A Curious Pattern of Comex "Deliveries"

201
Mon, Aug 1, 2016 - 12:45pm

Even though gold "deliveries" on the Comex are nothing but a charade and shuffle of paper warehouse receipts and warrants, the latest trend is a real eye-opener and appears to be a rather interesting datapoint of extreme demand for gold in all its forms.

First of all, some background so that we're all on the same page...

Through the year, the Comex trades futures contracts for every month on the calendar. However, not all months are treated equally. Six of the months are treated as "delivery months" and these are the contracts which carry the majority of the short-term trading interest and volume. These months are February, April, June, August, October and December, The other six months are considered "non-delivery" and are very rarely traded or utilized as physical settlement contracts. These months are January, March, May, July, September and November.

A quick look at the current "gold board" reveals that, with the Aug16 contract now in its "delivery" phase, the active front month has become the Dec16. See below:

And, as you can see on the next chart, fully 3/4 of the entire Comex gold open interest can now be found in this front month, Dec16 contract:

OK? So, when a front month comes "off the board" as the Aug16 did last Thursday, it moves into its "delivery phase". This is when the entire charade and fraud of "Comex delivery" kicks in, usually characterized by a simple shuffling of paper warehouse receipts back and forth between the various Banks which operate the vaults. We've written about this on countless occasions over the past six years so we're not going to cover all of this again. Suffice it to say that there is very little, actual metal that is ever physically delivered on Comex. The entire process is simply in place to create the illusion of physical delivery in order to give The Bullion Bank Paper Derivative Pricing Scheme some element of legitimacy. That said, what is currently happening on Comex is a shocking trend that requires your attention and consideration.

Let's start by considering how a typical year of Comex deliveries has historically played out. Below is a chart of the delivery totals by month for Comex gold in 2015. Note that the blue bubbles draw attention to "delivery months" beginning with the Dec14 and the red bubbles denote the totals of the non-delivery months.

Do you see how this works? For all of 2015, the six delivery months produced a total gold delivery of 15,070 Comex gold contracts or, on average, about 2,500 per delivery month. Each contract represents 100 ounces of "gold" so the Comex can be said to have "delivered" 1,507,000 ounces of gold in these six months or a paltry 47 metric tonnes. For all of 2015, the six non-delivery months produced a total gold delivery of 1,148 contracts or about 200 per non-delivery month. This comes out to just 114,800 ounces of gold or almost 4 metric tonnes.

Adding this all together...For all of 2015, the Comex "delivered" 16,218 contracts of gold. This was 1,621,800 troy ounces of "gold" or about 51 metric tonnes.

(I don't know. Maybe I should stop here for a moment and let you consider whether, in the grand scheme of things, 51 metric tonnes is really much gold at all. The world produces about 3,000 metric tonnes per year so Comex "delivers" about 1.5% of total mine supply. And yet Comex/Globex electronic derivative trading is allowed to produce the price at which physical transactions take place around the globe. Neat trick, huh?)

Anyway, not to get sidetracked. Let's get back to the alleged Comex "deliveries" and have a look at the startling trend that we mentioned earlier...

Below is a chart of the total Comex gold deliveries thus far in 2016. Note that, as the year began, the amount of "gold" being shuffled around each month is not that dissimilar to 2015 or, frankly, any other year in the past. The non-delivery month of January kicked off the year with just 172 deliveries. Delivery February followed with 2,569. This was more than Feb15 but, all things considered, nothing significant or noteworthy. Non-delivery March saw just 743 and Delivery April had 3,984.

And now here's where things get funky...

Non-delivery May15: 26 Non-delivery May16: 2,215

Delivery Jun15: 2,959 Delivery Jun16: 15,785

Non-delivery Jul15: 728 Non-delivery Jul16: 6,987

Hmmmm. Does this seem a little unusual to you? Me, too. In fact, go back and check the total amount of Comex gold deliveries for ALL OF 2015. Do you recall the number? 16,218 contracts for 51 metric tonnes. This year, the month of June alone nearly exceeded that total at 15,785 and 49 metric tonnes! And the just-completed, non-delivery month of July had a total of 6,987 contracts for 21.73 metric tonnes of "gold". This is FIVE TIMES the delivered total for ALL of the 2015 non-delivery months COMBINED.

And the trend doesn't appear to be reversing in the just-begun delivery month of August. At contract "expiration" last Thursday, the CME reported that there were 14,402 Aug16 gold contracts still open and indicating a willingness to "stand for delivery" this month. As you can see above, delivery notices for 5,028 contracts have already been sent out so August appears set to challenge June's record for total Comex gold "deliveries" in one calendar month.

Quite an interesting trend, eh? This is all definitely something that we will monitor all month and through the remainder of the year.

BUT

At the end of the day, you should be asking yourself "why does this even matter?". As stated above, almost ALL Comex deliveries are nothing more than an exchange of warehouse receipts and warrants and very little physical metal ever changes hands. Therefore, to claim that some kind of "delivery failure" or "default" emanating from the Comex is forthcoming would be naive. The true importance of this information is in its significance as a DATAPOINT OF GLOBAL DEMAND FOR ALL FORMS OF GOLD. Consider:

  • The tonnage of gold flow around the globe...from West to East and from South to North.
  • The extreme and surging growth of "inventories" in the gold ETFs
  • Total open interest on Comex, which by July 11 had grown 73% from January 29
  • Global Mint and Central Bank demand, including China and Russia
  • Interest in owning mining shares has sent the HUI index up over 170% year-to-date

And now we have Comex allegedly "delivering" gold at a never-before-seen record pace.

We are truly in a brave new world my friend...off the map and into the region marked "beyond which be dragons". These historical anomalies in Comex "delivery" are just another datapoint that signals extreme, global demand for gold in all its current forms. Our hope here at TFMR is that, one day soon, the entire Bullion Bank Paper Derivative Pricing Scheme will finally collapse as delivery demands simply overwhelm the Bullion Banks' ability to supply physical gold on a just-in-time basis to an insatiably hungry investment world.

When will this day come? It's impossible to say with certainty given the deliberately opaque nature of the current system. However, the day WILL come and you had best prepare for that eventuality. Buy gold and TAKE PHYSICAL DELIVERY NOW before it's too late because, when the music stops and the paper games end, I can promise that you DO NOT want to one of the sad, uninformed few left holding nothing but a stack of meaningless paper certificates.

TF

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  201 Comments

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AlienEyes
Aug 3, 2016 - 10:18pm

OOO

Oh my my. It seems your post failed to load.

If you are bitching because your head just exploded, I am pleased no end, having done my good deed for the day.

OOOBuck
Aug 3, 2016 - 10:10pm

Alien - You've outdone even yourself

Disgusting but not without a certain jocularity which is good, because if I thought you were serious through any of that outrageous rant, I'd have no choice but conclude that you have totally and utterly lost your mind.

AlienEyes
Aug 3, 2016 - 10:01pm

A Rant on Socialism

Socialism does not work. Ask anyone (except a stupid f#%king socialist) in Venezuela. Unfortunately, before you can ask them, you will first have to pry them out of the trash can they are trying to find lunch in.

That's why people that think it does work are called fools, dickweeds, and 'useful idiots' (and I'm being polite).

Fools and 'useful idiots' are like people except with the minds of chimps or less. OK, ok, quite a bit less.

Socialist have infantile minds and still believe in Santa Claus which is fine except they think the people who aren't socialist ARE Santa Claus.

To make matters worse, they think that what real working productive people have belongs to the lazy, mindless scum that haven't worked in five generations or more and have an average I.Q. of about 70.

Socialist all have a taste for sh!t. Research has found that this is a direct results of having sh!t for brains. After witnessing failure after failure of socialist states, they all believe that "next time it will be different". Yeah, sure it will you stupid s.o.b.

Socialists are never atheist. They are all devout believers in the "god of free sh!t". Poor Rudyard Kipling could have never guessed what a bizarre form "the White man's burden" would take in the twenty-first century.

Fuck socialism, communism, Marxism, newspeak, PC, diversity, militant leftist Catholicism and pisslam with a sharp stick !!!

I am NOT "my brother's keeper" as currently defined and morons, thieves, murderers, banksters, shills, politicians, filthy lazy scum, social parasites, political whores and simple minded socialists are NOT my Fu#king "brothers". Every one of the aforementioned aresholes should be removed from the gene pool and sterilized for the good of mankind. A few generations later and we will be free of the societal blood suckers and their supporters that are commonly referred to as far left "liberals". Liberals are the root cause of why we live in a period of global decline. We owe their ilk absolutely NOTHING !

Before any society has any prayer of working, the parts that don't work or act as a constant drag on that society's achievements must be removed.

AE

MRobOOOBuck
Aug 3, 2016 - 7:31pm

oops!

Hah! Serious oops - you're good, my bad, no need to apologise! Thanks for clarifying though and being so civil with my apparent inability to spot a joke online :-)... Oh brother, totally misinterpreted... well hey, that's life, my apologies!

And yup it is a fun post you wrote ... Wondered why I couldn't really understand it before haha... It makes much more sense this way... !! Mmm yeah, it's clearly a joke, but maybe I was just too shocked to find myself apparently being called a socialist, never happened to me before :-).

Lemming
Aug 3, 2016 - 7:10pm

Will Rogers

"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest of them have to pee on the electric fence for themselves."

OOOBuck
Aug 3, 2016 - 6:01pm

MRob - You leave me

in the difficult and near futile position of attempting to explain a joke. No sir, I am not trolling you.

The header expressed the mindless but effective tactic of name calling. "British Socialist", as though it described a man-eating, rabid beast or some other vile thing. Of course, it's ridiculous.

I was serious though about socialism in Britain, at least as I understand it.

As I've stated previously, I view socialism and social democracy as two different political pursuits although both share similar goals in political and social responsibility to the general mass of society.

Please accept my apology for the misunderstanding.

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MRobkoan
Aug 3, 2016 - 4:40pm

good thoughts

You know, I have a lot of time for the argument I have heard from anarchists in the past, now from you, that no organisation (government) should have a monopoly on the use of force. And nobody should even be forced to do something against their own will. And I totally agree, that makes sense. Unfortunately, the world is a complex place, and it seems to me that no single philosophy has all the answers.

I'll give you two examples I have been chewing on...

In the first, a person or organisation sets up to suck huge amounts of water from groundwater, eg for growing crops in arid conditions. Water table plummets, local wells dry up, etc. Locals start demanding this person/organisation stops, they refuse. What to do? Like it or not, some people (not all, probably minority) are selfish, and the water table is a collective resource that spans hundreds of miles. A voluntary-ism arrangement wouldn't work, clearly, so we have the use of force all over again, set up by the self appointed "guardians" of the resource. And after a while, the guardians set boundaries on the area, and warn wider neighbouring organisations - don't take too much water, or else! And since it is such a wide area, and there are real "water poachers" out there, policing it is serious business. Taxes must be collected, from everyone! Because again, some people are selfish, this is life, and will want to enjoy the benefits of good wells without wanting to pay to protect them. Sound familiar? Like a... Government? To imagine a humanity free of all selfishness, is a lovely thought, but I think not realistic. Again, no single quality applies to all people

Second example. Two expectant mothers, both with loving husbands and families who want to take part in raising the sprog, supporting them etc. Then one day, boom! Gas explosion, lightning strike, whatever. One mother to be is now on her own. Let's flip it even more, her child turns out seriously disabled. Fate has loaded the world against her, and she has to go out into the world and beg the charity of others? Let's say she is a huge introvert, terrified of such things. To me, a system where such a person doesn't have an institutional safety net, is not a civilised society either. And ok, we could have a voluntary charity nationwide system, but again, being a realist, some won't pay others will, this is human nature. The nicer people are then burdened with helping the poor and needy while the selfish keep all their money? And let's not forget, the richest are sometimes the most selfish of all.

As I say, I honestly don't think there is a perfect ideal solution, everything is ultimately a value judgement, with plus and minus sides.

Enough type, be interested to hear your response.

There was another reply from OOOsomeone, who I am honestly not sure if is trolling me or not, and since i couldn't even understand what was being said, I'll just leave it eh!

koan
Aug 3, 2016 - 2:42pm

Pick your 'ism'

doesn't matter which, its a question of choice - if it involves attempting to force (through man made laws, regulations etc) even one person to do something against their free will then it is no system for an evolved society.

Socialism (which goes hand in hand with democracy) appears to opt in a lot of people - judge a society collectively as the sum of each individuals free choice, not what the 'majority' force upon the rest.

Ironically, socialism is touted as the caring/altruistic option vs say libertarianism which is misinterpreted as selfish etc but at the core of the philosophy of socialism is the belief that left to our own devices humans wouldn't choose to be altruistic, caring etc so socialism 'cures' this by forcing sharing of an individuals own earnings/property. Socialists are pessimists and libertarians are optimists, whodathunkit.

lnardoziLemming
Aug 3, 2016 - 2:18pm

re ?

The chance of this happening accidentally is 1 in 33 trillion.

And...?

What if it were 1 in 9 septillion? The chance of it being that number, or some other number is unity. Why would you, or anyone for that matter be impressed or even interested that some random mathematical operation yielded a particular answer when there is and can be no significance to that fact? Isn't it indisputable there must be some answer, and is it not also indisputable that the answer happens to be what it actually is?

In what universe can this possibly have any meaning to anyone whatsoever?

Sorry, man but... wait - I'm not even calling you out. I'm just pointing out... you know what, never mind.

OOOBuck
Aug 3, 2016 - 1:52pm

MRob - British Socialist

Welcome to America! We love to dispense with counterpoint by attaching a name and discarding it to the junk heap before we need tax our brains by thinking it through for ourselves.

Uhh, they also do that in parliament which by the way, has never been 'socialist' per se (how else could Her Majesty have maintained the throne all these years?).

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