bottom of the barrelAs of Monday evening, The Comex is now operating on a ratio of 542 paper ounces for every 1 ounce of registered gold.
This means the February delivery period is about to begin with only enough registered gold to satisfy just 740 contracts.

Submitted by Craig Hemke, TFMetals Report

Some stunning and sizeable moves within the Comex gold vaults today drops the total registered gold down to just 73,949 troy ounces, slightly more than just two metric tonnes.
This raises the “Comex Bank Leverage Ratio” to a new all-time high of 542:1!  What the heck is going on here?

Before we get started, here’s your CME Gold Stocks report, issued on Tuesday for the vault activity of Monday (click to enlarge):

Note that, after the reclassification of registered gold to eligible gold by Brinks, HSBC and Scotia, the total registered gold has fallen today to a new all-time low of just 73,949 troy ounces…or slightly more than two metric tonnes. Additionally, based upon yesterday’s total Comex gold open interest of 400,948 contracts representing 40,094,800 paper ounces of “gold”, the “Comex Bank Leverage Ratio” has risen to a new all-time high of a whopping 542:1. This means that, as of last evening, The Comex was operating on a ratio of 542 paper ounces for every 1 ounce of registered gold. This is simply incredible and I’m sure ZeroHegde and others will soon have charts that demonstrate the absurdity of all of this.

However, I want to caution you…for now…from making too many quick assumptions as I think I can identify a possible reason for these stunning moves.

Recall that back during the December 2015 gold “delivery” phase, the Comex only “delivered” an underwhelming total of 2,073 contracts for 207,300 ounces of “gold”. Of these 2,073 “deliveries”, the House (proprietary) Account of JP Morgan stopped or took “delivery” of 2,021 contracts or 202,100 ounces. Remember that number…202,100 ounces.

We noticed at the time and were sure to point out that this is the fallacy of The Comex. JPM House allegedly took delivery of 202,100 ounces of gold but the daily Gold Stocks reports showed no gold actually moving or changing hands. See below. First, here’s the daily Gold Stocks report from December 1 with JPM holding in their vault 7,975 ounces of registered gold and 339,923 ounces of eligible gold for a total vault of 347,989 ounces:

And now here’s the Gold Stocks report from December 31. Note that, even after allegedly taking delivery of 202,100 ounces of gold during the December delivery period, JPM still shows just 7,975 ounces of registered gold and 337,121 ounces of eligible for a total of 345,096 ounces. Hardly any change at all!

So, here is how I think this all comes together and why I caution you against jumping to conclusions today.

Go back up and look at how much gold was reclassified yesterday between Brinks, HSBC and The Scoshe. Notice that the total is 201,345 ounces.

And how much “gold” did JPM allegedly deliver to their own, proprietary account back in December? Again, that number was 202,100 ounces.

And we went the entire month of December and all of January without seeing ANY sizeable deposits into JPM’s Comex gold vault. JPM booked in one of those perfect and precise, two metric ton jobs back on January 4. This raised their total Vault to 409,396 ounces. On today’s report it’s still just 409,195 and still shows just 7,774 ounces of registered.

So, here’s what I suspect…

This movement today of 201,345 ounces, out of registered and into eligible at Brinks, HSBC and Scoshe, is the actual “delivery” of “gold” for JPM from December. JPM now holds this “gold” in warrant or warehouse receipt form in their competitor’s vaults and it’s all in the eligible category. As February “deliveries” begin later this week, DO NOT BE SURPRISED if JPM now becomes the issuer with HSBC and Scotia taking “delivery”. This would fit the pattern of the continual and endless, circle jerk parade that creates the illusion of physical delivery on the Comex and allows the exchange to claim and maintain dominion over the price discovery process.

One final item, however, and this is important: Again, let’s wait to see what the Gold Stocks report shows tomorrow. Perhaps JPM will book in these ounces after all and place them back into the registered category. IF THEY DON’T, then we have another data point on the long list of signals indicating physical tightness in the global gold market. As recently as 2009, The Comex showed over 5,000,000 ounces of registered gold in its vaults. As recently as one year ago, the total Comex registered Vault exceeded 1,000,000 ounces. As of today, that number has fallen to a new all-time low of just under 74,000 ounces.

The February delivery period is about to begin yet there is only enough registered gold to satisfy just 740 contracts. This fraudulent scheme of hyperleverage may, indeed, be on its last legs. Only time will tell. For now, though, the month of February will certainly prove to be interesting.

Keep checking back here for regular updates and prepare accordingly.


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  1. Turd, nice supply update. On a slight tangent, my idea from the contract perspective is that an increase there could easily just be the additional paper contracts.  A few years ago the typical ratio of contracts to registered ounces was 20. I suspect the additional owners first to 60 then 100, 200, 300 and now 500 aren’t more contracts of interested owners. That number might be the same as when there where 20 owners per ounce. So the usual small monthly delivery amounts can continue.  But even those small amounts are pressure on 2 tons.

    I hope there’s another stacking smash in January or February. December was great!!

  2. At these levels, at least to me, a buy is a buy. If the price moves a percent or 2, it seems now premium often fills the gap.

    To this leverage story, it certainly on paper is of note, and shocking. Given David Morgan stated a number of years ago that comex can contractually cash settle I think it’s fair to say this doesn’t matter until the precise moment it does.

    We’re getting closer, yeah.. however, wake me up before you go go.

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