The Rats and The Sinking Ship

Yes, what we are about to show you is simply a collection of anecdotal data points. Taken separately, perhaps they can all be written off and marginalized. Taken collectively, however...well, maybe there's something to consider here.

This site has been around for over five years now and, for most of that time, we've preached about how fractional reserve bullion banking is a scheme that is destined to fail. By pricing a physical commodity upon the oversupply of paper derivatives, shortages become inevitable. The market recognizes the value of the mispricing and drives up demand. At the same time, the lower price affects supply as producers of the commodity limit or shut down production due to the economics and declining/negative margins.

What eventually happens is a physical supply shortage that manifests itself in smaller global stockpiles. This is evident in the increasing abundance of stories about the tight global gold market, particularly in London. This has also become apparent in silver as, just this week, Thomson Reuters GFMS released their latest Silver Interim Report, which projected the third consecutive year of a global shortfall in the supply of physical silver. Check these links for details:

As we all know, the global "price" of physical gold and silver is largely derived by trading on highly-leveraged futures exchanges such as The Comex in New York. On these exchanges, a modern form of alchemy has been perfected, whereby a relatively small amount of metal can be leveraged multiple times in the creation of paper metal derivative contracts. If after five years we are, in fact, seeing the first real physical cracks in the global paper metal bullion banking scheme, logic would compel us to expect those cracks to appear at The Comex first.

And that may be what we are seeing play out in real time. Below are those "anecdotal data points" mentioned above. Consider them independently but also take time to view them collectively, as well.


This site and others have been documenting this trend for weeks. What we're talking about here is not margin leverage. Instead, this is The Banks' ability to lever their existing supply of readily-deliverable gold. On the Comex, this is gold classified as "registered" and it is this registered stockpile that has been at record lows for over two months. As of Thursday, the amount of gold shown in this category was just 151,384 troy ounces. When you divide this amount of available gold into the total amount of "paper gold" measured by a total open interest of 424,000 contracts (100 paper ounces per contract)...we get a historically high and unprecedented leverage ratio that is nearing 300:1. We've repeatedly written about this here and you can also see this displayed on the chart below from ZeroHedge:


However, it's not just registered gold on The Comex that is dwindling, it's also the total amount of gold held in the bullion bank vaults. The chart below was published yesterday by Dave Kranzler, at his excellent site called Investment Research Dynamics: Note that over the past five years the total amount of gold held within the Comex vaulting system has declined from over 12,000,000 troy ounces to yesterday's new low of 6,436,404 troy ounces. Of course, this hasn't limited The Banks ability to create paper metal to meet occasional speculator demand, but that's a topic for another day.


But let's dig even deeper and look at the gold held by individual Bullion Banks within the Comex vaulting system. Every day, the CME puts out a "Gold Stocks Report" which attempts to show the total amount of gold held within the Comex vaults, though the CME added a major disclaimer to the report back in 2013 (

On the Gold Stocks report below, dated July 27 of this year, note that JPM reported a total vault of nearly 1,398,215 ounces. In that vault were 115,755 ounces categorized as registered and 1,282,460 ounces listed as eligible.

Next is a chart from about two weeks ago. Note that JPM's total vault has been more than cut in half. Total registered gold has fallen to just 10,777 ounces and total eligible gold was shown to only be 657,721 ounces. Hmmm.

But now look at what has transpired in just the past week. The total amount of gold held in the vaults of JPM has been cut in half again! As of Monday, JPM showed a total of 668,498 ounces of gold in their Comex vault. After two separate withdrawals of nearly five metric tonnes, JPM's vault was down to just 347,898 ounces as of yesterday:

So, after including the massive withdrawals of just this week, the total amount of gold held by JPMorgan in their Comex vault has fallen by 1,050,317 troy ounces...or 32.7 metric tonnes...that's a cumulative just the past four months.


And if you're beginning to feel as I do...that all of these points are connected...then what is going on at The Scoshe might be the most important as the Canadian bank, Scotia Mocatta, is the "oldest" gold dealer and bullion bank in the world.

One might think that, as the world's oldest bullion bank, The Scoshe is pretty well wired into what's going on in the global gold market. Additionally, you don't get to be the longest-tenured bullion bank without recognizing/anticipating change and then positioning yourself for future profits...and, as importantly, avoiding current losses.

We've detailed what appears to be a slow-burning "bank run" that is ongoing at Scotia Mocatta's Comex vault. We most recently wrote about the trend here: Note that The Scoshe (or their clients) almost appears to be exiting the Comex system...similar to what we're now seeing at JPMorgan. As you can see on the report below, back on March 5 of this year The Scoshe allegedly held 3,066,169 troy ounces of gold in their Comex vault. (You might also note the total amount of gold held by all six banks at that time and compare it to the 6,436,404 ounces reported yesterday.)

Now let's look again at the CME Gold Stocks report from yesterday. Notice that The Scoshe currently shows just 79,096 ounces of registered gold and about 1,008,831 ounces of eligible gold for a total vault of 1,167,927 troy ounces. This means that, over the course of the past 8+ months, Scotia Mocatta has lost 77% of its registered gold and 60% of its eligible gold. As measured by its total vault, the drop has been 1,898,242 troy ounces...or 59.4 metric tonnes...that's a cumulative a little over eight months.

And here's where the intrigue regarding The Scoshe gets even deeper. They're losing (moving?) silver, too.

Below is a CME Silver Stocks report from September of 2013. Note that the total amount of silver held with Scotia Mocatta's Comex vault was well over 22MM ounces or about 695 metric tonnes.

By May of this year, Scotia's silver vault was down to about 15MM ounces or about 468 metric tonnes:

And after yesterday's posted withdrawal of over 1MM ounces, Scotia's Comex vault held only 5,148,700 troy ounces of silver.

So, measuring from September of 2013, the drop in Scotia Mocatta's Comex silver vault has been 17,188,272 troy ounces...or about 535 metric tonnes...that's a cumulative about 26 months.


Again, we'll leave it up to you, the reader, to decide if something significant is happening behind the scenes OR if what has been displayed above is simply a collection of disparate data points. Maybe ponder these questions over the weekend, though:

  • Is the world's most important bullion bank (JPMorgan) moving gold away from a Comex system that is leveraged to a degree not seen before in its history?
  • Is the world's oldest bullion bank (Scotia Mocatta) relocating gold AND silver away from and out of the same Comex vaulting system?
  • If they are doing so, are these banks signaling that they, too, understand that the days of the current fractional reserve and derivative-based pricing scheme are numbered?
  • As gold and silver exit the Comex system...and as reports continue about physical tightness in London...and as the world continues to run physical silver supply at safe to conclude that the system's ultimate collapse is, at a minimum, an eventuality?

I don't know about you, but I think I'll buy some more gold and silver today...and take immediate delivery. The current pricing scheme may not collapse next week or next month (as stated above, we've been writing about this for over five years), but it's not going to last forever, either. And when change does come...and a new system emerges that determines price on the trading of physical and not synthetic metal...I'm quite confident that the prices "discovered" are going to be a little bit higher than $1100/ounce for gold and $14/ounce for silver.

Prepare accordingly.



infometron's picture

Old Number One

tedc's picture

FFMGF - Good News!

They not only are "talkin the talk" - they are "walkin the walk"!

Unfortunately, the market doesn't seem to know - yet!

Danforth Coxwell's picture

Now to read the article.

Have a good weekend everybody.

Kuchek's picture

Great Post!

Now to be spread far and wide. Also held for Marchas ;) Keep Stacking!

Enjoy some PCR.

ag1969's picture

MIDNIGHT RIDE - When Rogue Politicians Call For Martial Law

Turd Ferguson's picture



Here's a link to an interview this morning with KLZ in Denver CO:

canary's picture

That's what I think about Wall Street and affiliates CFTC/SEC

ReachWest's picture

The Disappearing Comex Stack

An exceptional 'snapshot' of where we currently stand. I do believe that taken together collectively, these point to a breaking point on the horizon. Rats scurrying from a sinking ship indeed.

@Turd: Just noticed that there is a typo in this paragraph:

"On the Gold Stocks report below, dated July 27 of this year, note that JPM reported a total vault of nearly 1,398,215 ounces. In that vault were 115,755 ounces categorized as registered and 1,282,460 ounces listed as registered."

If I'm correct, I think it should read..

"On the Gold Stocks report below, dated July 27 of this year, note that JPM reported a total vault of nearly 1,398,215 ounces. In that vault were 115,755 ounces categorized as registered and 1,282,460 ounces listed as eligible."

heathbr's picture

Looks like

Some good weekend reading materialyes

boomer sooner's picture

Dipped my toe

In First Mining Finance the other day. Hate myself if I didn't, small position. I remember Brotherjohnf talking about Bitcoin when it was 9 cents. I thought to myself "I should buy a hundred bucks worth for giggles", but did I, nooooooooo.

Turd Ferguson's picture

Yes, thanks


I thought I'd caught all the typos but missed that one. ChrisP at GATA was quick to email me, too.

Noted and corrected.

infometron's picture

On the growing irrelevance of the COMEX

An excellent job of connecting the dots, Craig! This is why we value your site so much. Every day you monitor these developments closely and keep us all updated! Priceless!

Here is yet another telling chart testifying to the growing irrelevance of the COMEX (at least with regard to the physical market... and hopefully their bogus 'paper' market soon)

bookers126's picture


The COMEX will just change some rules and declare that it is the world's first commodity-free commodities exchange, and prices, no longer being shackled to the pesky and unpredictable physical world, will, once and for all, be truly discovered!      

SteveW's picture

Is it a duck?

This is an excellent post TF and probably the best this year and possibly ever.

So if it walks like a duck, quacks like a duck and doesn't fly is it a duck? Bank runs are never published or promoted until they become obvious.

Turd Ferguson's picture

As if on cue


Friday's CME Silver Stocks report shows The Scoshe losing another 262,000 ounces. That's 8+ metric tonnes. Gone. And their total vault has now fallen to less than 5MM ounces.

Lemming's picture

Lost My Mind

Just bought more CDE, GDXJ, SAND. My patience is wearing out after 4 years down...........

canary's picture


Walks like a duck, quacks like a duck........and smells like a skunk.

usk's picture

Don't buy before the last second of the day

You are playing with algos. they have naked short this market all day long and the covering buy order is programmed at the last second. Buy at the last second if you want but never before. This is a scam, don't forget it. We are still in the 14s for Silver. They will try hard to push it in the 13s before the market closes. How may times have we seen this?

joeblack's picture

Another very bullish COT

I still expect a smash for options/contract expiration. 

Verus nemo's picture

Add also to the growing collection of "data points"

the now persistent .03-.05/oz backwardation in silver and the .50-0.90/oz backwardation in gold, the once again rising (implied) lease rates on both, the November 30th IMF board meeting where the Chinese Yuan/Renminbi will allegedly be added to the SDR, the Fed's emergency meeting now scheduled for Monday, etc. and the next few weeks and months are shaping up to be something to behold!

The persistent backwardation situation looks to me as the leading edge of what Antel Fekete has always maintained would become a permanent backwardation. Holders are physical are relinquishing the right to upwards of $250/contract of profit in silver by not selling the physical and buying the near-term contract and that (interestingly) amounts to nearly 3x the profit potential that gold backwardation presents.

Wouldn't it be explosive if Saudi Arabia began to rotate out of holding so many US Treasuries in their depleting sovereign wealth fund and replacing them instead with increasingly available Yuan-denominated bonds, in anticipation of the IMF-SDR change? This now seems as likely as them suddenly announcing their willingness to settle crude trade in something other than USD$. That too may ultimately transpire but they no doubt may demur on that since, as Bill Holter recently suggested, they may want to avoid being bombed back into the stone age.

Interesting times, for sure. I just keep adding to the stack. Thanks for the great post, Craig!

Turd Ferguson's picture

Wow! And the CoT does not disappoint.


All systems still a go and on track for a post expiration rally.

ReachWest's picture

RE: As if on cue

Very interesting.

It sure seems that the insiders know something is up .. as they squirrel away their gold stacks from out of the public (Comex) eye. Should the 'music stop', any Gold remaining at the Comex would likely get tangled into a very complex (and non winnable) web of legal ownership claims. By taking it and hiding it - 'they' effectively 'own' it.  

How many times have we heard? "If you don't hold it - you don't own it."

It seems the bullion Banks understand this axiom.

CPE's picture


How many times have we heard? "If you don't hold it - you don't own it."

It seems the bullion Banks understand this axiom.

This may seem like splitting hairs, but I assure you that JPM gold is not sitting in Dimon's house.  There is nothing wrong with a properly run vaulting system, and there are many good ones out there.  Fleeing the Comex vaults makes a lot of sense since it's not a properly run vaulting system overshadowed by 300 claims per ounce.

DAGEORGE42's picture

re joe black

big joe buying another 10 shares of DUST, rock on man!

s1lverbullet's picture

@ Turd

Do you expect to see 1,100ish by Tuesday since that is where the op ex sweet spot is?

Haven't had a chance to check out the COT but I have seen the comments on how bullish it is.

My hedge came off yesterday. Glad it did.

usk's picture

Look at the volume in miners in the last second of trading

I am 100% sure that the volume in the last second will exceed the entire volume trading of this day. This is pure fraud. This has been the case for 4 years. And miners execs do not care. Amazing. Let's see this last second.... The program is called "buy every-bid-atmarket-and-sell-1-naked... Cover everything at the last second"

joeblack's picture

30 minute december gold

november4's picture

Thanks, Turd!

This post, like all of Turd's postings, is why I subscribe. I scan a lot of PM sites and I have been a PM nerd of sorts for close to a half century (yeah, I'm that old, a Korea War vet), and this is the very best of the lot, but for the all-too frequent departures from the topic at hand. Fortunately, they can easily be ignored.

Question, to be considered and not necessarily to be answered, for it probably cannot: Given the progression of PM outflows from comex, JPM, and Scotia, among others, can a speculative date now be established as to when the collapse occurs? Something to think about.

Again, Turd, Thanks. Though you and I are somewhat distant philosophically, I regard you as the best most efficient market prognosticator on the web.

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