JPMorgan's Eligible Gold Plummets 65% In 24 Hours To All Time Low

Tyler Durden's picture




 

We are confident that in the aftermath of our article from last night "Just What Is Going On With The Gold In JPMorgan's Vault?" in which we showed the absolute devastation of "eligible" (aka commercial) gold warehoused in JPM's vault just over the Manhattan bedrock at 1 Chase Manhattan Place (and also in the entire Comex vault network in the past month), we were not the only ones checking every five minutes for the Comex gold depository update for April 25. Moments ago we finally got it, and it's a doozy. Because in just the past 24 hours, from April 24 to April 25, according to the Comex, JPM's eligible gold plunged from 402.4K ounces to just 141.6K ounces, a drop of 65% in 24 hours,and  the lowest amount of eligible gold held at the vault on record, since its reopening in October 2010!

Everyone has seen what a run on the bank looks like. Below is perhaps the best chart of what a "run on the vault" is.

The absolute collapse in JPM's eligible gold inventory, means total Comex eligible gold has fallen to just 5.8 million ounces, half of what it was in early 2011, and back to levels last seen in March 2009.

So, once again, just like last night, we ask the same questions which are even more critical today than they were 24 hours ago:

  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?

Incidentally, JPM now has just under a paltry 5 tons of eligible gold left in storage. We hope this is also the maximum exposure it faces for imminent delivery requests, because if tomorrow it receives withdrawal requests for 141,581.5 ounces +1, then things get really interesting.

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Thu, 04/25/2013 - 17:31 | 3499743 mayhem_korner
mayhem_korner's picture

 

 

(ooh, ooh, ooh) Jamie's cryin...

Thu, 04/25/2013 - 17:36 | 3499766 Frastric
Frastric's picture

Rehypothecation bitchez!

Thu, 04/25/2013 - 17:43 | 3499797 AlphaDawg
AlphaDawg's picture

epic news

its not manipulation, it is what it is.

and im buying

 

just a thought, could be due to the MASSIVE short Yen long Gold trade that everybody and thier dog is doing

Thu, 04/25/2013 - 17:43 | 3499824 kaiserhoff
kaiserhoff's picture

Could this be why Ben's ass is on fire?

Thu, 04/25/2013 - 17:53 | 3499866 THX 1178
THX 1178's picture

Is that what I smell?

Thu, 04/25/2013 - 17:57 | 3499883 TheFourthStooge-ing
TheFourthStooge-ing's picture

Yep. Although it's been smoldering for awhile now, this has opened the nitrous tank valves.

It's burnin' real good now.

Thu, 04/25/2013 - 18:03 | 3499914 camaro68ss
camaro68ss's picture

The person with the best video of Jamie and Bernake holding hands as they jump off the top of JPM building tomorrow gets a silver eagle.

Thu, 04/25/2013 - 18:05 | 3499919 nope-1004
nope-1004's picture

"Eligible"?  LOL.  Was there ever any eligible?

 

Thu, 04/25/2013 - 18:09 | 3499940 camaro68ss
camaro68ss's picture

its a paper smackdown so the bankers can buy the fizz on the cheap, load up there boats and head off to an island. why else would this happen? you think there really that stupid.

Everyone is worryed about this boston bombing as bernake is loading up the trucks full of gold

 

Thu, 04/25/2013 - 18:26 | 3499993 McMolotov
McMolotov's picture

"There's a bomb in a school..." —Simon Gruber

Boston + Syria = plenty of distraction.

Thu, 04/25/2013 - 19:13 | 3500220 SnobGobbler
SnobGobbler's picture

you forgot the (Rug = Pulled) quocient!

 

Thu, 04/25/2013 - 19:30 | 3500285 Harlequin001
Harlequin001's picture

Do correct me if I'm wrong here but if the world is net long gold and the banks force the price down past the stops as they did, then the world will buy a short to cover its longs won't it?

When they do someone buys the other long do they not, and if that someone is the bank itself because they know what is happening then the bank will take delivery and empty the vault will it not, and possibly for its own directors.

Which means that the end of the banking system i.e. gold default and blatant mass money printing could be upon us literally within months now.

Thu, 04/25/2013 - 19:34 | 3500307 BaBaBouy
BaBaBouy's picture

Whimen Have Penis-Envy...

JPM Now Has Physical-GOLD-Envy.

 

This Shit Will NOT LAST.

GOLD $50K, Ben-Shalom Notwithstanding...

Thu, 04/25/2013 - 19:45 | 3500353 cifo
cifo's picture

Too good to be true.

Thu, 04/25/2013 - 19:59 | 3500428 espirit
espirit's picture

Vatican wanted their gold back.

The end.

Thu, 04/25/2013 - 20:17 | 3500516 FEDbuster
FEDbuster's picture

I know the 1 oz eagle I bought today didn't come from their vault, but I like to think I am helping the cause.  As Max Keiser says, "If every adult would just buy one oz of silver......"

Crash JPM, buy silver (and gold)!!!

Thu, 04/25/2013 - 20:24 | 3500555 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Exactly I am at the point I don't mind losing a few dollars (which I need) just to bust this fucker wide open by buying a few paper shares and asking for delivery right away.

Thu, 04/25/2013 - 21:10 | 3500699 erg
erg's picture

There's chum on the face of the waters.

Thu, 04/25/2013 - 22:06 | 3500890 Pinto Currency
Pinto Currency's picture

 

The physical run is on and it is becoming visible now after smoldering since December.

On the JPM front, the question is who would store their gold or silver with JPM in the first place.

Thu, 04/25/2013 - 23:13 | 3501090 DoChenRollingBearing
DoChenRollingBearing's picture

LCS Report:

 

Bought the last 1 oz AGE they had left.  I also bought the last 1/10 oz Eagle and a 1/4 oz Maple.  Only thing left was a 1/2 oz coin and numismatic gold coins.

Thu, 04/25/2013 - 23:24 | 3501122 Big Slick
Big Slick's picture

That’s a reduction of 260.8k ounces, valued at $384.7 million

Fri, 04/26/2013 - 00:00 | 3501247 BTFDemocracy
BTFDemocracy's picture

The song line "Jamie's got a gun..." comes to mind

Fri, 04/26/2013 - 00:44 | 3501315 americhinaman
americhinaman's picture

It just means they are considering exiting the business of earning the carry from synthetically lending physical inventory.  While they hold physical inventory, they can roll short futures against it and pick up the sum of a a libor-ish rate plus a gold storage rate... i.e. gold futures curve is upward sloping, so they can capture that.  if physical gold is at 1500 and they have a short a 1y future at 1507, then they will capture 7 by shorting the future and delivering their physical gold.  Near maturity, the future will trade very close to spot, but they can buy that back and sell the next future for 7 more.  each period they capture 7... all they have to do is hold physical. 

So if they are allowing their short contracts to expire into phsyical delivery, it is not suggestive of any sort of panic.  What it does suggest is a combination of the following:

1) 7/1500 per year is not that much (about 50bps per year), but it beats treasuries right now.  If they are no longer happy with 7/1500 per year return, then they close out the gold carry trade.  They could be dissatisfied with that rate for a number of reasons, but the main reason is that they believe that they can earn more delploying capital elsewhere.  This strategy ties up the entire value of the gold inventory plus margins posted on the exchange.

2) They fear that the futures curve may go into backwardation.  That is when the curve is downward sloping... i.e. if they are long physical and shorting futures against it then they would lose money each period.  This scenario could happen if the sum of the bullion dealers who have comex inventory run out of gold.

So my guess is that it's a combination of both reasons.  The risk/reward on synthetic gold lending has deteriorated, so it's prudent planning by JPM in response to a possible short squeeze in phsyical gold.  Sorry to those of you who want to bankrupt JPM... actually to get real that's not a scenario where any of us would do well, so I wouldn't hope for it.

Fri, 04/26/2013 - 01:28 | 3501359 WTFUD
WTFUD's picture

Bullshit JPM is going down you wanker. Like paper gold its Assets are 1/100 its liabilities. Go fuck yourself it's GAME OVER.

Fri, 04/26/2013 - 03:59 | 3501450 Jack Napier
Jack Napier's picture

You can't bankrupt JPM without bankrupting the USG.

Fri, 04/26/2013 - 06:13 | 3501526 StychoKiller
StychoKiller's picture

You type that like it's a bad thing.

Fri, 04/26/2013 - 06:29 | 3501544 GetZeeGold
GetZeeGold's picture

 

 

 

 

 

It's a good thing - Martha Stewart

Fri, 04/26/2013 - 06:34 | 3501560 francis_sawyer
francis_sawyer's picture

I hate to be the one to bring this up, but I'm thinkin' 'somebody' has to manage the EBT cards [at least for now]...

Fri, 04/26/2013 - 07:03 | 3501594 malikai
malikai's picture

If I had a lot of outstanding shorts, knew there was a strong physical demand, and that there was this ETF which held incredible sums of the stuff, I'd like to see the price collapse, people in the ETFs sell in a firesale, so I could pick up my covers profitably while sorting out the physical troubles.

When people say ETFs are bad, it is partly for this very reason. It enables the above and in fact, incentivizes it.

Anyway, all that so-called smart money that was 'hedged' in levered gold should now have again learned this critical lesson.

Thu, 04/25/2013 - 23:17 | 3501100 TuesdayBen
TuesdayBen's picture

All they got is 5 tons? Shit, that'd all fit in the back of my short-bed pickup...

Fri, 04/26/2013 - 00:30 | 3501294 francis_sawyer
francis_sawyer's picture

& fuck up your suspension...

Fri, 04/26/2013 - 07:07 | 3501604 malikai
malikai's picture

I guess that means you're driving.

Pick me up on the way.

I'll buy you some new shocks when we finish the job.

Fri, 04/26/2013 - 07:58 | 3501682 francis_sawyer
francis_sawyer's picture

gonna need a lift kit...

Fri, 04/26/2013 - 08:04 | 3501696 ATM
ATM's picture

It will fit in the back of my Pacer too. but everyone will be able to see it in that fishbowl.

Thu, 04/25/2013 - 22:33 | 3500981 erg
erg's picture

Blood in the water. As if by rote; crash the price. Vanquish all ye hopes in anything other than fiat.

For thee the bell tolls. You can't avoid yourself.

Thu, 04/25/2013 - 21:13 | 3500720 jcpicks
jcpicks's picture

USMINT.GOV is selling their 1/10 oz PROOF coins for $195.

Other websites are selling uncircs for $200+ right now.

Hmmm......

Thu, 04/25/2013 - 21:15 | 3500727 Bananamerican
Bananamerican's picture

"because if tomorrow JPM receives withdrawal requests for 141,581.5 ounces +1, then things get really interesting"

quick. what's the readership of ZH!?!

Thu, 04/25/2013 - 22:09 | 3500900 Muppet of the U...
Muppet of the Universe's picture

HEY YOU!  Just wanted to grab someone's attention on the way down - The world's supply of gold is not going to run out in the next few months.  This is nearly impossible.  This is called dip buying, and its nearly over as prices are back at 1500ish.

Do not listen to ZH - They have become charlatans.  Do not let the dealers hoodwink you, they say they have no gold b/c they want you to pay insane premiums.  Why do all of you dunces buy silver eagles when you could buy engel or matthey for < half the over spot cost?  Its all metal - stop being stupid.  In 5-10 years, and more likely 15-30 years, there will be supply issues.  But the economy won't even last that long.  Don't let dealers hoodwink you.  You woke up and learned about investment and barely scratched the surface on finance and asset prices. 

& FFS, the comex isn't going to blow up.  Look at when JPM added its gold position to the comex and when it dumped it?

That would mean JPM lost a fuckshitton of money.  Guess what its actually for the comex reserves, which reflect the price.

Now whether Comex has the stuff or not?  I can't honestly say.  But I would bet a million to one, that you and all you buddies heard comex doesnt have the gold/silver from a bullion youtuber who is prob a phys dealer.

Phys dealers wnt you to think Comex will crash so you buy phys and not paper gold.  It makes them money.  They have a financial reason to make you believe comex = crash.  Remember the banks can print money in zirp environment, they can literally buy as much phys as they want and put in the comex, there was 10 million ounces produced in us alone last year.

China goes long metals b/c china wants a hedge against a us dollar blow up.  But china has to hold dollar if china wants us to buy all their worthless shit.  Its a mutual benefit that will net profit china immensely in 5-10 years.  But right now people just buy on dps and trade paper price in futures., so they can live comfortably.  Get it?

You aren't gonna crash shit by buying phys.  They can PRINT MONEY.   GET IT?  We will have hyperinflation b4 we run out of phys. Get it?  Asset prices and bubbles are everywhere begging you to participate, get it?

Do some more learning, and look to other commodities and assets for opportunity.  The goal is to make money, not sit on a bunch of metal thinking that when the sheeple lose their shit in the fan you'll be rich.  That's fucking stupid.  Money is mostly made b/c the sheeple haven't lost their shit, and you won't make any money if they do.  I know you hate the guy, but for fucks sakes if you had gone for the money bernanke would have made you a small fortune.  & guess what?  Its qe4eva.  They may at some point actually lessen qe, or go one talking about ending it but it will never stop, and even if lessened, will likely go right back to increasing. 

Think don't panic, and then zerohedge will stop posting retarded sht designed to make muppets panic.

Thu, 04/25/2013 - 22:34 | 3500982 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Whose payroll are you on to write a post like that and space it in a manner to take up as much real estate as possible.

Jamie is that you?

Thu, 04/25/2013 - 23:26 | 3501133 Big Slick
Big Slick's picture

Naw.  Not Jamie.  It's Ben.  Now we know why he's too busy to attend Brettonwood.  Discovered ZH!!!!

Fri, 04/26/2013 - 04:00 | 3501452 Jack Napier
Jack Napier's picture

Gold supply isn't going running out, except for the gold on the COMEX! At some point they will have to buy real physical metal to meet deliveries, and then the physical price will push them around like a ragdoll no matter their efforts.

If gold doesn't get the job done, silver most certainly will, and if they prefer to default then paradigm shift completed.

Thu, 04/25/2013 - 22:58 | 3501048 Bananamerican
Bananamerican's picture

"Remember the banks can print money in zirp environment, they can literally buy as much phys as they want and put in the comex"

Not if we get it first ;)

Thu, 04/25/2013 - 23:35 | 3501167 Big Slick
Big Slick's picture

But now I'm confused... Muppet of the Universe said there is no supply problem.  If the banks can print as much as they want, they can buy as much as they want.  Kind of like Obama-care and it's basis on unlimited supply of healthcare. 

The rules of physics can only be defied for so long.  So long...

Thu, 04/25/2013 - 23:17 | 3501102 pods
pods's picture

I know it may be hard to believe, but many here on ZH are actually working for a living making REAL shit, and want to store our surplus capital in something outside of this system.

We DO think, and see that there is only one end to this.

There is no panic in us and we do not leverage our purchases of physical precious metals.

We patiently add to our stores; we do not trade in PMs, we accumulate.

We know our local dealers of precious metals, and greet them with a smile and a handshake.

Call us what you will, we have all been called it before.  
Water off a duck.

pods 

 

Thu, 04/25/2013 - 23:26 | 3501136 DaveyJones
DaveyJones's picture

well said pods

Thu, 04/25/2013 - 23:40 | 3501188 pods
pods's picture

Thanks Davey, sometimes I get frustrated with people taking issue with the Tyler's postings.  

Many of us here in this melting pot truly cherish what this place represents.  It represents a bastion of sanity in this messed up world.

Sure there is red meat tossed out now and again, but if you don't want to read something, you can always NOT click on it.

I do appreciate that there are opposing viewpoints here, LTER is one that comes to mind.  Always a thought out post, not a troll.  Just a difference of opinion.

Kinda irks me when it is assumed that everyone here is an active trader.

Many (me for one) are just misfits that are happy to have a place where people may not agree with an arugument, but at least they know what you are talking about.

BTW, my allocated account still okay in your locker?

:)

pods

Fri, 04/26/2013 - 03:40 | 3501435 James_Cole
James_Cole's picture

Thanks Davey, sometimes I get frustrated with people taking issue with the Tyler's postings.  

Many of us here in this melting pot truly cherish what this place represents.  It represents a bastion of sanity in this messed up world.

All the same, critiquing Tyler's bias should be fair game, particularly when a lot of us felt it pretty obvious gold was in a bear market (for at least the past 6 months months) yet the refrain from Tyler was endless 'gold shortage' articles encouraging people to load up. 

Definitely some people were investing money they likely shouldn't have been in PMs and later being forced to sell at a loss because the 'certain ramp around the corner' never came and they needed cash. 

There are people around here who can lose lots of money and it probably doesn't matter and those who probably can't afford to lose much money at all. The latter group seem to be more attracted to gold and a lot of the risks are glossed over in the sales pitch. 

Fri, 04/26/2013 - 04:04 | 3501453 Jack Napier
Jack Napier's picture

Traders are a barbarous relic. It's all algos now. We're just here for the show.

Thu, 04/25/2013 - 23:44 | 3501207 Skateboarder
Skateboarder's picture

*Fistbump*

Fri, 04/26/2013 - 06:15 | 3501531 HulkHogan
HulkHogan's picture

Here, Here (in a british accent)

Do NOT follow this link or you will be banned from the site!