SGE) physical deliveries and from Alex Stanzcyk, Chief Market Strategist at Anglo Far-East Bullion, who Jansen spoke with directly. Stanzcyk said, "China imports a lot that's not going through Hong Kong (or through the SGE!)".

    In the interview Stanczyk explained how one of their partners had lunch recently with the head of the largest global operations company in security transport. He said there is a lot of gold that they're moving into China that's not going through exchanges. If the gold is for the government they don't have to declare where it's going. They don't have to declare where it's going in, or where it's heading. If you look at the way the Chinese do things, why would they tell?

    The People’s Republic Bank of China (The Chinese Central Bank), tend to shy away from routine reporting of their outright gold purchases to the IMF. A sensible strategy given their implied policy of reducing dollar reserve risk.

    GoldCore’s 10th Anniversary Gold Sovereign & Storage Offer
    Click For Details: Gold Sovereigns
    @ 5% Premium Over Spot (normally 8.5%-15% premium) & 1st Year's Storage @ Half Price
    Offer Closes October 25th

    https://www.goldcore.com/goldcore_blog/switzerland%E2%80%99s-gold-export...

    Spartacus Rex
    Oct 25, 2013 - 3:25am

    O.K. Bron...

    just thought I would try and get you to post some "Breaking News" here at TFMR

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