How The Comex Lost 20% Of Its "Registered" Silver In One Week, Or Where There's Smoke Of A Run, There's Probably A Run

Tyler Durden's picture

A week ago we noted something peculiar: in one day, COMEX
depository Scotia Mocatta (one of five in the world) saw a 25% transfer of silver from "registered" (or deliverable physical) to "eligible" (or "undefined" - a distinction discussed previously, and also below). We said: "Canada's largest bullion depository (and one of five total) reclassified
a whopping 5.2 million ounces of silver from Registered to Eligible
status. In order to get a sense of how big this amount is, which amounts
to just under $238 million at today's fixing price, it represents just
over 25% of the total silver stored at Scotia Mocatta, and about 5% of
the total silver held across all depositories."  The reason then given was: "due to a reporting reclassification, 5,287,142 t oz was moved from Registered to Eligible." To our (lack of) surprise, a quick glance at today's silver holdings at the Comex confirms that the trend of reclassification is continuing unabated, and total "physical" silver across the entire Comex universe has now plunged by almost 20%, or from 41 million ounces to 33 million ounces, in the span of one week! And while last week it was Scotia Mocatta, today it is HSBC and the Delaware Depository, and the reason given: "Adjustments include reporting classifications of t oz that were moved from Registered to Eligible.  Please see Special Executive Report reference 5736 for additional information.  http://www.cmegroup.com/tools-information/advisorySearch.html#." And a further drill down reveals the following link. Many have speculated that there could well be a run on physical silver. But for those looking for a smoking gun, this is probably as close as you will get to one, short of JPM actually declaring "force majeure."

This is from April 20:

And this is from today (link):

As for the detailed reason provided by the CME, we get the following:

A correction to the COMEX Metal Depository Statistics Stock Reports published on April 27, 2011, has been made to reflect a change in the reporting of metal from the Registered category to the Eligible category.  This change reflects paper warrants that have yet to be converted to electronic form.  The metal represented by these paper warrants, which will now be reported in the Eligible category, will continue to remain eligible for delivery against COMEX futures contracts provided holders of the paper warrants convert them to electronic form. 

Exchange metal reported in the Registered category represents troy ounces of metal that meet the contract specifications as defined in the Exchange Rules for which an electronic warrant has been issued.

Exchange metal reported in the Eligible category represents troy ounces of metal that meet the contract specifications as defined in the Exchange Rules for which an electronic warrant has not been issued.

So, a rather odd last minute paper to electronic contract conversion, which mysteriously results in a 20% drop in the physical silver across the entire Comex universe? And this coming at a time when silver is within cents of breaking the all time nominal high? Sure, we'll buy it. But perhaps the Comex can tell us just how many more such "warrants" exist in the system, and whether when all is said and done, where it says 33,322,807 million ounces of registered silver (where it was 41 million last week), it won't be zero, or, who knows, negative?

We, for one, won't wait to find out and demand delivery only when said number hits zero.

And as a reminder for those unfamiliar, here is a distinction between "registered" (real) and "eligible" (somewhat "questionable"), courtesy of SilverAxis

For
those who aren’t familiar with the terminology, the registered category
of COMEX warehouse bullion stocks generally refers to gold and silver
bars against which COMEX warehouse receipts are outstanding. The COMEX
publishes these stocks on a daily basis and they can be found here:
Silver | Gold. The registered category is the total pool of gold and
silver available at any time to meet delivery requirements under
expiring futures contracts or to establish initial futures contract
positions through a transaction called exchange-for-physicals (I’ll
explain this another time). It is important to realize, however, that
many parties holding COMEX gold and silver in registered form have no
intention of making their holdings available for delivery. By this I
mean that such parties are neither (1) holding a short futures position
against the warehouse receipt nor (2) willing to sell their registered
metal (warehouse receipts) to a party with a short futures position.
Indeed, a substantial portion of those holding registered metal would
have acquired the COMEX warehouse receipts by holding long futures
positions for delivery. In other words, these registered stocks are held
for investment and not for commercial purposes.

In comparison,
the eligible category of COMEX warehouse bullion stocks generally refers
to bullion held in the warehouses that meets the specifications of an
acceptable COMEX bar (proper weight, size, purity and refiner) but does
not have a COMEX warehouse receipt issued against it. For example, an
investor might purchase several 1,000 oz. bars of silver from a dealer
and then deliver the bars for allocated storage at a COMEX warehouse.
This is a private arrangement and has nothing to do with the COMEX.
Unless these bars are officially registered (the easiest way to do this
is through the aforementioned exchange-for-physicals), they will remain
in the eligible category until withdrawn from the warehouse by the
investor. Thus, the appropriate way to treat eligible COMEX warehouse
bullion stocks is that they represent metal that could potentially be
registered at some point in the future but cannot presently be used to
make delivery under a short futures contract.

h/t Dr Derivative

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johngaltfla's picture

Here comes the comment when you call:

 

"You want delivery bitch? STFU!!!"

 

Man are the next 60 days going to be fun to watch and get depressed over....

Quixotic_Not's picture

I've got some silver eagles available for $250 oz...

Perhaps now da bankster puppets will start crying for hearings on Au/Ag price gouging? 

There sure couldn't be any connection to Da Bernank printing 3 trillion U$D in under 2 years (To maintain the (D) & (R) oligarchy), right?

Or was it left?!?

Too many Democrats & Republicans, where did the Americans go?

Anyways, the one that makes it to Switzerland with the most Ag wins!!!

P.S.  Looks like ZH has dumbed down the captcha for the Facebook twits, No más números negativos!

Say hello to Dumb & Dumber Hedge; where dividing by -0- is the New 'MeriKan Dream  ;-)

JLee2027's picture

$250 will be cheap this time next year, and possibly next month.

Gold 36000's picture

now that is top talk anyone remember DOW 36000? or whatever that book was?

Pladizow's picture

Dow 36,000 = Harry Dent.

Who ironically does not believe in the gold story.

chump666's picture

Dow at 30000 by 2008 Bob Zuccaro.  Hilarious. Uber bulls usually get slaughtered

TruthInSunshine's picture

Dow 36000 was by Jim Glassman.

 

Texas Gunslinger's picture

Hi ya'll.

This is my first post at Zero Hedge, and I just wanted to tip my hat and say hello.

I've been reading this website for the past few months (my coin dealer referred me here), and have really learned a lot about silver, gold and all the evil of the Federal Reserve.  I've probably learned more here in the past two months, than I did during all my years of high school. 

I decided to join, so I could ask questions and keep learning. You guys seem really smart (except the trolls!), so I hope I can learn from everyone. By the way, I hope I don't get attacked by trolls.  I see the way they always try to harass everyone with opposite opinions, and it just sucks.  

I'm just a simple man trying to learn what happened to my country, and what I can do to get her back to the days before Obummer and his socialist agenda. I'm mad. I'm armed, and ain't no one going to take my country, especially an African. 

ok...so anyway, that's that.  

God bless, and god bless the USA.  

 

 

traderjoe's picture

Welcome aboard. Keep reading on the whole L/R paradigm. The whole mess started long before Obummer. At least since 1913, but most likely tracing back to the institution of corporations...

Overflow-admin's picture

Singing:

"It was 1913 on a Christmas day
Congress gave away its right to create cash
Now your money's only worth
Just what the Bankers say
And you can lose your only shirt
In just a flash"

F**k The Fed
Words and Music by Neal Fox

d00daa's picture

Boring Red Neck Repubnicunt is boring.

New World Chaos's picture

Howdy, Tex.

I've been saying for a while that I think Texas will be the first state to secede (after Obama steals the next election from Ron Paul) and this will ultimately trigger an avalanche of secession.  But first Texas will have to deal with Blackwater and various Rothschild/CIA terrorists.  Am trying to get my family in Dallas to prepare.

If the trolls come after you, that just means Cass Sunstein's psyops brigade thinks you're dangerous.  Take it as a compliment.

Hugh G Rection's picture

You just took the bait fellas. Its obviously one of 3 trolls changing his moniker after getting severly anal raped by SLV today.

Eat shit troll! Reload those 40 puts and come back under your real handle when you're in the money..

A Man without Qualities's picture

Good call, it's probably the new persona of Harry Wagner.  

f16hoser's picture

Welcome! I've been reading ZH for about a year or so and glad I did. The honesty and sometimes humorous sarcasm really make my day. I probably spend 1-2 hours a day here. I got into Silver before I found ZH and ZH has confirmed for me why I did. I'm dumping all dollar assets as fast as I can and buying Silver. Max Keiser has a good web site you may want to check out. I also like SGTREPORT.com / Rense.com

Off Topic, Iraqi Dinar could be in play this year if you're interested in foreign currencys: http://theiraqidinar.com/2010/12/11/marcus-curtis-rv-of-the-iraqi-dinar-heres-why-re-post-w-links/

Hoser

angela03's picture

 You ain't lying about being simple. If you think obama is the reason we are in the shape we're in you haven't learned a friggin thing over the past few years. You're from Texas so I suppose you have a ready excuse for being narrow minded and obtuse. If you'll try to remember, it was Paulson of the Bush administration that went before congress to extort 780B from the commonwealth. Bernake was already FED chairman although he was reappointed by Obama. It is the power holders protection of the U.S. oligarchy that we are fighting, and it doesn't matter what head they put on the White house puppet. Get a clue man.

mrgneiss's picture

I love this line from Avery Goodman's Seeking Alpha article:

However, as more and more people realize that they have been duped into accepting fake prices for silver, bullion banks may need to buy 100 ounces of silver for every one ounce that is withdrawn. How high is that going to drive the price of silver?

 

http://seekingalpha.com/article/265381-short-sellers-now-screaming-about-a-buy-side-silver-conspiracy?v=1303940178&source=tracking_notify

And for the uninitiated Seeking Alpha is filled with precious metal haters, what else would you expect from a bunch of money managers that are for the most part prohibited from owning physical metals in their funds and would hate to see their clients buy them missing out on commissions and fees?

akak's picture

That was truly an outstanding article by Avery Goodman --- and his comments following it, and a few other of his articles, are as good or even better than the articles themselves.  This man is truly a scholar and has a first-class mind. 

fockewulf190's picture

Indeed, that article will go viral across many a blog in short order.

Roger Knights's picture

"Seeking Alpha is filled with precious metal haters ..."

Not the commenters! The SA editors only post those negative articles to rattle their cages and provike their (devastating) comments.

akak's picture

Kind of like the SeekingAlpha versions of Leo and MomoTrader, eh?

mccoyspace's picture

That was an extremely helpful article.  I've haven't quite understood the problems with COMEX that are referenced here frequently and all the calls to 'buy physical'. Now I'm getting it. The fact that the same techniques are probably standard for the other metals markets is sobering. In the same way, as per last week's posts, that the Fed uses sales of derivatives to suppress the mid/long term bond yields, these metals market manipulations show the extent of their 'total management' of the world economy. amazing.

Chump's picture

Depression is rage turned inward.  I haven't run out of targets for my rage yet.

Hugh G Rection's picture

$48.50, no big deal...

 

Glad I pulled the trigger this am.

 

MethMan, RoboTroll, DangerDouche....??? Can we get an update on your puts????

 

Anyone else notice how all the posts have 1 junk???  C'Mon angry troll, sound off, no need to get passive aggressive!

Is that you DangerDouche???

Turd Ferguson's picture

In the months to come, we may look back on the "Scotia Announcement" as the beginning of the end of The Comex and The Cartel. Just as the assassination of Archduke Ferdinand began WWI or the self-immolation of the angry peasant in Tunisia set the entire MENA region ablaze, The Scotia Announcement may be the historic turning point.

TruthInSunshine's picture

Anything that ends fractional reserve banking RICO and the central banksters - especially the Fed, ECB, BOJ, World Bank & IMF - all good in my book.

Like a snake, you have to crack their skull really hard to ensure they die. You can't assume they die because they are wounded and slink away into the shadows. You need to chase the mofos and repeatedly put lead into cranium en masse.

Every fiatski that leaves circulation and ends up in physical silver/gold amplifies the crisis of Bernanke and all fractional reserve charlatans. It's a true revolutionary act, because it brings power directly to bear down on the syndicate, and weakens their hand and nullifies their bag of tricks.

As for the physical, it is going to be a big problem for those who are storing their physical with any seller. I think this has the potential to be one of the biggest scandals in a while.

I would be shocked if more than 25% of the physical is actually really 'there' and can be made deliverable at all.

I wonder how the actual end users of silver, in particular, are ensuring they aren't going to be absolutely slammed by wayward rogue silver price monster waves as this unfolds further.

It's going to get even more interesting. Buckle up.

Chicken_Little's picture

Turd, you the man. But don't forget what Izzy Friedman told Ted Butler about silver and having 2 green monster boxes of US Silver Eagles underneath your bed and forget about them. Well I bought 4 green ones at 14K for 2. One is still sealed from the Richmond US Mint.  I wonder how much an sealed box would go for? Offer me paper money, then no deal. Offer me silver eagles, and if I were a farmer I'd give you one of my cows and my family would eat steaks. You can't eat silver or gold coins, yeah right. But when the dollar collapses, you can sure barter with them. 10 Gold Eagles will buy a some land with a small house in Alabama, 2 green boxes of silver eagles will buy a foreclosed condo in a Trump Condo building.

 

Egg Laid from the Chicken now in Pattaya.

Yits and the Yimrum's picture

bingo; the assclowns crowing about the abundance of physical silver never got a history lesson in fiat currencies

Goldenhands57's picture

Yup.. so the day Mike Mahoney has been calling for is not all that far from here. For those not up on his points about PM; 500 Silver Eagles buys a median priced home in the States by 2015. Check it out. For a guy (me) that has been buying hand over fist since 1999 (when we had $2.65 an ounce spot) and NOBODY wanted metals, this has been the ride! Double Eagles were $280/$300. I was also there in 1979 and 1980..and sold at $42 Silver/$810 gold an ounce then. So the reality of just how the naysayers will get totally crushed is going to be sweeeet vindication...again! Go back as far as Fiat Currency has existed and PM is ALWAYS the leveler. Not one Fiat Currency has ever defeated Gold's (and Sister Silver) return to eventual value as the standard. This time is NOT different. What is about to happen is going to scare the holy crap out of anyone under 40 years old and didn't live thru the Inflation of the early 80's. My fam even had a paperpushing "advisor" "educate" me in 2000 about Lipper..bla bla bla.. and how Gold especially was a total FOREVER looser purchase. Well..his Enron, Washington Mutual, Lehman Bro's, and BearSterns crap sure did a hell of a good job of ensuring his clients (that haven't died off yet) are now in a dire struggle for simple existance. Like I told the moron then..the Double Eagle can't go worthless, idiot..it's still 20 Dollars no matter what happens! Maybe I'll buy his house from forclosure in 2014 for 500 of those "totally junk" Silver Eagles. Where's Harry Dent and his Paradise of the "Roaring" Dow today? It doesn't make a hill of beans even if the Dow did hit 36,000 if the purchasing power of a Fed Reserve note is zip! We're in a pickle for sure now so anyone not already deep in physically held PM is going to be neck deep in Shit creek before this is straightened out.

       

Moe Howard's picture

I am forced to agree with you. The bad news is that everything you are predicting will come to pass, the sheeple will be sheared and the unprepared and clueless will suffer the most.

PlausibleDenial's picture

Pattaya, yes, my friend.  I have a condo there.  Will be back soon.  Rolfe

amusedobserver's picture

Isn't this just the metal equivalent of transfering stock from a margin account to a cash account in order to restrict the amount of stock borrowable by short sellers?  It just tightens the screws, that's all.

tsx500's picture

...and i say give the assist to U Texas fund  taking physical deliv of over 40k lbs of au . 

Urban Redneck's picture

I wonder how many quant kids even know how to write an algorithm for a bifurcated market.  It should make for some interesting paper price movements in the coming months.

Captain Benny's picture

I think we'll look back on late 2010 and say that a massive buying spree of retail, possibly in part driven by Max Kaiser among many other factors is the major event that helped push silver to the breaking point.   We all know that silver broke in 2010, its just been tweaked in 2011 to try to conceal the fires that urgently need extinguishment.  -- Your bud, B

disabledvet's picture

all right, ya' got me instead.  "is that a bank created market corner?"  and "when I see it go parabolic do i sell?"

Dangertime's picture

When you call for the devil, you get him.

I'm sitting tight, this is just the first *BTFD* on the way down.  No doubt perpetrated by premature speculation.  Of course, you BTFD'ers are familiary with that I'm sure.

your neighbor's picture

Humanitarian aid to Mexico and Peru?

I only kill chickens and wheat's picture

bulliondirect says "Operational Delays

Due to heightened market activity please expect delays in customer service, accounting, shipping, and receiving."

Re-Discovery's picture

Delivery failure is such a better reason to make a boatload in silver than the collective insanity of our monetary leaders but isn't great to have BOTH.

 

Tail Dogging The Wag's picture

Take physical delivery!

Got farmland outside the US yet?

http://www.thorssoncapital.com/

Badabing's picture

“COMEX depository Scotia Mocatta (one of five in the world) saw a 25% transfer of silver from "registered" (or deliverable physical) to "eligible"”

 Could this be related to University of Texas taking delivery?

"last week it was Scotia Mocatta, today it is HSBC and the Delaware Depository."

If it is related to who is next to take delivery the MSM will ignore it,

I wonder how the royal wedding is going?

deacon_blues's picture

Hey Mac.  I'm just taking a few ozs on the sly.  Nobody's going to notice.