Comex Leverage Widens To Record

Tue, Jul 28, 2015 - 11:43am

With a move yesterday by JPM to reclassify 104,000 ounces of gold from registered to eligible, the total Comex registered vault has fallen to the lowest level in recent memory.

Now, I can show you any number of CME Gold Stocks reports from the last few years that purport to show a total registered Comex vault of 600,000-800,000 ounces of gold. That yesterday's report shows only 378,476 ounces is remarkable and interesting but not the point of this post.

After last week's carnage, there was all sorts of reporting about how "gold has lost its luster" and how "demand was falling". Is that true? Is that why the paper Comex price fell so dramatically? Or, instead, did the paper price fall because a collection of hedge funds and banks were able to short Comex futures with impunity and with no recognizable limit to the amount of leverage they're able to use?

Remember, the only reason that futures markets exist is to give producers of a commodity a marketplace where they can manage risk by buying and selling forward. Taking the other side of these trades are the speculators who make bets on the future direction of price. Physical backing of the paper price is what gives these "future" prices legitimacy.

But what level of physical backing must be present in order to ensure a fair and accurate price? If an exchange has 1,000,000 bushels of corn on hand, can they issue paper contracts for 5,000,000 bushels, thereby creating leverage of 5X? Maybe that's too low and the level of leverage should be 10X? The exact amount of appropriate leverage is hard to pin down but I think we can all agree that 20X or 50X has the effect of artificially stretching the distance between price and economic reality.

And this leads us to gold on the Comex. The CME open interest report for Monday showed a total Comex gold open interest of 440,550 contracts. As shown above, the total amount of registered gold held in the Comex vaults is just 378,476 ounces. Keeping in mind that each paper contract represents 100 troy ounces of gold, we can find the exchange's leverage by dividing 44,055,000 troy ounces of paper obligations by the 378,476 available and delivery-ready registered ounces. And what do we get?


So the question becomes: Is this "fair" and does this market discover an accurate representation of price when it uses a leverage of paper to physical at 116X?

And this is where this is all just one, big scam. With no boundaries or limits placed on The Bullion Banks which issue these paper contracts, what's to stop them from extending the leverage to 200X? Maybe 300X? How about 500X? What's the difference? So long as the world recognizes these fraudulently-determined prices as legitimate AND so long as The Banks can find physical metal to deliver at the paper price, the charade will continue.

The point of this post is simply to remind you of what a fraud this all is. Paper derivative transactions made at the speed of light between momentum-chasing hedge funds should not be the basis for a global price which ultimately effects real people with real jobs and real savings. Let's hope that sanity and fairness someday return to the global precious metal pricing structure. In the meantime, all we can do is continue to force The Banks' leverage even higher by removing physical metal from their system and placing it out of their collective reach.


About the Author

turd [at] tfmetalsreport [dot] com ()


Jul 28, 2015 - 11:45am

Tech issues

A handful of subscribers are having some tech issues today. So that they can read this post while we work to resolve the issue, I thought I'd simply make the post public.

Jul 28, 2015 - 11:51am



@CPE :)

Jul 28, 2015 - 11:51am

500 to 1

We will all be history at that point!

gamble I know I will gamble

Jul 28, 2015 - 11:52am

Cosby and the ConEX

Once upon a time everyone thought Bill Cosby was America's Dad. He was nearly universally loved for his supposed genuine character.

Then one day it all changed:


Once upon a time everyone thought the Comex Gold Market was the same as the real thing. It was almost universally referenced for liquidity, trading and price discovery.

Then one day it all changed:

When the music stops, do you have a chair to sit in? Or will a Corzine run off with whatever your statement said?

Jul 28, 2015 - 11:57am


Nice to see you back.

Stewart Thompson @321 gold says: "I think GDX is poised for a major rally, and whether an investor is bullish or bearish, now is the time to be a significant buyer of GDX, GDXJ, and of numerous individual gold and silver stocks! "

Jul 28, 2015 - 12:04pm

Willem Middelkoop tweets,

Willem Middelkoop tweets, Chinese Gold hidden with the people!

-Never before in my investing life the writings on the wall were this clear. But hardly anybody wants to see.

-So they want to buy lot's more but are careful not to jump start gold. PBoC: 'Gold at a particular time is a good investment.'

-PBoC: 'If a large number of foreign exchange reserves would (be used) to buy gold, this could easily lead to impact on the market ..'

-It's Official. China has a program called: 'Storing (hiding) gold with the people'.

-You don't even have to guess. The Chinese are openly telling it all. Re-read or my book. It's all there folks

Jul 28, 2015 - 12:21pm

Fantastic observation!

This is a really good article to give to people who "just don't get" that the metals are manipulated. To provide additional flavor... I wonder if it is possible to get information to track this level over the past 10 or 20 years. A chart showing a continuous (or exponential) uptrend in COMEX gold and/or silver leverage would be great evidence.

Jul 28, 2015 - 12:40pm


Leverage sunk Lehman, Bear Stearns, Merrill Lynch & AIG, at least the Fed can't ever be insolvent (that's a joke). ?? = Federal Reserve

Deutsche Bank looks really solvent too:

4 oz
Jul 28, 2015 - 12:48pm

Latest Numbers

US Mint 2015 Silver Eagle Sales

January 5,530,000
February 3,022,000
March 3,519,000
April 2,851,500
May 2,023,500
June 4,840,000
July 4,032,500

Total 25,818,500

2015 American Buffalo Sales


January 34,500

February 12,000

March 9,500

April 10,000

May 9,500

June 21,000

July 26,000

Total 122,500

Jul 28, 2015 - 1:22pm

Thanks, CPE

I'm going to steal that chart.

Jul 28, 2015 - 1:42pm


glad to be of service! :D

Jul 28, 2015 - 1:42pm

S&P charts

Yesterday's chart:

Today's chart:

The only question is: How can anyone be even remotely surprised by this?

Jul 28, 2015 - 1:45pm

FUCK Trader Dan

The fucker trader Dan always claims no manipulation in precious metals market. He is anti-gold, but he never admit it.

Jul 28, 2015 - 1:49pm

Thanks CPE - That chart is nuts

 Sister Christian said we were around 100 to 1. It was reported Dec. 2nd 2013 and that lines up with the chart. It looks like extreme desperation to me and has gone on for the last year and a half edging even higher as the gold wars continue. 

indiana rod
Jul 28, 2015 - 1:49pm

500 to 1

Someone, I think it was Jeff Nielsen, said the ratio of silver sold to supply was already 500:1.

indiana rod
Jul 28, 2015 - 1:50pm

500 to 1

Someone, I think it was Jeff Nielsen, said the ratio of silver sold to supply was already 500:1.

Jul 28, 2015 - 2:00pm

Most here already understand this

The FED is owned by The Banks. It is managed by The Banks. And The Banks profit by The Fed's activities.


Jul 28, 2015 - 2:05pm

They're all in the same boat.... without life jackets.

VIX beaten down, S&P elevated up last night...And the only interesting news I found was about the Chinese farmer who lost all his money (plus family and neighbors) on leveraged trading...Expect the Chinese market to bounce tonight as well. It's all coordinated.

Jul 28, 2015 - 2:38pm

TF- ... huh?

Let's hope that sanity and fairness someday return to the global precious metal pricing structure.


A third party pricing structure is by definition unfair.

A third party pricing structure that doesn't even include the physical metal for which it sets global prices is ludicrous. And still by definition, 'unfair'.

(btw, is the tiny bit of metal they do claim to have actually physical metal? or fiat metal? ... idk either.)

- - -

How about... Let's hope the privately owned fake silver and gold charts soon no longer control the prices of the world's physical Silver and Gold transactions. ??

Jul 28, 2015 - 2:39pm

The boat (extra)

After his money was gone...he went to the Chinese capitol to see the gov....For what? To get his money back?....After loosing my money, that idea never crossed my mind.

Jul 28, 2015 - 2:55pm

Chuck Norris

I wonder how much it would cost to have Chuck Norris drop by the NYC FED and hose the top three floors down with a pair of uzis. Who knows ? It might get him in the mood to drop by "the morgue" and Goldman Sucks and toss a few grenades and dump a few more mags on the upper floors.

Think about it. What would you do if you were the cop they tell to go arrest Chuck Norris ? Can you say "early retirement" ?


Jul 28, 2015 - 3:04pm

McHugh's Comment last nite / Dow to 18,000 then??????

"The Industrials have completed a Rising Bearish Wedge from October 2014, with a truncated top, meaning its final wave {e} up failed to exceed its May 19th, 2015 wave {c} high. July 27th, 2015's decline below the wave {d} bottom, below 17,465, confirms the top is in and the next great Bear market has started. The Industrials closed at 17,440 Monday, after hitting an intraday low of 17,399.

The top is in for the rally from 2009, and for the rally from 1987, and for the rally from the 1700's. A Grand Supercycle degree Bear Market is starting, with the first leg, wave (1) down of {iii} down of {3} down finishing now. The purple trend-lines in the chart on page 22 give us some guidance of where wave (1) down will likely bottom, around 17,200ish. Then we should see a short-term bounce, wave (2) up. That rise could take the Industrials up toward 17,800ish, with 18,000ish likely to be the maxim um upside potential given the purple declining trend-line, drawn by connecting recent tops. Then wave (3) down of {iii} down of {3} down will follow and that will feel very much like a crash, but it will be ju st a minor decline compared to what is coming this autumn."

Jul 28, 2015 - 3:21pm

Remember there are TWO Martin Armstrong's

  1. ​Pre Jail
  2. Post Jail

Post Jail, forget that one, that 0ne is useless. A real POS. But don't throw out the baby with the bath water. 

Pre Jail, His Economic Confidence Model is Amazing. This ECM cycles from confidence in public to private and back again, etc.

Remember how much Santa quoted him Pre ( and in ) Jail. He called him a genius. Santa later commented after MA's release that he most likely had sold out to TPTB. 

The next major turning point is Sept 30th. My bet? The Dow crashes on that date. See McHugh's commentary above. 

As the Sept approaches, Expect a Turn in something. Things should become clearer as we approach that date.

Jul 28, 2015 - 3:44pm


Great chart! Thanks!

Jul 28, 2015 - 3:59pm


You got a chart like that for silver too?

Jul 28, 2015 - 4:18pm



arch stanton
Jul 28, 2015 - 4:33pm

lots of

sophisticated guys had heard of Martin Armstrong before Sinclair started showcasing his hand typed missives from jail, but I hadn't.

No one had ever heard of traitor Dick until Sinclair started featuring him right after he started his website after falling out with Financial Sense Online.

No one had ever heard of Blow Pony until Sinclair introduced him to the gold world on his site.

I respect Sinclair as much as the next guy but he ain't got much sense about who he sides with.

Jul 28, 2015 - 4:33pm

Here we go

comex opo

Also see this:

comex stock

It's important to understand how many variables go into making a Comex OI to / Registered Stocks chart.

The Registered vs Eligible stocks of Gold or Silver on the Comex change all the time, and Turd notes these changes in the form of deliveries or reclassifications of Registered to Eligible and vice vs. The Open Interest also changes every day.

Over time it looks like the ratio for Gold is waaaaay out of whack in comparison of silver (let's talk relative because absolute measurements are obviously insane). I'm really not sure why that is.

Late Edit: My best guesses on why Gold's ratio is so much higher than Silver's is that the $ amount of Gold notional is higher (bigger market) so it's geared higher. The 2nd guess is that Gold at these prices is harder to come by than Silver. I'm guessing the 2nd guess is right if either of them are.

Jul 28, 2015 - 4:39pm

Thanks @CPE

Too bad the silver doesn't follow the gold. It does a bit of damage to the argument that silver is a better investment than gold since it doesn't have as large of a fake supply. Of course this is just looking at one exchange.

Jul 28, 2015 - 4:42pm

@ arch

Now that you mention it....I smell fish. 

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