Just What Is Going On With The Gold In JPMorgan's Vault?

Tyler Durden's picture

We know that back in early October 2010, when gold closed at a then record high of $1,320, JPM decided to reopen its previously mothballed precious metal vault due to soaring demand for metal vaulting, thus becoming only the fifth official Comex private gold depository in New York in addition to HSBC, Bank of Nova Scotia, Brinks and MTB (and of course the New York Fed).

We also know, courtesy of a Zero Hedge exclusive, that the JPM vault - the largest private gold vault in the world - is located at 1 Chase Manhattan Plaza, and is literally adjacent to the vault of the New York Fed 80 feet, and 5 sublevels, below street level.

We know that for a long time the vault held around 2.5 million ounces of eligible (commercial) gold, a number which declined only gradually until very recently.

We know that the total amount of registered (investment) gold has been steady for the past 4 years (after peaking in early 2006).

Finally, everyone knows that in the past month gold has experienced a very severe move lower which is still largely unexplained.

What many may not know, is that while registered Comex gold has been flat, the amount of eligible gold in Comex warehouses (the distinction between eligible and registered gold can be found here) in the past several weeks has plunged from nearly 9 million ounces, to just 6.1 million ounces as of today- the lowest since mid-2009.

What nobody knows, is why virtually the entire move in warehoused eligible gold is driven exclusively by one firm: JPMorgan, whose eligible gold has collapse from just under 2 million ounces as of the end of 2012 to a nearly record low 402,374 ounces as of today, a drop of 20% in one day, though slightly higher compared to the recent record low hit on April 5 when JPM warehoused commercial gold touched a post-vault reopening low of just over 4 tons, or 142,700 ounces.

This happened just days ahead of the biggest ever one-day gold slam down in history.

Some questions we would like answers to:

  1. What happened to the commercial gold vaulted with JPM, and what was the reason for the historic drawdown?
  2. Gold, unlike fiat, is not created out of thin air, nor can it be shred or deleted. Where did the gold leaving the JPM warehouse end up (especially since registered JPM and total Comex gold has been relatively flat over the same period)?
  3. Did any of this gold make its way across the street, and end up at the vault of the building located at 33 Liberty street?
  4. What happens if and/or when the JPM vault is empty of commercial gold, and JPM receives a delivery notice?

Inquiring minds want to know...

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vulcanraven's picture

Pull the trigger until it goes *click*

GetZeeGold's picture

 

 

Dude....watch it. I'm holding a beverage over here.

Bearwagon's picture

Those people are nihilists ...

fonzannoon's picture

I thought JPM sold 400 million ounces of gold or whatever it was in one trade last friday after some timely and prudent advice from the goldman sachs? Seems like an open and shut case, and some timely advice to boot!

caimen garou's picture

tower heist, watch for JD driving the ferrari

tip e. canoe's picture

ouch, that hurt.   helluva roundhouse tyler.

Where did the gold leaving the JPM warehouse end up (especially since registered JPM and total Comex gold has been relatively flat over the same period)?

whereever it be, betya 1 Valentian I era gold tax collector bar that it never made it above ground in the entire journey.

disabledvet's picture

"possession is 9/10th's the law." it went "wherever they said it went." if they nothing....they never had it to begin with.

Savyindallas's picture

Jim Willie says the Banksters pledged the gold as collateral to Chinese loan sharks  -really, really bad loanshrks- and that they had no choice but to cough up the gold -at the risk of getting Jimmy Hoffa-ed- he also says that when very , very rich people find out their gold is gone  -the Banksters will be toast - they have some kind of underground Elba Island or something where these banksters will be sent to. 

fonzannoon's picture

I thought Jim willie said the fed was about to do an about face and slam gold higher so that it would be much more difficult for the chinese to buy it....so basically the opposite of what happened....

Savyindallas's picture

The Willie interview I'm referring to was about 3-4 months ago

LaoTzu60606's picture

re: jim willie...

 

never trust a blogger who uses dual color fonts...

never trust anyone with two first names...

 

LT

Dr. Sandi's picture

Never trust anyone with two first names is MY line. It comes from being around broadcasting people too much. Movies are even worse.

Danchuk Jefara Vilmanscheiss suddenly becomes news anchor Danny Williams. (I made that one up, but I like it anyway.

tsx500's picture

...or an actor  re: Jim Carrey

MFLTucson's picture

Cant wait to see Dimon and Blankfein strung up in the city square so I can spit on both of them.

bluskyes's picture

Jim Willie says a lot of things.

ekm's picture

Easy answer:

 

MARGIN CALL KIND, not in cash.

fonzannoon's picture

so play it out ekm. where does it go from here?

ekm's picture

Same concept as for monte dei paschi collateral call, a spare change of 4 billion euros could have demolished the italian banking system. But they settled it with euros.

 

JPM owes money due to swap losses. Those are paid quarterly or something like that. They have no collateral, just a little.

Nobody seems to want dollars any longer, they want the stuff.

 

or the FED is buying gold from JPM in exchange for dollars for them to do payouts. I guess not much bons left to buy.

Bottom line: The Fed has bought almost all available collateral.

 

I made a call during the 2nd week of march that we are only weeks away from the collapse (collateral call). My call is in its 5th week unfulfilled yet. We'll see.

fonzannoon's picture

assume the fed is taking that gold off JPM's hands. Then JPM settles in cash. 

Then JPM has no collateral left.....

game over JPM? 

no way....?

ekm's picture

No. JPM will call other collateral from the sacrificial lambs around. It becomes a chain, like the risk with monte dei paschi

 

If italian gov didn't pay, then DB and Nomura would have had to sell something else in order to fulfill their obligations.

Why were they calling the collateral from monte dei paschi? Answer: they had swap payouts to do.

 

It's getting close, very close.

Lux Fiat's picture

Interesting.  I'm not familiar with your call, but recent events seem to have shades of the end games in Simon Johnson's "The Quiet Coup" [http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/30736...], but this time occurring in the developed world. 

Given all of the articles, pronouncements, and talk of how to handle G-SIFI's without taxpayer bailouts [just taking taxpayer acct money instead], makes me wonder if the TBTFs are playing musical chairs and we may find out soon who will be cannibalized, and who will be dining on the remains.  What happened in Cyprus definitely was a test run [with confirmations from Ireland, NZ, and other spots bearing this out in my mind].  It may also be how the CBs plan to sterilize a lot of the global QE - not through selling their bonds/assets, but through massive wealth destruction via bank "rescues". 

What it MFGlobal and Sentinel were also test runs?  After all, who got the allocated customer gold and cash?  And the big banks have moved lots of derivatives onto their retail banking banking balance sheets, where it now has primacy/priority over retail deposits.  Just speculating.

Oops- this was supposed to be a reply to EKM's 22:10 comment.

fonzannoon's picture

I saw Russ comment. so azberghasistan or whatever jumped the line in front of Germany and got delivery first? 

fonzannoon's picture

No I am asking how they got in line in front of Germany and actually received delivery first. Also what makes them so special that they don't get a delivery of bombs like Libya etc did?

ekm's picture

Their president is not stupid and is playing both ways with USA and Russia. Quite, quite smart.

He's got the oil and wants to sell it to highest bidder at the maximum leverage. He's something like a sultan there, like a king.

 

It's all about crude oil. All wars about crude oil. US soldiers die to obtain crude oil for the sheeple. As long as Germany gets the gas and oil, they won't care about their gold. They will call the gold back, if the gas flow gets reduced, so they can do their own deals using that gold.

 

Fred Hayek's picture

I disagree.
It's not that I don't think you're on the right track. But I think you focused on the wrong end of the transaction. Our recent military actions have been about the dollar not oil. Afghanistan was a target because the Taliban were there and the purported people behind 9-11. But it was also a great . . pickup for the narcodollar value. Iraq was a target because Hussein had had the audacity to say that he was going to accept euros for his oil. Iran is a target because they also say that they don't have to be paid in dollars. Qadaffi is suddenly an intolerable problem while not really having changed much how he ran his country because he was talking about a precious metals currency. Don't kid yourself. Oil is nice. It's a great thing to have. But oil doesn't threaten the banks that own the Federal Reserve. Actions against the dollar do. And that's when we go to war.

ekm's picture

We are saying the same thing.

The only way to keep a demand for dollars is to have oil denominated in dollars, otherwise nobody would care about us dollars.

 

US dollars is backed by Saudi's oil, hence it's backed by US military.

In a theoretical case that the earth runs out of oil today, nobody cares about USD as of today.

 

The problem is that Benny is printing dollars not backed by oil or other products, hence those dollars become claims on other's assets, hence rejection of USD by Currency Swap Agreements

tsx500's picture

dollars are backed by force   ie largest military force in the world

daveO's picture

Righto, Lybia wasn't attacked until Gadafi said he'd sell oil for Rubles and Yuan. Then, Bingo, a month later he's dead!

Tortfeasor's picture

Gold crushed to allow the morgue to replenish the vault w phyz, temporarily staving off default

GoldenTool's picture

Use me improperly at your own peril.

 

"Salus populi suprema lex esto"

mick_richfield's picture

 

Credat Judaeus Apella, non ego.

GoldenTool's picture

 Brevis ipsa vita est puer stultorum magister

GoldenTool's picture

That was more painful then it should have been.

 

 

 

mick_richfield's picture

 

Catapultam habeo. Isi pecuniam omnem mihi dabis, ad caput tuum saxum immane.

Seer's picture

Name alone was good for an up-arrow...

lotusblue's picture

Gold drop =coordinated soveriegn sale.

seek's picture

My bet (as I've stated recently) is it's getting passed back to the bullion banks so they can return it to central banks.

It's very obvious from COMEX inventories and GLD holdings and now this, that whatever physical is out there in the banking system is rapidly getting moved.

Something big is coming. Given run rates of how fast the gold is being moved and known inventory levels, whatever is going on will be complete in under a year, and probably in less than six months, and appears to be accelerating (run rates increasing) so it could happen even more quickly.

Whatever it is, it's being moved because of it's value, not lack thereof.

mick_richfield's picture

 

Something big is coming.

Yes, I think that's a safe bet.

By the pricking of my thumbs...

fonzannoon's picture

Hey Texas....you reading this?

It's gone baby....gone.

BoNeSxxx's picture

Shhhhh... you might spook the Germans.

nmewn's picture

"Did any of this gold make its way across the street, and end up at the vault of the building located at 33 Liberty street?"

Yes. I say it did.

The Morgue has always had a "special relationship" with government fiat. The rest of the world, not so much, apparently ;-)

Che Guevara is Dead's picture

That gold could buy a lot of Russian hookers and blow. Anyone seen Dimon recently? Does he look tweeked? 

Fred Hayek's picture

Nope, just the same old unremarkable, unaccountably smug dullard as always.

samsara's picture

Obviously the two minute warning blew a long time ago (2008ish)

The music is ending and everybody is grabbing chairs.

There are more tickets than underlying assets, Big people are getting their share first.

All actions now (Like the two vaults) are equivalent to 3 card monty.

Where's the queen