November Delivery; A Comex Odyssey

By now, we all know that the process of Comex metal delivery is shady and deliberately opaque. What has transpired these past few weeks only strengthens this belief.

I've written several times in the past about the perfect and precise additions to, and subtractions from, the JPM eligible gold vault. The most recent post included all of the past links and can be found here: https://www.tfmetalsreport.com/blog/6272/information-deemed-be-reliable

However, that's not what I'm writing about today. Instead, I want to focus upon the Comex gold vaults and apparent surge/rush for immediately deliverable gold.

Remember how this works...There are six months per year that are considered "delivery" months for Comex gold. Though an entity may stand for delivery of any contract, the vast majority of the deliveries are made in February, April, June, August, October (to a lesser extent) and December (typically the busiest delivery month of the year). You can see this on the chart below:

However, it is possible to stand for delivery during the "non-delivery" months of January, March, May, July, September and November. Not many folks do, however, and this, too, you can see in the chart above.

In order to stand for delivery in any month, one must provide 100% margin by First Notice Day and indicate your desire to take delivery of your gold. Additionally, and this is very important, the contract continues to trade through the delivery month and anyone willing or needing to "jump the queue" can appear on any day, provide the full margin, buy a contract and then stand for almost immediate delivery. This is where our story gets interesting as this is precisely what happened about 10 days ago.

As you can see below, through the first 12 days of this "non-delivery" month, physical deliveries were almost non-existent. Only 10 deliveries had been made for a total of 1,000 ounces and total remaining open interest was just 33 contracts. No big deal, right? Everyone must simply be waiting for December...

WRONG! Check the red rectangle on that chart! On the 13th and the 14th, someone or something suddenly appeared as a hurried buyer of physical gold. Open interest in the November contract surged and 1,382 deliveries were almost immediately made. Let's do the math on this, shall we?

1,382 contracts X 100 ounces/contract = 138,200 ounces of gold

138,200 ounces of gold is 4.3 metric tonnes.

At $1180/ounce, that's $163,076,000.

So, putting this back together...Out of the blue and suddenly, on November the 13th and 14th, someone or something appeared with just over $163MM and took immediate delivery of 4.3 metric tonnes of Comex gold, not wanting to wait for the December delivery month.

Now, why in the world would somebody do that? Perhaps a bullion bank is in immediate need of metal? Hmmm. The GOFO rates which have been negative now for four weeks would certainly suggest physical tightness. But maybe it's not a bank. Maybe it's an individual or fund instead? But why not wait for December? Why the rush to jump the queue and get your gold in November?

For some clues, let's dig a little deeper...

Check the chart below:

Longtime readers will recall that, last December, the JPM House (proprietary) account was extremely active, stopping 6,254 contracts or about 96% of all deliveries. JPM House continued issuing and stopping contracts through the spring but, strangely, their activity has ground to a complete halt over the past six months. Last week on Capitol Hill, JPM claimed to be exiting the physical commodity business and we know that they sold the building which houses their gold vault late last year. Maybe they are?!? Who knows?

Regardless, what are we to make of the 1,305 contracts that JPM suddenly delivered this month from their "customer" account? And note that all of it apparently went to the House Account of The Scoshe. (see chart above)

So, based upon the available evidence, The Scoshe showed up two weeks ago, plunked down a cool $163MM and took immediate delivery of 4.3 mts of gold. This is interesting in and of itself but, remember, we are dealing with the deliberately opaque Comex so the mystery is about to deepen even further. How? Why?

Check these two charts. These are the CME "Gold Stocks" reports from Thursday, November 6 and last Friday, November 21. (Keeping in mind, of course, the CME disclaimer at the bottom of each report.)

So let me see if I've got this straight...

  • On Nov 6, JPM shows 176,436.330 ounces of registered gold and 417,475.738 ounces of eligible gold. This gives them a total of 594,012.068 in their entire Comex vault.
  • On Nov 13 and 14, JPM "delivers" 138,000 ounces of gold to a willing buyer so eager to receive metal that they jump the queue, put up $163MM in margin and take immediate November delivery.
  • On November 21, JPM shows 176,436.330 ounces of registered gold and 417,475.738 ounces of eligible gold. This gives them a total of 594,012.068 in their entire Comex vault.
  • And look at The Scoshe, which had allegedly taken delivery of 132,000 ounces of this "gold". Over the same time period, their registered gold has not changed at all and their eligible gold has actually declined by 72,000 ounces.

System/Cartel Apologists will just claim that this is how it all works...that this is a logistical issue and that these are warehouse receipts that simply allow each bank to hold other banks' gold. Rrriiiggghhhttt. So, you're telling me that someone or something ponied up 163 mil simply for the pleasure of knowing that they now have a paper claim on a JPM customer's gold within the JPM vault? Okeydokey then. Knock yourself out. I guess we'll see...

Instead, maybe this sudden desire for 4+ mts of gold really is another sign of extreme delivery tightness? Maybe the CME (with their disclaimer fully visible) is actively under-reporting vault movements so as to hide the severity of the situation? Maybe someone or something jumped the queue because they were concerned that, if they waited for December, there wouldn't be much gold left? And maybe, just maybe, we're all set up for a rollercoaster ride in December where indications point to a minimum of 10,000 or more contracts standing for delivery?

The Dec14 Comex gold contract expires on Wednesday and it trades First Notice on Friday. As of last Friday, there were still 149,255 contracts open of a total OI of 468,748. That's 31.84%. Last year, with the same amount of time remaining before expiration, the Dec13 OI was 104,270 versus a total of 402,194. That's 25.92%. Last December, 10,157 stood on First Notice Day. (In the end, however, just 6,493 deliveries were made as 3,664 contracts were simply sold for cash.) Given the current OI numbers listed above there's every reason to think that 12,000-13,000 will stand this week, at a minimum. If all of these holders demand delivery and don't simply close via trading over the course of the month, that's 1,300,000 ounces of gold. Look closely again at the Gold Stocks numbers above. The total Comex registered Vault is just 869,309 ounces.

Look, I'm NOT trying to say that Comex default is imminent. I'd be stunned and flabbergasted if it happened. However:

  • I have no doubt that readily-deliverable, physical gold is in short supply in both London and New York
  • The Comex, The Bullion Banks and CME actively attempt to deceive market participants by inflating or simply fabricating their vault and delivery numbers

Therefore, your only winning move is to take immediate, physical delivery of your gold holdings. Do not, under any circumstances, hold your metal in unallocated, paper form. You do not have clear provenance and, when this entire fractional reserve bullion banking scam finally collapses, it will be YOU left holding the bag.

Continue to prepare accordingly as we await the inevitable,

TF

25 Comments

Stackable's picture

FIRST!

:)
 

ArtL's picture

2nd!

Now to read the post!

It is time to make sure your gold and silver are in a safe place. 

Buzzedbud's picture

Turd! maybe...

Turd!

maybe...

Turd Ferguson's picture

As everyone can see

MODERATOR

Comments to public posts are now open again but FOR VAULT MEMBERS ONLY.

Bollocks's picture

FIFTH!

Thank god I'm not a vault member.

Err... hang on.

silver66's picture

Good decision Turd

We will see how it pans out

Silver66

braincramps's picture

Thanks

For opening the comments section back up Turd.  Great site and worth the few $ /month.

Happy Thanksgiving week.

Chuck

argentus maximus's picture

It's good news imho that

It's good news imho that comment posts are back under the blog article.

Pining 4 the Fjords's picture

Outstanding!

Now folks can follow along with the comments on fine articles from our contributors!

Like Argentus "Are you not entertained" Maximus:

Or yet another fine article from Doctor Jerome, our professor of rhetoric and noble farmer:

They can check in to see how our good buddy Bart Chilton is doing in his post-CFTC career:

Find a juicy link or two quoting our good friend Ned:

And of course, research and commentary from our esteemed leader:

All in all, quite a show!  And a measly 10 bucks gets you a ringside seat, and posting privileges to boot... nice!

cyclemadman's picture

All In

I have no dry powder left. I certainly don't want to be holding Dollars when this whole thing explodes. I'd much rather be years early than one nanosecond too late.

Verus nemo's picture

Thank you, Sir!

I couldn't be more pleased with the most recent changes made to this, the best PM/TEOTGKE website on the 'Net today.

I'll now be resubscribing soon. Thanks again for a great site.

Nick Elway's picture

Non-vaulters can comment

Non-vaulters can comment here:

https://www.tfmetalsreport.com/comment/450789#comment-450789

I'll read what you have to say.

Thanks, Turd  for the curious (non?)movement of $163MM in gold

Quote:
So let me see if I've got this straight...
  • On Nov 6, JPM shows 176,436.330 ounces of registered gold and 417,475.738 ounces of eligible gold. This gives them a total of 594,012.068 in their entire Comex vault.
  • On Nov 13 and 14, JPM "delivers" 138,000 ounces of gold to a willing buyer so eager to receive metal that they jump the queue, put up $163MM in margin and take immediate November delivery.
  • On November 21, JPM shows 176,436.330 ounces of registered gold and 417,475.738 ounces of eligible gold. This gives them a total of 594,012.068 in their entire Comex vault.
  • And look at The Scoshe, which had allegedly taken delivery of 132,000 ounces of this "gold". Over the same time period, their registered gold has not changed at all and their eligible gold has actually declined by 72,000 ounces.

System/Cartel Apologists will just claim that this is how it all works...that this is a logistical issue and that these are warehouse receipts that simply allow each bank to hold other banks' gold. Rrriiiggghhhttt. So, you're telling me that someone or something ponied up 163 mil simply for the pleasure of knowing that they now have a paper claim..

JY896's picture

Golden oldies -- got physical...?

I stumbled across an old (2001) article this morning that seems to tie in perfectly with Turd's post above.

Lessons from the London Gold Pool

World Gold Crisis
On Friday March 8th, London sold 100 ton of gold at market, up from around 5 ton on a normal day. The following Sunday evening, the pool released the statement "the London Gold Pool re-affirm their determination to support the pool at a fixed price of $35 per oz". Fed chairman William McChesney-Martin announced the US would defend the $35 per oz gold price "down to the last ingot". That week the London Gold Pool continued to fight the free market process and defend $35.20 gold. By midweek it had emergency airlifted several planeloads of gold from the US to London to meet demand. On Wednesday the London market sold 175 ton, 30 times its normal daily turnover, and by Thursday demand exceeded 225 tons.

That evening emergency meetings were held in Buckingham Palace, with the Queen subsequently declaring Friday 15th March a "bank holiday". Roy Jenkins, Chancellor of the Exchequer, announced that the decision to close the gold market had been taken "upon the request of the United States".

Two-tier Market
The London gold market remained closed for two weeks, during which time the London Gold Pool was officially disbanded. During that two weeks, Zurich and French markets continued to trade with open market prices for gold exceeding $44 per oz (up 25% from London's official price of $35.20 per oz).

A fortnight later, an official "two-tiered" price was announced to the world, where the official price of $35.20 would remain for central banks dealings, while the free market could find its own price, the London market re-opening again on the 1st April.

I haven't yet had a chance to dig deeper into research on the specifics of the article above, so DYODD -- but it's an old and well-worn tale we've heard many times at some point over the last few years.

Translation: 'price optimization' will continue until it cannot. An exogenous factor may or may not be what precipitates system failure, it (IMHO) is likely to be a combination of factors. There is no canary in the coalmine to sing of the imminence of the event -- all the canaries are long dead. One may or may not have time to convert 'virtual' metal holdings into physical ones -- and not all of us have a battleship group to send to NYC to make a pickup.

However, as the DATE of the article above (May 21st, 2001) indicates, the system has MUCH more sophisticated tools at its disposal than it did 40-odd years ago -- and the 'will continue until it cannot' part is still continuing apace. Nevertheless, any change to the existing status quo is likely to be dramatically rapid, as in overnight/over a holiday weekend. Prepare accordingly. I, for one, plan to check whether my LCS is open this weekend.

Some more background reading on the same topic from Grant Williams of Mauldin Economics:

Things That Make You Go Hmmm... -- Twisted (By The Pool)

Bama's picture

December

Great article Turd. December may be one for the record books. We have all been waiting a long agonizing time. If we do get a Swiss yes vote and 13,000 do stand for delivery It could be an exciting December indeed.

BigGamble's picture

Open Interest In Silver is SCARY

(Mods: Please delete this post in Turds new thread since this post fits best here)

This is damn interesting sure but would like to get everyone's take-

OI is currently 54,129.

Only a few days left. Thus far...about 7k contracts were shaken from Friday. Before that it was about 4K.

I guess the average has been 4-7K contracts per day in the past several days.

If this keeps up, COMEX will not be able to deliver the metal..correct?

7K x 3 days= 21K contracts..subtract from 54K....and we are left with 34K contracts..or over 150,000,000 ozs of silver.

Its way more than doubled what Comex has.

http://www.cmegroup.com/trading/metals/precious/silver_quotes_settlements_futures.html

If there is say 60 million ozs of silver in COMEX......Im guessing a default? Or a forced cash settlement (though it wouldnt matter since it will be revealed that there is no silver in teh depositories?)

It was said that 1500 contracts at max can settle....though is it possible that a really huge entitiy can get around this via different proxies? Many questions but just my simpleton math, there wont be enough silver for delivery that is in the COMEX prospectus.

Turd Ferguson's picture

BigG

MODERATOR

I would caution you against getting too caught up in that...at least today. I'll be sure to address this in today's podcast.

BigGamble's picture

Thanks Turd

Very new at this stuff.......looking forward to podcast, thanks again.

Turd Ferguson's picture

Today's Gold Stocks report

MODERATOR

Again, zero movement at JPM and the Scoshe sees a little more gold withdrawn.

Still no sign of the 138,000 ounces of gold changing hands:

JY896's picture

Foreshadowing, part deux

There is a sticky post on ZH at the moment worth a look:

Deutsche Bank's Modest Proposal To Central Banks: "Purchase The Gold Held By Private Households"

"However, the idea of gold purchases has merit because of the possible sellers. Much gold is held in private households, especially in countries like Germany. In some cases these are unwanted remnants of crisis-driven investments five years ago. A program that targeted these holdings would liberate dormant liquidity, some of which might even flow into consumption."

Ya gotta love it when DB wants to liberate your dormant liquidity... I wonder if such a 'targeted program' would include a premium above list price to provide incentive to German households, or if such a scheme would have to wait until 'list price' is more attractive to any who still holding such a barbarous relic.

Nota bene, here is a study on German household gold ownership from 2010:

"The entire volume of gold held by the population in the form of jewellery and physical investments (such as bars and coins) is approximately 7,500 tonnes. An interesting aspect is that the volume of gold held by the population is more than double that of the gold owned by the Bundesbank, just under 3,500 tonnes of gold. If we also take the gold-based securities of 1,350 tonnes or 43 billion Euro in to account, the total ownership is almost 9,000 tonnes or 280 billion Euro."

A single line in the ZH piece about the DB 'recommendation' refers to the originating comments from a distinguished central bankster, Mr. Yves Mersch.  This upstanding stalwart of centralized monetary power unwittingly (and possibly still unbeknownst to him) became connected with a failed social media publicity ploy to popularize the new 10 euro note, encouraging EU residents to take selfies with the new and improved fiat reserve note #mynew10:

Mr. Mersch is a Member of the Executive Board of the European Central Bank, and as such his speeches and articles are regularly published by the BIS . He made some comments documented in less-low-brow, non-fringe publications such as the WSJ and the Telegraph:

"Still, he repeated that such an option [imminent sovereign bond purchases by the ECB] would theoretically be possible, along with purchases of gold, exchange traded funds or stocks, underlining that the ECB still has a broad array of assets it could buy if it deemed such unconventional measures were necessary." -- Wall Street Journal

"Gold, shares, and exchange-traded funds (ETFs) - the European Central Bank (ECB) may turn to buying any or all of these in an attempt to boost inflation in the currency bloc. Yves Mersch, a member of the ECB’s executive board, said that the purchase of these assets was “theoretically” an option for the central bank, which earlier this year resolved to “take further unconventional measures to counteract a lengthy period of lower inflation”." -- The Telegraph

Original speech from Frankfurt, 17 November 2014 (in German) here, translated version here in English:

"The Board of Governors has unanimously expressed to adopt further unconventional measures to counteract a too long period of low inflation. Theoretically could include also the purchase of government bonds or other assets such as gold, stocks, exchange traded funds (ETF) etc. [...] Our liquidity injections and purchase programs to help solve the blockages in the credit channel ( credit easing). The risks that we try to keep as low as possible and confine ourselves to purchase of extremely safe securities. Goal is not to remove bad credit risks to the banking sector and in the balance sheet of the Federal Reserve. That is not our mission."

'Theoretically could include' and 'extremely safe', huh...?

Markedtofuture's picture

US Senate Tries Public Shaming of New York Fed President Dudley

By Pam Martens and Russ Martens: November 24, 2014

New York Fed President William Dudley Got a Dose of Public Shaming at the Hands of the U.S. Senate Last Week

New York Fed President William Dudley Got a Dose of Public Shaming at the Hands of the U.S. Senate Last Week

Last Friday, the Senate Subcommittee on Financial Institutions and Consumer Protection, chaired by Sherrod Brown, effectively put William Dudley, President of the Federal Reserve Bank of New York, in stocks in the village square and engaged in a rather brilliant style of public shaming. With each well-formed question posed by the panel, Dudley’s jaded leadership of a hubristic regulator came into ever sharper focus.

http://wallstreetonparade.com/2014/11/u-s-senate-tries-public-shaming-of-new-york-fed-president-dudley/

boomer sooner's picture

Gold

Lets see

Helo Ben proclaims Gold is a barbourous relic.

The Germans ask for some Gold back, 300 tonnes.  They get bumkis, 5+30? In 3 years.

China importing 50 tonnes a week, for 2+ years straight.

The Dutch get 122 tonnes, surprise surprise.

Swiss gold referendum this week.

Someone jumps the que in November and takes 130,000 oz.

Now Germany's Douche Bank comes out saying that the German (Gov/Reserve Bank) should purchase Gold from citizens.

GOFO gets deeper in the negative by the day, 6 mos is getting interesting.

I think the next few months are going to get real interesting!

As for confiscation.  Might be wise to pick up some 100+ year old antiques (numis)!

Righting Moment's picture

Spot on, Turd

Thanks for the daily dose of timely updates and keen insight to the various goings on in the world of PMs.  As a stacker I use your insight to help me get the best PM bang for my fiat buck. The cost of the subscription is worth its weight in, well, gold !! (and silver !)  I appreciate having the comments with the associated article.

Put your own oxygen mask on first...

flyinkel's picture

OK, so I have a great idea

All we ever do is swim upstream.  Maybe we should tell everyone to rid themselves of their

"unwanted remnants of crisis-driven investments" GOLD.

Then we are saying the very same thing as the "trustworthy" banks.

Erstwhile, Gold dumps a final time, everyone gets ultra low pricing, and away she goes...

Really, how many times do you want to try to save a populous that doesn't want to be saved?

flyinkel's picture

And Happy Turkey Day!

Pining 4 the Fjords's picture

Gold repatriation fever!

Swiss gold referendum this week, and now major opposition leader in France is demanding gold repatriation.

None of these things matter, since I am sure we have all their gold locked up safe and sound at the Fed, right?  I mean, it's not like any of it has been leased out into the market by bone-headed Keynesian central bankers, sold to facilitate money printing by artificially propping-up the dollar. Right?

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