JPM Eligible Vault Gold Drops To Fresh Record

Tyler Durden's picture

Two weeks ago we reported about one of the biggest daily withdrawals of eligible gold from the JPM gold vault, it not on an absolute basis, then certainly on a relative, when in one day over 260k ounces of gold were withdrawn, leaving a record low 141.6k ounces, or just over 4 tons of gold in the vault. Subsequently, we tracked the daily additions and withdrawals of gold from the vault to see if any other major withdrawal request would come, instead discovering instance after instance of JPM reclassifying Registered gold into Eligible, which is how the vault saw its eligible inventory rish back to 195K ounces as of yesterday, without any actual net additions or more importantly withdrawals. It seems the pause of withdrawals has ended, and as of yesterday, another delivery led to a withdrawal of 53,658 ounces, or 28.5% of the total, leaving a fresh record low inventory of only 137,377 eligible ounces in the vault.

As a result, total Eligible in the Comex system is now at a level of 6.13 million oz, or roughly the lowest since since 2009.

And since much of the Eligible gold "additions" have come as a result of the reclassification of Registered gold into Eligible, the combined total of Eligible and Registered has also declined to levels last seen in 2008, at just under 8 million total ounces.

But here's the real punchline: if JPM had not been allowed to arbitrarily convert registered gold into eligible in the past two weeks, the firm's current inventory of eligible gold would be just 83,718 troy oz, or a little over one and a half metric tons: an amount that is laughable and is about 3% of the maximum eligible gold (2.8 million oz) held at the JPM vault, shortly after its commercial reopening in October 2010.

Earlier today, when reporting about the insatiable demand for physical out of China, following the report that "The jump in Chinese physical demand also prompted some banks to ship in more supplies from London and Swiss vaults, traders said." we asked "What about New York vaults? And specifically the biggest gold vault in the world, located 90 feet below 1 Chase Manhattan Plaza?" It appears the Chinese may have gotten just a little more gold out of New York today after all.

Finally with gold at record low levels, pay attention to how much more registered gold is converted into eligible in the coming days. Because if one day the registered gold holders realize the "run on the vault" that is going on, and they too ask to have their gold moved elsewhere, then things will really get entertaining.

Source: COMEX