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THE WTF COMEX TRAVESTY

ilene's picture




 

THE WTF COMEX TRAVESTY 

By  of Winter Actionables

 

Despite the knot in my stomach, I’m proceeding directly to the available Comex forensics. The gold and silver Commitment of Traders report is highly revealing. The data is for Tuesday, Nov. 26, when gold was trading at 1,243.

The settlement price on Monday was 1,222. The managed money boyz, (aka Slingers) have now ramped up their biggest short position since early July’s low at 77,658 contracts (7.766 million ounces). With this week’s net managed money long position down to 15,961 contracts from 34,531, we can see from the report that about a third of this was reduced longs, perhaps from stop hunting. But again, two-thirds of this week’s operation was raw naked short selling.

On the other side of this bizarre trade: Since Oct. 29, the large commercial combined net short position has fallen an extremely large 78,551 contracts (7.856 million ounces) to a near-record low of 28,236 contracts net short. After Monday’s assault, I would imagine the previous July 9 record was broken and these positions are even more extreme.

 

Chart source: GOTGold

 

Silver slingers reported a new COT record high 27,808 lots short. The previous record was on June 25 with 26,512 shorts at $19.52 silver.

 

Chart source: GOT Gold

 

Once piece of information in the report was particularly stunning. The producer/merchant category, which basically is defined as players (such as miners) who actually produce and supply actual physical gold to the Comex, has gone to 5,960 producer contracts long (596,000 oz). This is unprecedented! As you can see, producers have never been long gold since the series began. Even at the bottom in 2009, they were still short.

The supposed purpose of an exchange is to allow producers to price hedge future production. With the Slingers completely distorting the market, this concept has been abandoned. Turning over a whole new leaf, producers now plan to take gold from someone else. Who that might actually be isn’t exactly clear, as naked paper shorts have no real gold to deliver. A subscriber asked where miners sell their gold nowadays. Good question. It sure isn’t the Comex, nor do I think it’s the LME (London Metal Exchange). Instead, these exchanges shuffle pieces of paper around after speculative attacks. There are six cash delivery markets in the world now, and some offer premiums. Nobody talks about it, but why wouldn’t miners just sell there?

 

Chart source: GOT Gold

 

But the 5,960 producer contracts long (596,000 oz) might be a key forensic pointing to something else. Nobody is more likely to bring in the armored trucks and clean out what little registered gold remains in the Comex than a player in an industry that is being completely abused by these paper attacks. Incidentally, there were 590,800 ounces of registered gold left at the Comex before Monday’s paper dump. About the same as the producer longs. Naturally, with 6,770 December futures still standing on Tuesday and this historic revelation about the producers being long, one wonders about what’s up.

Following the sequence of this is a little challenging because these reports are issued  in different time zones, on different days and sometimes with a lag. Additionally, the banker’s participation report (BRC) is due out on Friday, and I can only imagine how extremely long the U.S. bullion banksters are at this juncture. Bankers were long nearly five million ounces a month ago at $100 higher prices.

Another report, the number of ounces raided out of the GLD and shipped off to China, sometimes doesn’t update or comes with a delay. There were no redemptions Monday. Tuesday’s report showed that only about 58,000 oz was pulled out of the GLD.  That is not sufficient to feed this beast. Over 17 million oz has been extracted YTD and they are down to 27,109,000 oz. The question of the day: does GLD still have this in vaulted physical gold or do they now need to run it down too?

The data for the Shanghai deliveries of real gold tend to show up at its site a little after 4 a.m. EST. Last night, a healthy 369,100 ounces of real gold were delivered.

The registered gold report at the Comex is very convoluted, ad hoc and piece meal. I believe that is because issues are deferred, laxly enforced, given promises and convinced to leave their gold. If a producer who is now long starts asking for gold, it will be an entirely different story, a game changer. This can be tracked here and the low inventory levels are evident enough.

 

 

As the Comex opens for trading, the remaining open interest (OI) for December will be reported. Going into Tuesday it as now 6,770. This would would take issue notices and whatever was rolled over to February. The actual issuance tally for the day isn’t reported until late in the evening. Since I need to get this posted, and to maintain some continuity I will have to put that OI number up in the comments section in this post. The same will be true of the daily issue reports going forward, so check back to this post.

These issue report show up late at night and are also sometimes delayed. The one last night was posted at 9:22 p.m. and shows 609 contracts out of 658 (65,800 oz) issued from Nova Scotia to JP Morgan. This is for Dec. 4 delivery.

 

At the margin, and in perhaps what is a dry run on India’s punitive import fees on gold, Sri Lanka has thrown in the towel and has removed its 100% surcharge. Once the jewelry industry there gets back on its feet, that country can soon be another source of heavy duty gold smuggling into India.

 

Subscribe to Winter Actionables here. 

 

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Fri, 12/06/2013 - 22:09 | 4223491 ptolemy_newit
ptolemy_newit's picture

Gold is a hedge against inflation!

However we will have deep, long and devastating deflation in real assets.  All this chart noise, is bull bear speculation.

the whole world is short term thinkers, except maybe China.

Sat, 12/07/2013 - 02:32 | 4223834 Jorgen
Jorgen's picture

Maybe Russia, too. They have been accumulating gold along with China.

Fri, 12/06/2013 - 19:21 | 4223091 SAT 800
SAT 800's picture

So; it's a buy signal. it's not rocket science. Silver at $20? in 2013? boy that price will be nostalgic next Christmas.

Fri, 12/06/2013 - 17:08 | 4222738 russwinter
russwinter's picture

Enormous stunning add of more net longs in just released Bankers Participation Report:

US bullion bankster added 750,000 oz net long, up to 5.74 million total.

Foriegn banks had a 2,350,000 swing more long. primarily via large scale short covering.

http://img89.imageshack.us/img89/9386/xrb7.png

Fri, 12/06/2013 - 16:40 | 4222649 russwinter
russwinter's picture

CoT just released shows producers added another 6400 to their longs, now up to 12,300. Managed money slingers shorted it to them.

Fri, 12/06/2013 - 16:10 | 4222537 assistedliving
assistedliving's picture

Silver is better... A man is out shopping and discovers a new brand of Olympic condoms. Clearly impressed, he buys a pack. Upon getting home he announces to his wife the purchase he just made. "Olympic condoms?", she blurts, "What makes them so special?" "There are three colors", he replies, "Gold, Silver and Bronze." "What color are you going to wear tonight?", she asks cheekily. "Gold of course", says the man proudly. The wife responds wryly, "Why don't you wear Silver? It would be nice if you came second for a change."

Fri, 12/06/2013 - 13:07 | 4221735 squid427
squid427's picture

I heard the ratio is 69:1

and the great part is it only takes 2 people coming for the same ounce and the jig is up; can't hardly wait.

Fri, 12/06/2013 - 12:11 | 4221491 enloe creek
enloe creek's picture

I can't bring myself to believe that the gold price is manipulated as much as it seems to be without some foolproof way avoiding being caught in a short squeeze of epic proportions. Selling paper gold down is fine as long as the price doesn't reverse on the seller, if the physical delivery can't be accomplished then the seller would have to pay cash and try to keep it secret too. now should the buyer resist the cash settlement by threatening to publicly detail the situation, I know it won't happen but say it did would that point be the end of the gold smashdown? or am I in lala land again
is china a possible benefactor from this happening and are they using this as leverage in some way

Fri, 12/06/2013 - 15:15 | 4222296 MeelionDollerBogus
MeelionDollerBogus's picture

it's called getting topped up with printed money. You can't lose if you're the only legal counterfeiter.

Fri, 12/06/2013 - 15:00 | 4222241 Sofa King Confused
Sofa King Confused's picture

The US Treasury and the FED short gold through various TBTF banks to keep paper money as #1.

Sat, 12/07/2013 - 20:08 | 4225484 auric1234
auric1234's picture

I guess they're in for a short squeeze.

 

Fri, 12/06/2013 - 10:51 | 4221214 Quinvarius
Quinvarius's picture

Cheaper to mine the COMEX.  Pretty much every fkd up market distortion that can only unwind in a price explosion is taking place.  Below mining cost, over shorted, GOFO inversions, momo hype trade shorting, loss of inventory, banking troubles, money printing insanity, global debt issues, and gold is now the cheapest vs the money supply it has ever been in American History.  I would keep adding even at 3k.

Fri, 12/06/2013 - 15:33 | 4222387 daveO
daveO's picture

The Comex miners are likely to have a major cave in, when they demand delivery. 

Fri, 12/06/2013 - 03:02 | 4220619 russwinter
russwinter's picture

Comex Drama Queen Report:   JPM continues to take delivery into it's house account.  So far this week they have been stopped (or took in) 320,200 oz mostly from other dealers, specifically HSBC and Scotia.  Last night they took some from customer accounts.

http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsReport.pdf

Time will tell if this is more paper shuffling and deferring or if JPM wants real gold.  Right now JPM has 40% of all dealer gold, with the others run down to fumes.  I submit that JPM has long cornered the market against the Slinger specs.   

On Wednesday JP Morgan (long/stopped) took delivery of 238,900 oz mostly from one source, HSBC’s registered gold account (short/issued).  At last tally and before this issue, HSBC only had 80,257 oz in it’s dealer account.  It is unclear how HSBC will deliver, but will have to get daisy chain creative.  Of the December contracts standing  this week almost none has been rolled over, it is being delivered. There are 5612 or 561,200 oz still left this morning.   Since JPM is dominating the action right now, there is no way to tell if producers are involved, except to say there are still an unusually high number of December contracts standing. 

Fri, 12/06/2013 - 09:56 | 4221050 eclectic syncretist
eclectic syncretist's picture

Yes, this appears to be getting very interesting.  JPM has done a 180 degree turnaround and is taking delivery of signaificant amounts of gold and silver every day now.  They took delivery of another 19,300 ounces of gold and 580,000 ounces of silver yesterday, bringing their totals for the first week of December to 359,000 ounces of gold for their house account and an eye-socking 5,905,000 ounces of silver between their house and customer accounts.

http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsReport.pdf

http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsYTDReport.pdf

HSBC clearly does not have enough gold to deliver all that they sold to JPM.  Perhaps they can buy the shortfall from China, but I suspect what China bought will not go back on the market for many generations to come.

Fri, 12/06/2013 - 15:19 | 4222321 MeelionDollerBogus
MeelionDollerBogus's picture

bah! what a bubble.
don't we know by now to do what they say and not what they do?
oh wait.... :)

Fri, 12/06/2013 - 15:14 | 4222299 Bastiat
Bastiat's picture

I don't think China bought JPMs vault building for nothing.  I think it will be filling up.

Fri, 12/06/2013 - 01:50 | 4220554 drdolittle
drdolittle's picture

Yeah Im really pissed off now. I gots the phizz but they're gonna steal it from me and I have too much to live for. My guns are for zombies and a hedge against inflation. (buy one ar per month instead of an ounce of gold, sell after each newtown event investment thesis?). Those pricks are gonna rob us as much as they can and I'm pretty sure they can torture it outta me, even if I do have pretty good mental control.

This stuff looks exciting though. And, some guys will have less to lose and start taking out the robbers. That'll be cool to watch too.

Fri, 12/06/2013 - 01:44 | 4220550 Seeking Aphids
Seeking Aphids's picture

I truly hope you are right, Mr. H. Truly! Bring it on!

Thu, 12/05/2013 - 23:18 | 4220229 Seasmoke
Seasmoke's picture

I guess I am a Gold miner. 

Thu, 12/05/2013 - 22:36 | 4220140 The Wisp
The Wisp's picture

Nice Mine you got there... be a Shame if something happen to it.. BTW your wife's kitten is missing.. I am sure your family wouldn't want the same thing to happen to your grand Child. oh there seems to be a problem with your taxes, the IRS would like a few months of your  accountant's time..

  Trust me the banks will solve their Problem Fairly and Honestly...

Fri, 12/06/2013 - 15:26 | 4222354 MeelionDollerBogus
MeelionDollerBogus's picture

Good Sir, am I to understand your conveyance to be that banking professionals could be up to nefarious doings?

Thu, 12/05/2013 - 22:31 | 4220130 frankTHE COIN
frankTHE COIN's picture

This is A Spectacular Analysis. Well Done .

Thu, 12/05/2013 - 22:29 | 4220126 joego1
joego1's picture

Check Mate!

Thu, 12/05/2013 - 21:30 | 4220003 El Hosel
El Hosel's picture

The Fed and the Banksters Pattern is to keep ringing the register and "stimulating" "the Markets" until they break something... and it blows up in their plastic faces. Are we there yet?

Thu, 12/05/2013 - 21:02 | 4219911 Bastiat
Bastiat's picture

I understand Bitcoin sells a near infinite premium to the cost of production.  Hmmm.

Fri, 12/06/2013 - 08:31 | 4220854 Matt
Matt's picture

Nah, come March, the margins on bitcoin could completely collapse. As it is right now, my $2000 mining rig, consuming $0.25 in electricty per day, produces 0.1 BTC per day (about $100) so only 400:1 returns on production cost.

Fri, 12/06/2013 - 13:54 | 4221946 RafterManFMJ
RafterManFMJ's picture

I'm curious if anyone finds it a bit evil to burn resources, ie oil and gas to produce essentially electronic vapor?

You burn power and dedicate machines to produce...bits of nothing?

I dunno BitCoin conjures a mental image of some fool pumping 500
Gallons of oil onto a road and setting it alight; burning the real, tangible and useful for some Unicorn bit that no one can even say where it came from.

Sure, they have value I suppose ... until they don't.

Fri, 12/06/2013 - 18:18 | 4222923 MeelionDollerBogus
MeelionDollerBogus's picture

I certainly do. A lot more can be produced of lasting biological or engineering value by never mining bitcoin and just using GPG signatures for electronic vouchers.
They take mere fractions of a second to produce & verify.
Bitcon is a travesty on so many levels.

Fri, 12/06/2013 - 14:21 | 4222060 Idisq
Idisq's picture

Yeah! I'm sure not much energy is used to prop up USD...

Fri, 12/06/2013 - 19:43 | 4223137 Matt
Matt's picture

If I remember correctly, America consumes about 20 million barrels per day, and the US military is about 20% of that, so about 4 million barrels of oil per day. At a creation rate of about $3 billion USD per day, they are getting about $750 dollars created per barrel of oil consumed by the military.

Sat, 12/07/2013 - 02:05 | 4223822 RafterManFMJ
RafterManFMJ's picture

Yea, I guess printing paper costs ink, paper AND electricity. I'm saying I don't think bitcoin is evolutionary, but rather devolutionary.

Fri, 12/06/2013 - 10:52 | 4221221 Ghordius
Ghordius's picture

so twenty days until your investment has paid itself off, and then it's only electricity and depreciation? +1, well done

yet at the end during speculation mania periods like the current one production flows are often irrelevant. so perhaps March, yet I would not be so sure... which year

Thu, 12/05/2013 - 20:56 | 4219870 Al Huxley
Al Huxley's picture

Maybe below the cost of production, the best way for producers to deliver on their commitments is to buy the (apparently widely available) metal from the comex instead of going through the trouble to dig it up.  Oh, didn't see that one coming!  LOL....

 

Actually, this fucking kills me the more I think about it - if that's the case, what a fucking laugh, the PRODUCERS buy the metal off the exchange, to deliver the metal into the market, apparently so it can be promptly resold!!!  Ha ha ha, what a fucking circle jerk, what a travesty of a 'market'.  I wonder where all the gold is coming from now that the fucking producers are on the buy side (if true).

Fri, 12/06/2013 - 10:56 | 4221230 Quinvarius
Quinvarius's picture

I think the producers/commercials have other obligations for their gold than to put it back on the COMEX.

Fri, 12/06/2013 - 06:34 | 4220746 auric1234
auric1234's picture

I wonder where all the gold is coming from now that the fucking producers are on the buy side

They can either raid GLD by pushing the price lower, making this the very end of the game, or stage another leg up to, say, $3000 and let the new price solve everything.

Actually, make that two legs. The first one to $1500 just to suck all the dry powder before it goes to $3000.

 

Thu, 12/05/2013 - 20:49 | 4219856 Bron Suchecki
Bron Suchecki's picture

"A subscriber asked where miners sell their gold nowadays. Good question. It sure isn’t the Comex, nor do I think it’s the LME (London Metal Exchange)."

It sure isnt' the LME, as they don't trade precious metals. Does this guy know what he is talking about?

Fri, 12/06/2013 - 03:36 | 4220635 Trampy
Trampy's picture

It sure isnt' the LME, as they don't trade precious metals. Does this guy know what he is talking about?

Forget about "ilene" and Russ Winter.  Go to the source of those charts and you'll see the first person in a chain of people playing "telephone," Gene Arensberg.

Gold miners are not net long per the COT data!

These articles often get garbled in the process of shortening them and juicing them up for ZH reposting.  Travesty, my ass!  The only "travesty" was the distortion and false claims added to the original with this nonsense added right here at ZH:

  • THE WTF COMEX TRAVESTY Posted by: ilene Post date: 12/05/2013 - 15:09 Travesty- n: “a false, absurd, or distorted representation of something.”
  • --------------------------------------------------------------------------- 

    The original undistorted article came from here:  http://www.gotgoldreport.com/2013/12/rare-signal-producer-merchants-net-long-gold-futures.html

    CFTC “Producers, Merchants, Processors and Users,” ... This category of traders includes producers and miners, refiners, large jewelers, large bullion merchants and, perhaps most importantly, it also includes the large bullion banks those gold industry titans end up trading through on the COMEX bourse.

    Fri, 12/06/2013 - 05:35 | 4220709 russwinter
    russwinter's picture

    Utter nonsense, historically the hedging by miners is by far the largest component of this category.

    Gene Arensburg does good work and I used his charts. But Gene doesn't have a monopoly on this data, which is reported for public dissemation by the CFTC. 

    The best info on bullion bankers is the bankers participation report being released Friday. In the last report, the big 4 US bankers were net long close to 5 million oz with gold $100 higher. 

    Fri, 12/06/2013 - 14:27 | 4222093 smartstrike
    smartstrike's picture

    My money is on Russ whom I followed on-off since 2006.

    Thu, 12/05/2013 - 21:16 | 4219952 Al Huxley
    Al Huxley's picture

    Yeah, yeah, LBMA, not LME.  The real question is 'are the producers actually net long'?  If they are, who will be providing them with gold?  The FED, the Rothschilds?  Perhaps the Comex can set up their own 'Cash For Gold' chain and scoop up enough scrap to meet the commitment.  Maybe the Perth Mint can supply them - that would be quite the sale, wouldn't it - 596,000 oz all in one shot!

    Thu, 12/05/2013 - 22:57 | 4220189 rationaldemocracy
    rationaldemocracy's picture

    perth mint is leverged 13-1 in it's own ETF

    fat chance

     

    Fri, 12/06/2013 - 00:23 | 4220380 Bron Suchecki
    Bron Suchecki's picture

    Where do you get the 13-1 leverage, I am across all the crap about us but haven't seen that figure.

    We are a mint, not a bank, so everything is 100% backed. Like we are going to run out of gold when we refined 400 tonnes of the stuff a year.

    Fri, 12/06/2013 - 20:45 | 4223260 Imminent Crucible
    Imminent Crucible's picture

    "Like we are going to run out of gold when we refined 400 tonnes of the stuff a year."

    The largest gold refinery in Switzerland refines a lot more than that, and they have run out of gold source several times this year, for the first time ever. They sent 500 tonnes of kilo bars to China alone in the past year.

    http://www.ingoldwetrust.ch/alex-stanczyk-physical-supply-never-been-tig...

    It's a new game now. Perth Mint is screwed.  Has everyone already forgotten that the Bundesbank asked the FRBNY to return their 1,536 tonnes, and were told, "Okay. You can have it back in 2020. Meanwhile, there's no room for visitors in the basement"?


    Sun, 12/08/2013 - 23:51 | 4228312 Bron Suchecki
    Bron Suchecki's picture

    Still waiting for the source/facts behind the 13:1 statement. People have been saying Perth Mint is screwed for years now and we are still around. We've been in business for 114 years and will still be in business in another 100, as we are conservative and risk adverse and don't play games with clients' metal.

    Fri, 12/06/2013 - 05:52 | 4220719 akak
    akak's picture

    Bron, I would be curious to know your opinion of Jeffrey Christian, particularly of his repeated and heated (some would say at time positively rabid) denials of ANY possible high-level (i.e., governmental and/or by their agents) manipulation in, or suppression of, the market and the price of gold.  Do YOU see anything wrong, or at least suspicious, in the market and/or price of gold in recent history?

    Sun, 12/08/2013 - 23:55 | 4228321 Bron Suchecki
    Bron Suchecki's picture

    Turd recently asked some questions about Jeffrey, see here for some background on him http://goldchat.blogspot.com.au/2013/11/so-who-are-the-liars-and-cartel.html

    As I said in this post http://goldchat.blogspot.com.au/2013/05/questions-from-tf-metals-report-readers.html 

    I believe in manipulation but not suppression. One is short term, the other long term. Many of the manipulation and suppression theories are simplistic comic book stuff. Often why people consider me anti-manipulation is because I critique these theories. Doesn’t mean I don’t believe others, like this http://goldchat.blogspot.com.au/2009/06/death-of-gold.html : “To kill gold you don't manipulate its price, you manipulate its volatility.”

    Mon, 12/09/2013 - 00:27 | 4228366 akak
    akak's picture

    Bron, thank you for your response. And I agree with you completely about the potential and/or attempted discrediting by TPTB of gold (and silver) as a means of personal financial protection through artificially induced and/or exaggerated volatility.

    But I am still curious, why do you believe that price suppression is not possible, in light of, for example, the post-war Bretton Woods Agreement, combined with the London Gold Pool of the 1960s, which was EXACTLY one such officially-coordinated suppression of the price of gold --- and not just on a multi-year, but on a multi-DECADE time scale?  And just because some gold suppression theories can be possibly discredited, or are even "comic book stuff", does not mean that ALL such theories are impossible or not reflective of reality.

    Tue, 12/10/2013 - 03:57 | 4231738 Bron Suchecki
    Bron Suchecki's picture

    I side with Martin Armstrong's analysis on this, I don't think they have the competency. But more seriously, the amount of metal needed to sustain this they would have run out already. I mean they shut down the London Gold Pool after 7 years, look how much gold they lost just to maintain $35 and consider how much more fiat exists now that they would need to absorb if it flows into gold. The assertion is that the CBs were holding the price down through the 90s (look at the chart and how it repeated hit a ceiling at $400) then you have the whole 11 year bull market. They just don't have enough gold to last 20+ years (and don't give me any Yamata gold BS).

    If you were in their position would you try the blunt instrument of outright sales or try and extend your firepower via tactical retreat actions?

    Tue, 12/10/2013 - 15:36 | 4233298 akak
    akak's picture

    Oh, I agree Bron, there is not and has not been nearly enough physical gold, by itself, to have maintained a 20 year price suppression scheme in the current environment.  But to what extent has, or might have, paper gold, in all its many forms, played in substituting for physical gold in maintaining such a scheme?  That is the issue that I find most pertinent, most opaque, and most unsettling.

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