Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1089.40 down $5.50 cents (comex closing time)
Silver $14.52 down 23 cents.
In the access market 5:15 pm
Gold $1085.00
Silver: $14.50
First, here is an outline of what will be discussed tonight:
At the gold comex today, we had a good delivery day, registering 256 notices for 25,600 ounces and on Friday we had 16 notices for 80,000 oz . Silver saw 1 notice for 5,000 oz for Friday.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 235.52 tonnes for a loss of 59 tonnes over that period.
In silver, the open interest fell by 1159 contracts. The total silver OI continues to remain extremely high, with today’s reading at 185,926 contracts In ounces, the OI is represented by .930 billion oz or 132% of annual global silver production (ex Russia ex China). This dichotomy has been happening now for quite a while and defies logic. There is no doubt that the silver situation is scaring our bankers to no end as they continue to raid as basically they have no other alternative.
In silver we had 16 notices served upon for 80,000 oz.
In gold, the total comex gold OI rests tonight at 435,095. We had 256 notices filed for 25,600 oz today.
We had no withdrawals in gold tonnage at the GLD today / thus the inventory rests tonight at 672.70 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. I thought that 700 tonnes is the rock bottom inventory in GLD gold, but I guess I was wrong. However we must be coming pretty close to a level of only paper gold and the GLD being totally void of physical gold. In silver, we had no change in silver inventory at the SLV / Inventory rests at 326.829 million oz.
We have a few important stories to bring to your attention today…
1. Today, we had the open interest in silver fall by 1159 contracts down to 185,926. We again must have had some shortcovering by the bankers as they feared something was brewing in the silver arena. The OI for gold rose to 435,095 contracts
(report Harvey)
2. Two big commentaries from Bill Holter
first commentary title:
“I Dare You!”
and the second commentary:
“The Great Call.”
(Bill Holter/Holter-Sinclair collaboration)
3. Two important stories on Greece
(zero hedge)
4.One story on Ukraine
(zero hedge)
5.Is GLD being raided to supply China?
(TF Metals, Craig Hemke/Dave Kranzler ird)
6. A superb Ted Butler commentary
(Ted Butler)
7. Huge Chinese demand this past reporting week: 73 tonnes
(Jessie/Americain cafe)
8 Huge demand for gold from India/155 tonnes of demand over the first two months of their fiscal year.
(times of India)
9 Trading of equities/ New York
(zero hedge)
10. Oil related stories (3)
zero hedge/ Andy Tully
11. USA stories:
Data for today:
a)
i). Personal spending down
ii). ISM manufacturing slumps
iii). Construction spending also slumps
b). Puerto Rico defaults on its bonds
c). Another casualty in the coal space: Alpha Natural
(zero hedge)
Here are today’s comex results:
The total gold comex open interest rose from 427,678 contracts up to 435,095 for a gain of 7417 contracts. For the past two years, we have strangely witnessed two interesting developments with respect to the gold open interest: 1) total gold comex collapse in OI as we enter an active delivery month, and 2) a continual drop in the amount of gold standing in an active month, and today the latter was again the norm. What is interesting is that the LBMA gold is witnessing a 7.40 premium spot/next nearby month as gold is now in backwardation over there. We are now in the contract month of August and here the OI fell by 920 contracts falling to 8,295 contracts. We had 3 notices filed upon on Friday and thus we lost 917 contracts or 91,700 ounces will not stand for delivery.The next delivery month is September and here the OI fell by 73 contracts down to 1993. The next active delivery month if October and here the OI rose by 167 contracts up to 25,194. The estimated volume on today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 121,608. The confirmed volume on Friday (which includes the volume during regular business hours + access market sales the previous day was fair at 196,300 contracts. Today we had 256 notices filed for 25600 oz.
And now for the wild silver comex results. Silver OI fell by 1159 contracts from 187,085 down to 185,926 contracts despite the fact that silver was up by 6 cents yesterday . We continue to have our bankers pulling their hair out with respect to the continued high silver OI as the world senses something is brewing in the silver arena. We are in the delivery month of August and here the OI fell by 20 contracts down to 89. We had one delivery notice filed on Friday and thus we lost 19 contracts or 95,000 ounces will not stand for delivery in this non active August contract month.The next major active delivery month is September and here the OI fell by 2639 contracts to 120,622. The estimated volume today was fair at 26,105 contracts (just comex sales during regular business hours). The confirmed volume on Friday (regular plus access market) came in at 55,076 contracts which is excellent in volume. We had 16 notices filed for 80,000 oz.
August contract month: initial standing
August 3.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
1477.46 oz (Scotia,Manfra)
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
nil
No of oz served (contracts) today
256 contracts (25,600 oz)
No of oz to be served (notices)
8036 contracts (803,600 oz)
Total monthly oz gold served (contracts) so far this month
259 contracts(25,900 oz)
Total accumulative withdrawals of gold from the Dealers inventory this month
nil
Total accumulative withdrawal of gold from the Customer inventory this month
272,871.421 oz
Today, we had 0 dealer transactions
total Dealer withdrawals: nil oz
we had 0 dealer deposits
total dealer deposit: zero
we had 2 customer withdrawals
i) Out of Scotia: 95.01 oz
ii) Out of Manfra: 1,382.45 oz (43 kilobars)
total customer withdrawal: 1,477.46 oz
We had 0 customer deposits:
Total customer deposit: nil oz
We had 1 adjustments
i) Out of Scotia: 200.732 oz was adjusted out of the customer and this landed into the dealer account of Scotia
JPMorgan has only 3.098 tonnes left in its registered or dealer inventory.
.
Today, 0 notices was issued from JPMorgan dealer account and 48 notices were issued from their client or customer account. The total of all issuance by all participants equates to 256 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account
To calculate the total number of gold ounces standing for the August contract month, we take the total number of notices filed so far for the month (259) x 100 oz or 25900 oz , to which we add the difference between the open interest for the front month of August (8295) and the number of notices served upon today (256) x 100 oz equals the number of ounces standing
Thus the initial standings for gold for the August contract month:
No of notices served so far (259) x 100 oz or ounces + {OI for the front month (8295) – the number of notices served upon today (256) x 100 oz which equals 921,200 oz standing so far in this month of July (25.80 tonnes of gold).
We lost 917 contracts or an additional 91700 oz will not stand for delivery in this active month of August.
Total dealer inventory 351,720.09 or 10.939 tonnes
Total gold inventory (dealer and customer) = 7,570,807.473 oz or 235.48 tonnes
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 235.48 tonnes for a loss of 67 tonnes over that period.
end
And now for silver
August silver initial standings
August 3 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil
Withdrawals from Customer Inventory
1,040433.342 oz (CNT,Delaware,Scotia)
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
nil
No of oz served (contracts)
16 contract (80,000 oz)
No of oz to be served (notices)
73 contracts (365,000 oz)
Total monthly oz silver served (contracts)
17 contracts (85,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
nil
Total accumulative withdrawal of silver from the Customer inventory this month
1,446,601.7oz
Today, we had 0 deposits into the dealer account:
total dealer deposit: nil oz
we had 0 dealer withdrawal:
total dealer withdrawal: nil oz
We had 0 customer deposits:
total customer deposits: nil oz
We had 3 customer withdrawals:
i)Out of Delaware: 1,968.800 oz
ii) Out of CNT 321,429.900 oz
iii) Out of Scotia; 717,037.642 oz
total withdrawals from customer: 1,040,433.342 oz
we had 1 adjustment
Out of Brinks:
25,959.13 oz leaves the dealer and lands into the customer account of Brinks
Total dealer inventory: 56.568 million oz
Total of all silver inventory (dealer and customer) 174.630 million oz
The total number of notices filed today for the August contract month is represented by 16 contracts for 80,000 oz. To calculate the number of silver ounces that will stand for delivery in August, we take the total number of notices filed for the month so far at (17) x 5,000 oz = 85,000 oz to which we add the difference between the open interest for the front month of July (89) and the number of notices served upon today (16) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the August contract month:
17 (notices served so far)x 5000 oz + { OI for front month of August (89) -number of notices served upon today (16} x 5000 oz ,= 450,000 oz of silver standing for the August contract month.
we lost 19 contracts or an additional 95,000 oz will not stand in this delivery month of August.
for those wishing to see the rest of data today see:
http://www.harveyorgan.wordpress.comorhttp://www.harveyorganblog.com
end
The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.
***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:
i) demand from paper gold shareholders
ii) demand from the bankers who then redeem for gold to send this gold onto China
vs no sellers of GLD paper.
And now the Gold inventory at the GLD:
August 3.2015: no change in inventory at the GLD./Inventory remains at 672.70 tonnes
July 31/we had a huge withdrawal of 7.45 tonnes/Inventory rests this weekend at 672.70 tonnes
July 29/no change in inventory/rests tonight at 680.13 tonnes
July 28/no change in inventory/rests tonight at 680.13 tonnes
July 27/no change in inventory/rests tonight at 680.13 tonnes
July 24.2015/we had another massive withdrawal of 4.48 tonnes of gold form the GLD/Inventory rests at 680.13 tonnes.
July 23.2015: we had another withdrawal of 2.68 tonnes of gold from the GLD/Inventory rests at 684.63 tonnes
july 22/another withdrawal of 2.38 tonnes of gold from the GLD/Inventory rests at 687.31
July 21.2015: a massive withdrawal of 6.56 tonnes of gold from the GLD.
Inventory rests at 689.69 tonnes. China and Russia need their physical gold badly and they are drawing their physical from this facility.
July 2o.2015: no change in inventory
July 17./a massive withdrawal of 11.63 tonnes in gold tonnage tonight from the GLD/Inventory rests at 696.25 tonnes
July 16./we lost 1.19 tonnes of gold tonight/Inventory rests at 707.88 tonnes
August 1 GLD : 672.70 tonnes
end
August 3.2015; no change in inventory at the SLV/inventory remains at 326.829 million oz
And now for silver (SLV) July 31/no change in inventory/rests tonight at 326.829 million oz
July 29/no change in silver inventory/326.829 million oz
July 28/we had a huge withdrawal of 2.005 million oz from the SLV/Inventory rests at 326.829 oz
July 27/no change in silver inventory/inventory rests tonight at 328.834 million oz
July 24/no change in silver inventory/inventory rests tonight at 328.834 million oz
July 23.2015; no change in silver inventory/rests tonight at 328.834 million oz
july 22/no change in silver inventory/inventory rests at 328.834 million oz.
July 21.we had a massive addition of 1.241 million oz into the SLV/Inventory rests tonight at 328.834 million oz.
Please note the difference between gold and silver (GLD and SLV). In GLD gold is being depleted and sent to the east. In silver: no depletions, as I guess this vehicle cannot supply physical metal.
July 20/no change
july 17.2015/no change in silver inventory tonight/inventory at 327.593 million oz
July 16./no change in silver inventory/rests tonight at 327.593 million oz
August 3/2015: tonight inventory rests at 326.829 million oz
end
And now for our premiums to NAV for the funds I follow:
Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 11.4 percent to NAV usa funds and Negative 11.0% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 62/2%
Percentage of fund in silver:37.5%
cash .4%
( July 31/2015) Cdn holiday
2. Sprott silver fund (PSLV): Premium to NAV rises to -.55%!!!! NAV (August 3/2015) (silver must be in short supply)
3. Sprott gold fund (PHYS): premium to NAV falls to – .90% to NAV(July August/2015)
Note: Sprott silver trust back into negative territory at- 0.55%
Sprott physical gold trust is back into negative territory at -.90%
Central fund of Canada’s is still in jail.
Sprott formally launches its offer for Central Trust gold and Silver Bullion trust:
SII.CN Sprott formally launches previously announced offers to CentralGoldTrust (GTU.UT.CN) and Silver Bullion Trust (SBT.UT.CN) unitholders (C$2.64)
Sprott Asset Management has formally commenced its offers to acquire all of the outstanding units of Central GoldTrust and Silver Bullion Trust, respectively, on a NAV to NAV exchange basis.
Note company announced its intent to make the offer on 23-Apr-15 Based on the NAV per unit of Sprott Physical Gold Trust $9.98 and Central GoldTrust $44.36 on 22-May, a unitholder would receive 4.45 Sprott Physical Gold Trust units for each Central GoldTrust unit tendered in the Offer.
Based on the NAV per unit of Sprott Physical Silver Trust $6.66 and Silver Bullion Trust $10.00 on 22-May, a unitholder would receive 1.50 Sprott Physical Silver Trust units for each Silver Bullion Trust unit tendered in the Offer.
* * * * *
>end
And now for your overnight trading in gold and silver plus stories
on gold and silver issues:
Goldcore blog off today.
(courtesy/Mark O’Byrne/Goldcore)
end
(courtesy Craig Hemke/TFMetalsReport)
TF Metals Report: July 19 raid on gold was meant to drain GLD
Submitted by cpowell on Sun, 2015-08-02 18:38. Section: Daily Dispatches
2:37p ET Sunday, August 2, 2015
Dear Friend of GATA and Gold:
The raid on gold of Sunday night, July 19, was staged by bullion banks to drain more tonnage from the exchange-traded fund GLD to be sent to Asia, the TF Metals Report’s Turd Ferguson writes.
“As GLD is a readily-accessible source of instantly available gold,” Ferguson writes, “its authorized participant bullion banks are once again redeeming their 100,000-share lots for physical gold from the GLD ‘inventory.’ That this gold is then utilized to settle physical demand from around the globe is hardly arguable, given recent history.”
Ferguson’s commentary is headlined “The Gold Raid of July 19″ and it’s posted at the TF Metals Report here:
http://www.tfmetalsreport.com/blog/7036/gold-raid-july-19
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
end
And on the same subject as above
(courtesy Dave Kranzler/IRD)
Was The July 19 Paper Raid On Gold Implemented To Remove Gold From GLD?
August 2, 2015Financial Markets, Gold, Market Manipulation, Precious MetalsComex, GLD, gold manipulation, LBMA, paper gold, TF Metals Report
Craig Hemke of the TF Metals Report wrote an article which has sniffed out the probable motive behind the shamelessly blatant paper smash of gold on Sunday evening July 19 at one of the quietest trading periods of the week:
As a readily-accessible source of instantly-available gold, The Authorized Participant Bullion Banks are once again redeeming their 100,000 share lots for physical gold from the GLD “inventory”. That this gold is then utilized to settle physical demand from around the globe is hardly arguable, given recent history. – Craig Hemke, TFMetalsReport.com
I believe Craig has hit the nail on head here. Ever since first reading James Turk’s original dissection of the GLD Trust legal structure from the Prospectus, it’s been pretty obvious that GLD was created to act as a “holding reservoir” of physical gold that would be used by the Central Banks/bullion banks as a source of gold to required to settle LBMA forward commitments to buyers (i.e. China, India and Russia) who would refuse to settle in cash. 99% of all Comex trades are settled in cash.
The one unresolved question, for me anyway, is the issue of how much gold really still exists in unencumbered (e.g. leases or hypothecation agreements) physical bar form in HSBC’s vault or the vaults of designated subcustodians. It’s an question that won’t be answered until the system implodes because GLD, by design, has made it impossible for anyone to conduct a bona fide, independent audit.
This is an excerpt from a post I wrote on the The Golden Truth, the predecessor blog to Investment Research Dynamics – it looks like my analysis was correct back then which reaffirms Craig’s analysis of what happened two weeks ago:
We have witnessed a stunning drain of gold from the GLD ETF trust. Through last Friday, an incredible 479 tonnes – more than 35% – of GLD’s gold has been removed and has disappeared, most likely to Asia – in the space of about 10 months. The biggest chunk of that 479 tonnes was removed shortly after Germany’s Bundesbank issued it’s feeble and hopeless request to the U.S. that the Federal Reserve start shipping back some portion of the 1500 tonnes of gold that is supposedly being “safe-kept” on behalf of Germany by the Fed in its vault in New York City. Gold luck, Angela…
I have looked at GLD suspiciously ever since James Turk issued the first analysis of GLD’s prospectus back in 2004. Those of us who are familiar with securities laws and investor “safe guards” supposedly enforced by the SEC were absolutely shocked that the SEC approved the GLD prospectus as it was filed because of the egregious lack of GLD sponsor and custodian legal accountability standards typically required by the SEC for publicly traded securities.
Given this fact, I believed at the time that GLD was a scheme devised to suck in retail and institutional cash that might otherwise flow in massive quantities into actual physical gold that would be safe-kept in private vaults in this country. Although GLD has a mechanism to enable investors with a minimum of 100,000 shares to convert those shares into gold that would be delivered to the investor, the procedure is exceedingly cumbersome and expensive and there’s a mechanism embedded in the language of the prospectus that enables the trustee of GLD to deny such requests.
But I also knew – through GATA’s invaluable research – that there would eventually be a shortage of physical gold that would be available to allow the western Central Banks and bullion banks to maintain their oppressive and incessant manipulation of the paper gold market for the purposes of maintaining a cap on the price of gold, for the purposes of defending the credibility of the U.S. dollar. I figured that at some point the gold in GLD would used for this purpose once the Central Bank stocks of gold were largely if not fully depleted. In this context, please recall that about three years, the ECB system, which had been selling 400 tonnes per year on average, pretty much stopped selling any gold. That’s sign-post #1 that I was right.
Then along comes the Bundesbank in early 2013, with a request that the Fed start shipping Germany’s gold held in in New York back to Germany. That’s when all hell broke loose:
(The graph above is from the TFMetalsReport.com)
There’s something really wrong with that picture because the intuitive response from the market by Germany’s request of the Fed should have been a quickly rising price of gold. But as you we all know, the Fed defaulted on the request – for all intents and purposes – and that’s when the massive drain of gold from GLD commenced.
The truth is that my original hunch was correct. 100% correct. The gold in the GLD trust is being used to satisfy the enormous physical delivery demands from China and the other big gold buying countries because the western Central Banks have run out of gold to deliver. That is an unmistakable fact. Reports and data ad nauseum have been published in the last six months describing and verifying the voluminous, unprecedented amount of gold bars that have been moved – literally physical transferred – from the Comex in NY and the LBMA and Bank of England vaults in London to Switzerland and then on to Hong Kong, where it flows to its ultimate destinations in China. Anyone who would deny that this is the case has a blatant and catastrophic disregard for the truth as supported by provable facts.
So the question is, how much longer can the depletion of gold from GLD continue before this scheme falls apart? Let me first say that it is likely that the U.S Government’s “Waterloo” in this situation will be the gross miscalculation – when GLD was originally devised – of the growth and size of China’s appetite for physical gold for which actual physical delivery is demanded.
Along with all the other manipulated schemes of the western Central Banks/Governments, I believe that the GLD fraud is starting to unravel. I would argue that the ability to execute successfully the intervention in interest rates, currencies and equities requires the unfettered ability to manipulate the price of gold. In my view, the western Central Banks are losing their grips on gold and this will likely bring the entire western financial system down.
end
My goodness, India is ramping up physical gold deliveries. For the first two months of their fiscal season, the citizens of India (not sovereign) purchased 155 tonnes or an average of 77.5 tonnes per month.
For a recap of the major buyers of gold:
1.China is averaging 252 tonnes per month now.
2. Russia: averaging 30 tonnes per month
3 India: 77 tonnes per month.
total for the three :359 tonnes per month. If they continue at this pace: 4308 tonnes. The world produces 2200 tonnes ex Russia ex China (who both keep every ounce produced)
(courtesy Press Trust of India/Times of India/Mumbai/GATA)
India’s gold imports up 61% at 155 tonnes in April-May
Submitted by cpowell on Sun, 2015-08-02 18:27. Section: Daily Dispatches
From the Press Trust of India
via The Times of India, Mumbai
Sunday, August 2, 2015
NEW DELHI — India’s gold imports shot up by about 61 percent to 155 tonnes in the first two months of the current fiscal mainly due to weak prices globally and the easing of restrictions by the Reserve Bank.
In April-May of the last fiscal years, gold imports had aggregated about 96 tonnes, an official said.
In the international market, gold has been trading weakly over the past few months. On Friday, it closed at US$1,095.10 in New York market. …
… For the remainder of the report:
http://timesofindia.indiatimes.com/business/india-business/Gold-imports-…
end
And now for China’s demand last week: A monstrous 73.289 tonnes of gold. Ladies and Gentlemen: this is citizen gold demand. Sovereign gold is not included in this mix;
(courtesy Jessie/Americain cafe)
31 July 2015
Shanghai Gold Exchange Has 73.3 Tonnes of Bullion Withdrawn Its Third Largest WeekFor the week ending July 24th there were 73.289 tonnes of gold bullion withdrawn from the Shanghai Exchange into China.
That is about 2,356,296 troy ounces in one week.
I have included the most recent statistics from the Comex Gold Warehouses below. There are currently 351,519 ounces of gold available for delivery at these prices there for the month of August.
Nine out of ten Americans will notice that in terms of technical analysis this is ‘a lot less.’
But as the very serious people like to point out, the Comex is not really ‘a physical exchange.’ Yep.
And as you may have seen in the posting from earlier today showing the sea change in leverage over even the past ten years there, it is seemingly getting a lot less physical all the time, even compared to just five or six years ago. Winning…
Even the US Mint seems to be getting in on the act. The mint sold 202,000 ounces of gold in the form of coins for the month of July, one of its largest monthly sales totals in several years.
That’s a lot of pet rocks.
Do the math. I wonder where the poor, deluded ignoramuses who obviously do not understand finance are getting all that money to spend on such worthless trifles. Does the US Mint take food stamps?
While they last.
This chart is from the date wrangler Nick Laird at sharelynx.com
Gold and the Grave Dancers
August 1, 2015 | Author Pater Tenebrarum
***
end
(courtesy zero hedge)
Comex On The Edge? There Are Now A Record 124 Ounces Of Paper Gold For Every Ounce Of Physical
Over the weekend, we got what was merely the latest confirmation that when it comes to sliding gold prices, consumer of physical gold just can’t get enough. As theTimes of India reported over the weekend, India’s gold imports shot up by about 61 per cent to 155 tonnes in the first two months of the current fiscal “due to weak prices globally and the easing of restrictions by the Reserve Bank. In April-May of the last fiscal, gold imports had aggregated about 96 tonnes, an official said.”
This follows confirmations previously that with the price of gold sliding, physical demand has been through the roof, case in point: “US Mint Sells Most Physical Gold In Two Years On Same Day Gold Price Hits Five Year Low“, “Gold Bullion Demand Surges – Perth Mint and U.S. Mint Cannot Meet Demand“, “Gold Tumbles Despite UK Mint Seeing Europeans Rush To Buy Bullion” and so on. Indicatively, as of Friday, the US Mint had sold 170,000 ounces of gold bullion in July: the fifth highest on record, and we expect today’s month-end update to push that number even higher.
But while the dislocation between demand for physical and the price of paper gold has been extensively discussed here over the years, most recently in “Gold And The Silver Stand-Off: Is The Selling Of Paper Gold And Silver Finally Ending?”, something unexpected happened at the CME on Friday afternoon which may be the most important observation yet.
Recall that in the middle of 2013, in an extensive series of articles, we covered what was then a complete collapse in Comex vaulted holding of registered (i.e., deliverable) gold. At the time the culprit was JPM, where for some still unexplained reason, the gold held in the newest Comex’ vault plunged by nearly 2 million ounces in just six short months.
More importantly, the collapse in registered Comex gold sent the gold coverage ratio (the number of ounces of “paper” gold open interest to the ounces of “physical” registered gold) soaring from under 20 where, or roughly in line with its long-term average, to a whopping 112x. This means that there were a total of 112 ounces of claims for every ounces of physical gold that could be delivered at any given moment.
Gradually, the Comex raid was relegated to the backburner when starting in 2014 the amount of registered gold tripled from the upper 300k range to 1.15 million ounces one year ago, at which point the slide in Comex registered gold started anew.
Which brings us to Friday afternoon, also known as month end position squaring, when in the latest daily Comex gold vault depository update we found that while some 270K in Eligible gold had been withdrawn mostly from JPM vaults, what caught our attention was the25,386 ounces of Registered gold that had been “adjusted” out of registered and into eligible. As a reminder, eligible gold is “gold” that can not be used to satisfy inbound delivery requests without it being converted back to registered gold first, which makes it mostly inert for delivery satisfaction purposes.
Most importantly, this 25,386 oz reduction in deliverable Comex gold from 376,906 on Thursday pushed the amount of registered Comex gold to an all time low: at 351,519 ounces, or just barely over 10 tons,registered Comex gold has never been lower!
Incidentally, as part of the month-end redemption requests, we saw a whopping 22% of the eligible gold in Kilo-bar format (where there is no registered, just eligible) be quietly whisked away from Brink’s vaults: unlike traditional ounce-based contracts, the kilo format traditionally serves as an indication of Chinese demand, and if withdrawals on par with those seen on July 31 persist, it will soon become clear that Chinese buyers are once again scrambling for the safety of gold now that their stock market bubble has blown up.
This covers the sudden surge in demand for physical gold as manifested by CME data.
Meanwhile, over in “paper gold” land, things remained unchanged: as shown in the chart below, the aggregate gold open interest rose modestly to 43.5 million ounces up from 42.9 million the day before.
While on its own, gold open interest – which merely represents the total potential claims on gold if exercised – is hardly exciting, as we have shown previously it has to be observed in conjunction with the physical gold that “backs” such potential delivery requests, also known as the “coverage ratio” of deliverable gold.
It is here that things get a little out of hand, because as the chart below shows, all else equal, the 43.5 million ounces of gold open interest and the record low 351,519 ounces of registered gold imply that as of Friday’s close there was a whopping 123.8 ounces in potential paper claims to every ounces ofphysical gold.
This is an all time record high, and surpasses the previous period record seen in January 2014 following the JPM gold vault liquidation.
Another way of stating this unprecedented ratio is that the dilution ratio between physical gold and paper gold has hit a record low 0.8%.
Indicatively, the average paper-to-physical coverage ratio since January 1, 2000 is a “modest” 19.1x. As of Friday it had soared to more than 6 times greater.
Which brings us to the usual concluding observations:
First: as we have said previously, at a time when all the gold selling (and naked shorting) is in the paper markets and when demand for physical gold is once again off the charts, with soaring purchases not only in India but also in the US, where is this gold going? Clearly not into CME gold vaults, which are once again asource of physical gold, and as the above shows, have never had less deliverable gold.
Second, total Comex gold has dropped to such precarious levels in the past and while on many occasions market observers have asked if the Comex is close to a failure to deliver, aka a default of the CME’s gold warehouse, it has always avoided such a fate. Still, one wonders: the 10+ tons of deliverable gold at the Comex are now worth a paltry $383 million. It would not be very complicated for a next generation “Hunt Brother” to buy some $400 million in Comex gold, and promptly demand delivery: after all the gold crash of two weeks ago saw some $2.7 billion in paper gold dumped in the most illiquid market – why can’t it be done in reverse. What would happen next is unknown, but unless somehow the Comex found a way of converting millions of ounces of Eligible gold into Registered, the CME would simply be unable to satisfy such a delivery request.
Third: while there are still over 7 million ounces of Eligible gold, why the recent spike in “adjustments” of eligible to registered gold (i.e., missing a warehouse receipt)?
Finally, we assume the mainstream press will once again start paying close attention to the total, and especially registered, gold held at the Comex: at a pace of 25K a day, the gold vaults that make up the CME’s vaulting system would be depleted in just under two weeks of daily withdrawals.
In any case, we are very curious to see how this latest dramatic face off in the long-running war between paper and physical gold, concludes.
end
This should hurt the supply side of the equation:
(courtesy GATA)
South African mineworkers union rejects wage hike from gold producers
Submitted by cpowell on Sun, 2015-08-02 18:20. Section: Daily Dispatches
By Zandi Shabalala
Reuters
Sunday, August 2, 2015
http://www.reuters.com/article/2015/08/02/safrica-gold-unions-idUSL5N10D…
Members of South Africa’s Association of Mineworkers and Construction Union on Sunday rejected a wage offer from gold producers of increases of up to 17 percent, spokesman Manzini Zungu said.
Gold firms Sibanye Gold and AngloGold Ashanti last week offered an additional 1,000 rand ($80) a month to entry-level workers, while Harmony Gold offered 500 rand a month.
“Harmony’s offer has messed it up — the offer is too low for the members,” Zungu said after a mass rally at Sibanye’s Beatrix mine.
The union is demanding a more than doubling in wages but gold companies say they cannot afford such increases as they battle falling prices and rising costs.
The union will meet with the Chamber of Mines on Tuesday to officially reject what the gold companies called a “final offer.”
“The final offer is just that — final,” Chamber spokeswoman Charmane Russell said. The Chamber would wait until Tuesday to hear from the union, she said.
end
(courtesy Wall Street Journal/GATA)
China’s stock plunge burnishes gold’s appeal
Submitted by cpowell on Mon, 2015-08-03 12:24. Section: Daily Dispatches
By Biman Mukherji
The Wall Street Journal
Sunday, August 2, 2015
HONG KONG — Until recently, every time Hong Kong-based bullion supplier Padraig Seif would inquire about demand from customers, the answer would be the same: Business is quiet as all eyes — and money — turned to the surging stock market.
Suddenly, though, his sales are booming again in the wake of a plunge in Chinese equities and sliding gold prices.
“It has really taken us by surprise,” says Mr. Seif, co-owner of bullion supplier Finemetal Asia. “We are looking at three times the revenue in June as in May.”
He said demand is particularly strong for small gold bars weighing 250 grams and 500 grams that are popular with price-conscious smaller investors. …
… For the remainder of the report:
http://www.wsj.com/articles/chinas-stock-plunge-burnishes-golds-appeal-1…
end
Ted Butler…
(courtesy Ted Butler/Silverseek.com)
Price Takers and Price Makers
Theodore Butler
|
July 30, 2015 – 9:09am
In the world of basic commodities nearly every market participant, whether a producer or consumer, is a price taker, accepting the general price level prevailing at the time. For example, the individual consumer of gasoline has little choice but to take the price at the pump or go elsewhere. Same with corporate consumers like airlines and other transportation entities. They can hedge and fix their costs, but that hedging must be based upon current prevailing prices. Even large producers like the oil companies must take what prices the market provides, although the largest oil producers, like Saudi Arabia, could set (make) oil prices if it wanted to (at least temporarily).
That’s the way it is and should be with world commodities – 99.9% of all consumers and producers are price takers, that is, accepting whatever the prevailing price happens to be. Generally, this shouldn’t be considered a problem as it dovetails perfectly with our vision of how a free market sets prices through the magic of aggregate supply and demand. Too much world demand and not enough supply, prices have to rise; not enough demand and/or too much supply and prices must fall enough to regain fundamental balance. If that was occurring currently in the pricing of many world commodities, namely, that actual supply and demand was determining price, I would end this article here. But that is not the case.
Oh, it’s true enough that more than 99.9% of all world consumers and producers are price takers and not price setters. While that is good in terms of how free markets should operate, their total consumption and production has little to do with how prices of many world commodities are determined; and that is bad. How can this be? How can there be no dominant producer or consumer of world commodities capable of making a price; and still I contend that prices are being set to the point of being artificially fixed?
The answer lies in the fact that a great force is setting (making) the price of many world commodities completely apart from the influence of aggregate actual supply and demand. Seemingly out of nowhere, this great force has come to push aside the price effect of the law of supply and demand and render it as almost non-existent.
The great pricing force that I speak of is excessive speculative positioning in the regulated futures markets, mostly exchanges owned and run by the CME Group. Simply put, speculative futures trading has come to supplant actual commodity supply and demand as the main pricing force. Although such excessive speculation is strictly against commodity law, the primary commodities regulator, the CFTC, looks the other way. Ironically, it is the data published by the federal regulator that proves that excessive speculation is setting prices for many world commodities.
Let me be clear – there is nothing wrong with speculation and without it, there would be no functioning commodity market possible. But there is something very wrong when excessive speculation sets prices.
The excessive speculation that I refer to is quite specific – it involves only two types of modern day futures traders. One group are the traders in the category the CFTC refers to as managed money and the other group includes commercial traders (mostly banks) which take the other side of whatever the managed money traders wish to buy or sell. And it’s even more specific than that – I’m only referring to the managed money traders which operate strictly on technical considerations, like moving averages.
In a nutshell, here’s the problem – because managed money technical traders generally do the same thing (buy or sell) under similar pricing circumstances (buying on rising prices and selling on declining prices), even though each technical trader is operating independent of other technical traders, the net effect is that their collective actions transform them into one massive trader – the largest such trader ever known to markets. The price-setting influence the unified managed money traders is having on world commodities is undeniable. Whereas I usually talk in terms of what this collective influence has on silver and gold prices, it has now gone much further than that.
The proof that collective managed money positioning has been the dominate price force in recent moves in corn, crude oil and copper (in addition to silver and gold) can be seen in the data in the CFTC’s Commitments of Traders (COT) report. Other commodities are similarly affected by collective managed money futures market positioning, but let me stick to just these five commodities for the sake of brevity.
On the recent 20%+ jump in corn prices (now reversing), managed money traders bought (mostly in the form of short covering) roughly 400,000 net futures contracts in a matter of weeks, or nearly 30% of the total open interest in the Chicago Board of Trade’s corn futures market . In addition, that’s the equivalent of two billion bushels of corn, nearly 15% of US corn production and the US is the largest corn producer in the world with half the world output. If one trader, effectively and suddenly, bought 30% of an entire major futures market, could there be a more obvious force for driving prices higher?
On the recent $12 plunge in the price of crude oil, managed money traders sold 150,000 net contracts in a matter of weeks. That’s the equivalent of 150 million barrels of oil and close to 10% of the total NYMEX crude oil market. If any one trader sold 150 million barrels of crude oil in a hurry, what would the effect on prices be?
On the plunge in copper prices since May 19 from over $2.90 to under $2.40, managed money traders sold more than 66,000 net COMEX copper futures contracts, an astounding 40% of the total open interest. That’s also the equivalent of 825,000 tons of copper or more than double the combined COMEX and LME inventories. If one trader sold the equivalent of 40% of a major market in a matter of two months, wouldn’t prices drop sharply? (By the way – I’m using data from the most recent COT reports).
On the drop in gold prices of $140 from May 19, managed money traders sold 93,000 net COMEX futures contracts (mostly in the form of new shorts) or more than 20% of the entire COMEX market and the equivalent of 9.3 million oz, worth more than $10 billion. If one large trader sold more than 20% of the world’s largest gold exchange in a little over two months, would you be surprised that prices dropped by 11%?
On the $3 price drop in silver from May 19, managed money traders sold 57,000 net COMEX silver futures contracts (also mostly in the form of new short sales) or roughly 30% of the entire COMEX market, also the largest silver exchange in the world. That’s the equivalent of 285 million oz or close to 35% of world annual silver mine production. How could a large trader selling such incredible percentages of both the COMEX and world mine production not send prices lower?
I know that what I just reported on involves trading in futures contracts and not in the actual commodities, but therein lies the rub. Because all commodity producers and consumers are price takers and not price makers, physical commodities are priced off the futures price. Make the price of silver $3 lower on the COMEX and that automatically becomes the price for all silver producers and consumers. It’s nuts (and illegal) for pure speculators to dictate prices to real producers and consumers, but we live in a mad, mad world. (Perhaps only until real producers stand up against the madness).
Who are these traders that move in lockstep and hold such a dominant role in setting commodity prices? And why are the regulators looking the other way as managed money technical traders evolve into the unquestioned price makers that the data indicate? The answers to these questions have to do with gradualism and not wanting to admit to a problem that should have been rectified long ago.
First off, no one managed money technical trader is responsible for setting prices; but when many different managed money traders do the same thing at the same time, the collective effect is price making and distortion. As a whole, managed money traders control upwards of $300 billion in assets devoted to futures trading. They even have their own powerful lobbying organization, which like any such organization fights any attempt to restrict their activities, even if their collective activities undermine the integrity of our markets.
https://www.managedfunds.org/
And as for the CFTC, it has denied so often that there is anything amiss in the silver market that there is no chance it can admit to anything I allege under any circumstances. Unfortunately, because the CFTC is afraid to even discuss this issue, now the silver manipulation disease has spread to most markets controlled by the CME Group. That’s too bad, because there is a simple solution to the problem of collective managed money trading making the price that all consumers and producers of world commodities must take. (For the purpose of this article, I’m leaving out my contention that the commerci