Fraud and Deceit on The Comex

Tue, Mar 8, 2016 - 11:07am

We've written about this so many times, frankly I'm not sure if I have the energy to do it again...but we'll give it a try.

Here are just the last three missives on this (sore) subject:

Basically, here's what you need to understand. The only "price" that is discovered on the Comex paper derivative exchange is the price/value of the paper derivatives, themselves. The price discovered is definitely NOT the price of gold.

Whenever prices rise, it's due to a surge in speculator interest in the paper derivative contracts. Prices fall when speculators exit this paper market and move on. To meet this surging demand for the underlying paper derivative, the Bullion Banks that are allowed to operate as de facto "market makers" create and issue new paper gold contracts from thin air. These banks are not required to deposit any metal up front as collateral nor are they required to limit the amount of paper metal they can alchemize on any given day.

Since the beginning of February, the Comex-determined "price of gold" has risen from $1116 to today's $1270. That's a gain of $154 or 13.8%. Not too shabby. But what caused this increase in price? Was it the demand for physical gold? Not really. Instead, it is the demand for the paper derivatives on the exposure to gold...and there's A BIG DIFFERENCE.

In making a market for these derivative contracts, The Bullion Banks create new paper contracts (sell short) when speculator demand increases. They then withdraw and buy back these contracts (covers shorts) when price falls. All the while, no actual physical gold is ever put up as collateral or deposited into the Comex vaults. Here's just your most recent example:

On January 29, 2016, The Comex vaults allegedly held 6,430,863 ounces of gold. See below:

As noted above, price closed that day at $1116 on total Comex open interest of 373,434 contracts. At 100 ounces of gold per contract, that represents obligations for 37,343,400 ounces of paper gold or about 1161 metric tonnes.

As of last evening, March 7, the price closed at $$1264 on total Comex open interest of 498,172. At 100 ounces of gold per contract, that represents obligations for 49,817,200 ounces of paper gold or about 1550 metric tonnes.

So, have the Comex vaults increased by 12.5MM ounces over the same time period? Have 390 metric tonnes of additional gold been put on deposit there?

Of course not! There have been a few new ounces that have arrived but, as you can see below, it's not in the tonnage category. This is the report from yesterday, based upon the vault activity of Friday:

As you can see, on Monday the Comex vaults allegedly held 6,816,951 ounces of gold. While this total is up nearly 400,000 ounces from late January, that's a far cry from the 12,500,000 ounce increase in paper obligations. And this assumes that all of the recently deposited 385,000 ounces are actually up for sale or used as collateral for the new paper contracts. How much of the Comex gold really is for sale at current prices? Unfortunately, that's impossible to say and we'll never know.

What we do know is this...The Bullion Banks are the entities creating this paper gold and taking the responsibility for it. On the Commitment of Traders survey of January 26, 2015, the gold "Commercial" position was as follows:

Gold Commercial Gross Long Contracts: 115,343

Gold Commercial Gross Short Contracts: 175,176

Gold Commercial NET short position: 59,833 contracts or 5,983,300 ounces of "gold". Coincidentally, almost the same number of total ounces held within the Comex vaults.

Now look at the latest Commitment of Traders data from the survey taken last Tuesday, March 1:

Gold Commercial Gross Long Contracts: 115,571

Gold Commercial Gross Short Contracts: 287,002

Gold Commercial NET short position: 171,431 contracts or 17,143,100 ounces of "gold". Hmmm. That's interesting, now isn't it?

So, while price has rose through February by nearly 14%, the Big Banks categorized here as "Commercials" saw their long position in gold increase by a paltry 228 contracts. At the same time, their cumulative short position rose by 111,826 contracts. And these very same banks, while increasing their paper obligation by over 11,000,000 ounces, only scraped up about 400,000 new ounces to place in their vaults.

And here's the rub...At the end of the day, how much higher would prices have risen in February if The Banks had not been allowed to simply create over 100,000 new paper gold contracts? If total open interest had held steady below 400,000 contracts, an equilibrium price where willing sellers met willing buyers would have been significantly higher. Instead, to meet the demand from buyers, THE BANKS SIMPLY CREATED NEW PAPER DERIVATIVE SUPPLY. These banks have no intention of actually making physical delivery and the vast majority of the Speculators on the other side of the trade have no intention of taking delivery.

So, this demands the ultimate question:

What price is actually being discovered on the Comex? Is it the price of "gold" or is it the price of an unbacked and under-collateralized paper derivative contract?

Sadly, this confidence game and paper derivative pricing scheme is being allowed to continue indefinitely by the criminal co-conspirators of the CFTC and SEC. Until this exchange finally fails when actually physical delivery is demanded, I'm afraid that we're stuck with it. In the end, though, I suppose that's OK. Having physical price determined by the ludicrous machinations of this current Bank confidence scheme allows all of us the opportunity to buy and stack physical gold at a price that is deeply discounted from its actual value. I strongly suggest that you continue to use this historical anomaly to your advantage.


About the Author

turd [at] tfmetalsreport [dot] com ()


· Mar 8, 2016 - 11:08am

Vault post

Might make this one public later today.

Havenstein · Mar 8, 2016 - 11:11am


Thanks Turd.

UulaBear · Mar 8, 2016 - 11:14am


Great stuff

mindblue · Mar 8, 2016 - 11:16am


under the wire...

Marchas45 · Mar 8, 2016 - 11:30am


Yea!!!!!!!!! My luck is in, so now to buy an oz of Gold. Keep Stacking

Kuchek · Mar 8, 2016 - 11:33am
LostMind · Mar 8, 2016 - 11:38am

Top 10 again....

Love to see Marchas back where he belongs...

BarnacleBill · Mar 8, 2016 - 11:50am

Thanks again, Craig.  Your

  1. Thanks again, Craig. Your excellent description of the COT reports on this site has been an eye-opening education for me. Physical is the only place to be long-term. I have also benefited greatly from your terrific technical analysis. Perhaps I'm mistaken, but it seems to me that while a terrific potential upside is often painted on the charts that gets us (and others) all lathered up, it is done only to suck everyone in for fear of being left behind. Then the inevitable shearing of the sheep begins anew. While the COT is an obvious sham, I do believe that it is the only view that is given that might tip off the Banks' hands on bigger moves. But WTFDIK!? This morning before the downturn I cashed in a little more than half my paper positions for a profit in preparation to buy more phys (hopefully) after a smackdown. Why not? The manipulators are still strong enough to continue the scam for now and have given us many phys entry points over the years. Thanks for the education at Turd U!
heathbr · Mar 8, 2016 - 12:16pm


Can you add another Copper:Silver chart in the podcast today?

· Mar 8, 2016 - 12:18pm


Gold pounded/manipulated/driven lower today against the yen. For the past five days, the correlation remains intact. However, for the day, gold has seemingly been intentionally driven lower against the rising yen (falling usdjpy) and this has kept gold from making new 2016 highs above $1281.

bookers126 · Mar 8, 2016 - 12:36pm

And Thus

The GSR chart is simply a derivative of "unbacked and under-collateralized paper derivative contracts."

It is virtually impossible for people to make informed business decisions when everything is based on on nothingness and the nothingness, in turn, is controlled unpredictable nothingness.

canary · Mar 8, 2016 - 12:39pm

Chuck Butler (Daily Pfennig)

"Well, want some more proof that the whatever jobs were actually created in February weren't bread winner jobs? The Fed's very own LMCJ (Labor Market Condition Index) fell 2.4 points in February, the largest monthly drop since 2009, despite the so-called strong job growth during the month...And before we go on, January's original estimate for a 0.4 pts gain, was revised downward to -0.8...So two consecutive months a negative wage growth according to the Fed's very own index!".

G-Rod · Mar 8, 2016 - 12:42pm

Based on your chart

Today is a buying opportunity for when Gold catches back up to the Yen.

(Or vs a vs Yen catches down...)

Also - looks like gold is riding the Nemesis line and finding support

G-Rod · Mar 8, 2016 - 12:56pm

Actually, our "Nemesis Line"

Actually, our "Nemesis Line" is way down and out of the picture. I think, instead, you're referring to this:

· Mar 8, 2016 - 12:59pm

Not sure if there's a

Not sure if there's a correlation but this is certainly noteworthy...

The last time the 2-year treasury note exceeded in yield the 30-year Jap bond was early 2008. We all know what happened later that year.

· Mar 8, 2016 - 1:17pm

Here's another thing that

Here's another thing that I've noticed for years but since it occurs so infrequently, we rarely document it.

One nights/sessions where The London Monkeys stand down (as they have the past two), the burden of selling gold down falls to the banks on the Comex the next day. See below as the latest example of this:

braincramps · Mar 8, 2016 - 1:26pm

The illusion of choice and love of war.... George Carlin

He was sooooo far ahead of his time

George Carlin The Illusion Of Choice, voting, presidents, corporate control and more...
Kokanee · Mar 8, 2016 - 1:52pm

Cup and Handle Still Looking Good

Clive Maund likely won't agree, but call me an optimist. 

C1 · Mar 8, 2016 - 2:02pm

Fraud and Deceit

Turd: This could hold many titles in including Smoke and Mirrors, Sleight of Hand, Pay No Attention to That Man Behind the Curtain, etcetera. Your point, now very specifically and succinctly stated, is the system is one designed to benefit one class of "investors" to legally fleece all others not in their game. The Government "regulators" keep it legal because it has worked to accomplish the ancillary goal of masking the inflationary expansion of "money".


tyberious · Mar 8, 2016 - 2:05pm

Danny B

the turndown of the debt cycle,,, cash and freedom

"There are two sides in the global war against cash. On one side are many of the world’s governments, central banks, fintech firms, banks, credit card companies, telecommunication behemoths, financial institutions, large retailers, etc. According to them, the days of physical currency are numbered, so why not pull the plug already

“I have my doubts that introducing a cash limit or getting rid of bigger denominations can really prevent terrorists or criminals from engaging in illegal activities,” Carl-Ludwig Thiele, Bundesbank board member in charge of cash issues, said in a speech last week. “We also should ask ourselves: what sort of an understanding of government forms the basis of these proposals? Citizens should not be put under general suspicion.”

“We don’t want someone to be able to track digitally what we buy, eat and drink, what books we read and what movies we watch,” said Austrian Deputy Economy Minister Harald Mahreron on Oe1 radio. “We will fight everywhere against rules” including caps on cash purchases, he said."
"“We want citizens to be able to pay in whatever form they desire. Especially in Germany, cash is part of that,” said Thiele. And he warned that “freedom always dies bit by bit.”
“Freedom Always Dies Bit by Bit”: Bundesbank Takes Sides in War on Cash | Wolf Street

America closed quite a few zombie banks. Europe and Japan tried to keep all of them going. This is still dragging down their economies. Zombie Banks - Bloomberg QuickTake

"Powers of east are rising because they lack the debt baggage of decades of supporting a welfare state"
New round of open-ended bond purchasing program of agency mortgage-backed securities also known as Quantiative Easing (QE) before presidential elections.

"Ordinary people have been lumbered with a total global debt of $230 trillion — a debt that has gone up tenfold since the early 1990s. And don’t believe that anyone can ever repay this debt. If debt goes up ten times in so called good times, how can they ever be reduced or repaid in bad times? "
"So the world will soon experience the start of a downturn that will erase a major part of the gains in the last 100 years. This will involve most of the bubble assets (stocks, bonds and property) imploding by at least 75-95% in real terms. The debts that have financed these bubbles will of course also implode which means that the financial system will not survive intact. "
Legend Warns Massive Coordinated Global Money Printing Program Is About To Shock The World | King World News

Debtor days are over as BIS calls time on world credit binge – Telegraph
Debtor days are over as BIS calls time on world credit bingeÂ*
So, we have $200---250 trillion in debt that has been serviced by creating fresh debt to roll over the original debt. The BIS says that this is winding down. Debt creation is like air under the wings of a plane. Draghi and Kuroda talk about "bazookas" to save the system. The world is slowly coming to an understanding that debt creation only works in small doses. A welfare State needs BIG doses because; debt created for consumption is not the same as debt created for investment / growth.
America has been slower to create debt through the FED. BUT, this is an election year. Peter Schiff is calling for lots of QE before the election.

G-Rod · Mar 8, 2016 - 2:21pm

So the bottom line is the Nemesis line?

I thought it was the top line.

Thanks Turd.

Angry Chef · Mar 8, 2016 - 2:37pm

Bank of Canada...Idiots eh !

Go to the 5:00 minute mark...

He brings up a couple of good points. Canada is a resource based ( like almost every economy on the planet ) economy. Why sell one of our most precious resources ?

And why guard Fort Knox Gold if it's not worth anything ?

Both good points. Whether the Gold at Fort Knox is their or not. I have a sneaky suspicion, though I can't prove it, that someone needed Gold badly. And that is where Canada's Gold is. Maybe it was Blackrock that needed it ?

BlackRock Can Buy Gold Again: IAU Suspension Lifted After 300 Million New Shares Registered | Zero Hedge

gazzmann · Mar 8, 2016 - 2:50pm

SoT - Craig Hemke TFMetals Report:

Demand For Physical Gold/Silver Will Break The System

SoT - Craig Hemke TFMetals Report: Demand For Physical Gold/Silver Will Break The System
· Mar 8, 2016 - 2:51pm
G-Rod · Mar 8, 2016 - 2:54pm

No, that's not right either

This is The Nemesis Line:

SS121 · Mar 8, 2016 - 2:59pm

Quote of the day !

Having physical price determined by the ludicrous machinations of this current Bank confidence scheme allows all of us the opportunity to buy and stack physical gold at a price that is deeply discounted from its actual value. I strongly suggest that you continue to use this historical anomaly to your advantage.


Angry Chef · Mar 8, 2016 - 3:05pm

Moscow Now Plays Main Role in the Oil Market

Moscow Now Plays the Main Role in the Oil Market - Fort Russ

"If this scenario works, Russia would be the de facto leader amongst the major oil-producing countries, and will be responsible for 73% of the world's supply," — says the author.

Can you say Gold Backed Ruble ?

And just in time for tonights Batchelor and Cohen show.

Just a coincidence I guess....

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