Fun With Comex Open Interest

96
Wed, Apr 20, 2016 - 11:21am

Gold prices remain firm today...with the exception of the $5 drop at the London PM Fix...and they remain at a critical juncture. Price needs to extend higher here but total Comex open interest is back above the 500,000 level and, if recent history is any guide, that's not a good sign.

Let's start with the open interest numbers for yesterday as they were exactly as expected. On the $19 price surge, you knew that The Banks were in there, desperately attempting to keep things in check. To that end, The Criminals issued another 13,553 contracts of Comex gold yesterday. Again, these contracts represent an additional 1,355,300 "troy ounces" of paper metal and a future intent to deliver over 42 metric tonnes of gold. However, no additional gold collateral was deposited and no delivery is ever intended. Instead, The Criminal Banks issue this new paper in order to meet Speculator demand and thereby manage price from making fresh highs above $1264...and preserving their carefully-painted head-and-shoulder top:

So, what happens next? Well, it looks like price wants to break higher and I want price to break higher...but we have recent history working against us. Check this out:

DATE OPEN INTEREST NEXT DAY DROP

Mar 10 504,418 -

Mar 17 508,262 -

Mar 22 510,579 -

Apr 12 504,523 -

Apr 19 503,331 so far, so good

So, we'll see. Like we've been saying, we need even more Spec fiat to flow into paper gold. This would force The Banks to take OI up to 550,000 and price would likely move to new highs near/above 00. Now, what could/can/might entice enough new Specs onto The Comex to make this happen? Maybe the next set of FOMC Fedlines next week on the 27th? Maybe the release of the first guesstimate of Q1 GDP the next day? Maybe more crazy fun out of Shanghai? I don't know. But we need some kind of catalyst...otherwise, The Banks will just overtly raid price again, forcing The Specs back out and dropping OI back toward 480,000.

Silver saw an open interest increase yesterday, too, but not much when you consider that price was up over 4%. Total Comex silver OI rose by 946 contracts to 194,510. Don't misunderstand, though. This is still an extraordinarily high amount of open interest. The all-time high in Comex OI was set last June 23 at 200,273 and, less than two weeks ago, we were at 175,000. However, if you really want to get frustrated and angry, consider this:

Every Comex contract represents an opportunity to buy or deliver 5,000 troy ounces of silver. Therefore, when we do the math: 194,510 contracts X 5,000 oz/contract we get a total Comex "obligation" of 972,550,000 ounces of "silver". And here's your trivia question of the day...How much silver does the world produce every year? About 870,000,000 ounces. So The Comex silver open interest represents at 112% of total mine supply.

How does that compare to gold? Well, the world is projected to mine about 3,000 mts this year or about 96,000,000 ounces of gold. With each Comex contract representing 100 ounces, a total OI of 503,331 contracts equals 50,333,100 ounces or about 52% of total mine supply.

And what about platinum? A Comex contract represents 50 ounces of platinum and there are currently 60,387 of them floating around. This represents 3,019,350 ounces of paper platinum. And how much platinum does the world mine every year? About 178 metric tonnes or roughly 5.7 million ounces. So here the Comex also trades about 52% of mine supply.

Lastly, and just for fun, you might consider that total Comex copper open interest is 201,891 contracts. Each contract represents 25,000 pounds of copper. This yields a total of just over 5 billion pounds of copper. That may sound like a lot until you consider that the world produces about 41 billion pounds annually. So, The Comex copper open interest represents about 12% of total mine supply.

HAHAHAHAHAHAHAHA!!! Do you see a little bit of disparity here??? What would be the paper price of silver if open interest was cut in half to the level of gold and platinum? What would be the paper price if OI was reduced by 90% to the relative level of copper? And you wonder why I call the Bankers "criminals" and "thieves", and why I call the Comex a "den of vipers" while using the terms "fraud" "scam" and "sham".

So, anyway, before I start getting angry, I think I'll just give you a couple of charts and then close out this post. Here are gold and silver. Again, gold needs a move through 64 to ease some of my concerns. Provided gold holds in there in the short term, I still think that silver charges through .20 and heads to .70.

As I close, I see we're at $1258 and $17.20.

More later,

TF

About the Author

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turd [at] tfmetalsreport [dot] com ()

  96 Comments

Marcrward
Apr 20, 2016 - 12:01pm

I don't look out that far

My aim has always been to look at things through the lens of how The Cartel seems them...not the traditional TA.

Fandango
Apr 20, 2016 - 12:03pm

Not yet

The action yesterday in silver was likely some short-covering of the 25,000 Large Spec shorts that remained as of last week. We'll know more on Friday.

I still think we're a long ways from any kind of April 2011 Silver Bank short squeeze.

SS121
Apr 20, 2016 - 12:03pm

silver chart

If you've got dry powder, this is no time to be over-thinking things.

The USD coup attempt is in motion. Opportunity of a lifetime low Silver prices will end when it goes full-on mainstream... with Cramer screaming and Drudge's little spinning light, etc etc..

Now the silver chart is slowly working higher to validate the China fix effect. The China fix follow-on is only going to increase. don't know if that means the silver chart will never be going back to the 14s and 15s, but the tiny savings that may never come isn't worth the risk of missing the upside move, imo.

And last but not least- a few more green plastic boxes just moved from the system camp to the stacker's camp.

canary
Apr 20, 2016 - 12:06pm

Do we really need a new catalyst...

...For the new Specs to come and lift the price?......What if the price consolidates here for a while and some weak handed shorts start to cover positions.....The effect on price should be the same, right?

Safety Dan
Apr 20, 2016 - 12:15pm

The Holter Report Bill

The Holter Report

Bill Holter

April 19th ...they lit the first candle

Many of us have waited for today, April 19, as we anticipated the new Chinese daily gold fix and the opening of the ABX physical exchange. Some may be disappointed, other ecstatic. I will say I am personally pleased because it was almost exactly as I suspected.
Much has happened over the last couple of weeks and a lot of it has to do with "truth" being exposed. The "markets" are no different. China in my opinion is simply trying to aid in markets determining prices of gold and silver.

Last Friday we got horrifying (from a contrarian standpoint) COT numbers with nearly record numbers for commercial shorts. With history as any guide, gold and silver should have already been slaughtered, they have not been. In fact, we now have silver and gold at nearly one year highs and mining equities exploding. Yesterday saw a dozen or more juniors up 25%++ for the day!
As I have maintained, I believe today's action will become more frequent with the Shanghai physical demand pushing prices higher. I believe they lit the first candle of truth today, other candles will follow until the light switch gets flipped on. COMEX/LBMA will either go along in price or they will be arbitraged completely out of inventory. As I wrote several weeks back, "what good is a contract that cannot perform"? It is very possible China will let this "stew" for a while and allow the markets time to adjust to real and free pricing ...only then do I see China coming out with a gold backed yuan. If they were to do that today, it would be a declaration of war on the U.S. hegemon, if they wait, they can have cover and say "hey, it was global free markets that pushed gold out of sight".
As mentioned above, commercials are very short gold and silver now, they have lost $billions just today. Maybe they continue to throw paper at gold and silver, Shanghai ain't buyin' it! No matter what the apologists say, COMEX can and will default when they can no longer deliver metal. They say "cash settlement" is not a default ...who are they kidding? This is the rally you never sell ...until you are offered a different "paper" (one that is backed by something, anything) that can be trusted. China may be making this offer in the near future!

Standing watch,

Bill Holter

Holter-Sinclair collaboration

Comments welcome bholter[at]Hotmail[dot]com

Fandango TF
Apr 20, 2016 - 12:16pm

Not yet

Thanks mate. It's a long way to Tipperary...

Marcrward TF
Apr 20, 2016 - 12:16pm

Copy.

you have certainly re-created their play book!

Apr 20, 2016 - 12:23pm

$17.20 silver

Do you recall how we've discussed $17.20 as a resistance spot on the way to $17.70? Just yesterday, we posted this:

Well, look at the action since. Again, once clearly through that level, silver should proceed to .70

Here's an even closer look:

luvabean
Apr 20, 2016 - 12:23pm

woke up, immediately checked spot to see if i could still stack

...ahh turd,
i understand that you are much more diversified than i am as a simple factory mule stackin' physical...
so, i can kinda' understand that these seemingly never ending cycles are angering and exhausting,
alas,
i remember this ominous message @ 7:10 betwixt bill holter and santa,
and slowly, cautiously stack and prepare as things could be unpredictable.
https://www.youtube.com/watch?v=B0K80538fRM

Fandango SS121
Apr 20, 2016 - 12:30pm

SS121

Green Monster?

Used to import those silver eagles for awhile. All good until on one shipment, the Australian Tax office hit me up for 10% GST. Tried to argue the point 'legal tender', but the boffin at the ATO said "Take legal action." My pockets are not that deep.

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