What Am I Missing?

Wed, Jun 10, 2015 - 10:54pm

A LOT of talk these past two days about an article written by Avery Goodman that was posted at Seeking Alpha. Maybe I'm missing something but I fail to see what the big deal is.

The article in question supposes that the FRBNY "bailed out" JPMorgan on their Comex delivery obligations earlier this month and it can be found here: https://seekingalpha.com/article/3247676-did-comex-just-receive-a-physic...

Look, I like this Avery Goodman guy. The article he wrote last month about China was prominently featured here at TFMR as a "guest post". If you haven't yet, you should be sure to read it: https://www.tfmetalsreport.com/blog/6845/guest-post-real-reason-china-bu...

In this case, though, I don't see what the big deal is. We discussed the Comex vault movements of June 1 as soon as we saw them. Here's what I posted in the Vault thread of the day:

Submitted by Turd Ferguson on June 2, 2015 - 2:52pm.

"A HUGE slug of June deliveries were made yesterday and it's just the same old Comex circle jerk. Of the 2,468 deliveries issued (that's allegedly 246,800 troy ounces or 7.7 metric tonnes!), ALL OF THEM came out of the House account of JPM. The circle jerk comes from 1,570 of them being stopped by the House account of HSBC.

Just one criminal organization passing off some paper warehouse receipts to another criminal organization. No honor amongst thieves?

By the way, on today's CME Gold Stocks report, JPM moved 177,408 ounces from their eligible to their registered account. In order to send it over to HSBC? We'll see. This brings their registered total up to 297,541...enough to ship over the 246,800 to HSBC if need be, I guess. More likely, HSBC will just keep "their" "gold" in JPM's vault leaving JPM with only 50,000 ounces of registered currently available.

I'll keep an eye on these reports every day for the next few days just to catch any games as they're played."

And below is the CME Gold Stocks report in question. See how JPM reclassified 177,408 ounces from eligible to registered? As noted above, we remarked at the time that this was likely earmarked for "delivery" to HSBC et al. (click to enlarge)

And how do we know that this eligible to registered gold came from The FRBNY? This sounds like guesswork. Far more likely is this explanation: The House (proprietary) account of JPM has been stopping gold deliveries all year with 1,988 in December and 1,25o in April....more than enough "gold" to deliver back out this month.

Finally, as projected/expected, so far there has been NO additional movement into or out of the JPM Comex vault, as you can see below from Wednesday's report. Yes, JPM has allegedly issued 2,468 deliveries this month for 246,800 ounces but, so far, those warehouse receipts and paper certificates are just sitting chilly in JPMs vaults.

So, in the end, I guess I just wanted to offer a contrary opinion. Where we can all agree, however, is the the Comex is a den of thieves, run by criminals for criminals. The last Commitment of Traders report showed the gold "Commercials" to be gross short 246,573 contracts or 24,657,300 ounces of paper gold. This on a total Comex vault that you can see above only contains 7,891,115 troy ounces of gold. That's more than 3X leverage and if you only look at the registered vault of just 548,749 ounces, The Comex Crooks are levered nearly 45X.

We should all be far more concerned with the fraud and deceit of the paper pricing scheme that is managed by the Comex and their parent company, the CME Group. Worrying, instead, about the minutiae of the opaque "delivery process" and a report that the CME itself deems "unreliable" and for "informational purposes only" seems a fools errand.



p.s. Denver Dave is our A2A guest on Thursday, We'll be sure to discuss this with him, too.

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