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JPM Eligible Gold Plunges To New Record Low, And Why It Could Have Been Much Worse
Back on April 25, in the aftermath of the latest epic precious metals takedown, we reported that something odd had happened: overnight, total Eligible gold held in the vaults of JPM dropped by 65%, or 260.8k ounces in one day, to a record low of only 141.6K ounces. Contrast that with the 2 million Eligible ounces the JPM vault at the basement of 1 CMP held when it reopened.
Since that moment, many were curious if this may not be the start of the proverbial "run on the vault", and whether JPM's COMEX holdings could actually run out, and if so what happens then. And finally: is the dramatic plunge in gold related to any of this (and certainly to the Bundesbank's repatriation of NY Fed gold for the next five years)? In the ensuing days, JPM's Eligible gold fluctuated in a tight range, until today, when another 22,780 oz were withdrawn from Blythe Masters' metals cellar, bringing JPM's eligible gold to a fresh record low of only 137,377 troy ounces.
But this is only half the story: the details are as always behind the scenes.
Because what the chart above does not show is how, quietly, JPM managed to keep its eligible inventory constant even in light of various withdrawal demands.
The chart below looks at the relative moves in JPM Eligible and Registered gold, starting with the massive withdrawal day, April 25. What is immediately obvious is that the only reason JPM's eligible gold hasn't plunged, is due to the periodic "adjustments" out of Registered into Eligible gold, which on essentially all days in the past three weeks netting out, and for every ounce converted into eligible, one ounce was removed from registered gold.This also explains why even with the three distinct sizable withdrawal days, of 24K, 57.9K, and 22.8K on May 2, May 8 and May 14.
Incidentally, when asked about the rationale behind such seemingly arbitrary reclassifications, and warrant cancellation of registered gold into eligible gold, a market surveillance analyst at the CME replied as follows:
...the adjustment column does reflect the issuance and cancellation of warrants, but it can be used for other purposes as well. Anything that is not received or withdrawn would be reported in the adjustment column.
In other words, JPM and the Comex have full liberty to adjust what is eligible and what is registered, at will, and can thus easily replenish inventory even when it is about to run out.
And run out, it almost would have.
Because if one ignores the 100k or so ounces of Registered gold that were reclassified to replenish eligible inventory, JPM's eligible gold would, as of right now, be down to a negligible 36,931 ounces, or just over 1 ton!
At that point JPM would be down to one withdrawal request away from declaring force majeure on its eligible gold holdings, and all the unpleasant consequences that this would entail for future delivery requests.
Source: COMEX
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I love the free market. It is so random. So variable. So unencombered by manipulation........
Baaaaahhaaaaahaa
Pretty sure SAT 800 is drunk, but it is worth noting that TPTB are allowing us plebs to get in on the action as far as the purchase of phys. This allowance roughly coincided with the US going off the gold standard. Ask yourself why they did this. And I post this as someone who has a significant physical holding, that I unfortunately lost somewhere in Lake Superior.
I smell what you're cookin. Next one puts the theory to the test. Let's hope, for the sake of living an interesting life, its empty.
No more gold for sale? :-(
jut remember, as corazine showed, they can steal their clients gols and do what they want with it.
Gold just sits there and does not nothing while you hope someone will pay you more for it that you paid.. just like BRK.A stock.
I prefer to sit on silver. If it were not for my charity, in buying it all up and giving it a comfortable home, it would end up in some glue factory, or worse, thrown into the garbage heap (in the form of silver oxide batteries). Dickens would have approved.
You have it backwards. We will not sell our gold for funny paper. We will exchange it only for real goods or trustworthy investments.
If you want honest people to invest, stop rigging the economy. It shouldn't surprise you that many people don't want to invest into an obvious trap.
Actually, swanpoint, you are wrong in claiming that gold "just sits there and does nothing".
What gold DOES do is increase in price roughly in line with the debasement of our fiat currencies, given a suitably long enough timeframe, thereby preserving one's purchasing power and savings.
One does not have to "hope" that somebody will pay one more for their gold than they paid --- government fiat currency debasement already virtually guarantees that.
Long Thin Air!
meanwhile gold price is falling and will continue down to its long term average
People need to take the gold they are hoarding and turn into jewelry and other pieces of artwork to give their gold more value. Gold prices are dropping, and gold is not going to go up in value with it just sitting there; being stared at all day. For instance, there is a demand for 24 carat gold dildos in India, and the women will pay a handsome premium for a well designed golden shaft. Be creative. Put your gold to work for you. Don’t let it just sit there and do nothing.
Thanks, but I don't invest my money in a rigged economy. Not before the fundamentals reassert themselves.
I have a fixed income of fiat every month. If the fiat price of gold goes lower, I'll sell more of that overpriced paper.
gold has less value to me in this form. In bullion pure form I can choose later what to do with it. If I jump too quick now to change it I'll only find I made the wrong choice. Jewelry is ALWAYS the wrong choice too. Gold has real uses for electronics, medicine, radiation-shielding, and dentistry and I would not revoke that value by making it into silly jewelry.
Gold taking a dump again.
You mean, gold having a dump taken on it.
Since the gold market is still a paper market, the Comex is still dominant in gold price discovery alongside the LBMA fixing cartel.
http://www.lbma.org.uk/assets/Alch68GoldPrice.pdf
While this is frustrating, it will only change as the physical market reasserts itself.
If Registered stock is being used to replenish Eligible, then either a) existing warrant holders (of Registered) are being reassigned to either HSBC or Scotia stock, or b) some warrants are being convinced to cancel their warrants or c) the figures are rigged.
If a) then there should be increases in Registered totals at HSBC or Scotia.
If b) then possibly JPM is itself a holder of a minority of the warrants and hands then back (what better place to start but at home)
If c) then the whole spreadsheet is untrustworthy
I am sure I am not alone in hoping that the gold price suppression continues and actually accelerates as TPTB become more flummoxed and concerned over their ponzi global economy, because at a certain level, whatever the premium, I will be buying gold to add to my already fine stash of silver.
I'm looking for around $1200, figuring a $100-150 premium for physical, so, please, keep selling Yen and Euros and AUS$ to prop up the US$ and force gold - it's a barbarous, useless relic anyhow - lower and lower and lower until we eventually arrive at Professor Fekete's "Permanent Gold Backwardation" and there will be no gold to be found at any price, anywhere.
Then I will trade (some of) my gold and silver for a magnificent 50-acre estate somewhere in Bumfuck, USA and retire to a life of fishing, small-scale farming and bliss.
Well, that's the plan, anyhow.
As a side note, I surely hope Jamie D. keeps his dual function as CEO and Chairman of the BOD at JPM because when the eventual fall (the Bible says pride comes before a fall) occurs, Jamie will catch shit from shareholders and an unpleasant feeling in his back when the knife-fighting proceeds in the boardroom.
Good luck to all. Gold to ZERO! Excelsior!
can someone please explain why, given the purported "huge" demand for physical relative to financial gold, premiums on physical have not exploded?
Until i see premiums on eagles at $300 i don't buy the physical argument
That's because you can't do math. That's why we don't buy your argument. By the time the premium is +$300 the physical will be had by elites only - all retail orders will be rejected and all deliveries will be a minimum of 100 oz gold no matter how many pieces / coins are asked.
JPM is about to institute a new dental plan for all employees...