Something Just Snapped At The Comex (Updated)

Tyler Durden's picture

Update: Earlier today, we said that we would "keep a close eye on today's Comex update to see if JPM reverses this "adjustment" and adds at least a few more tons of deliverable gold to its vault." Moments ago we got the daily update form the Comex and not only did JPM not reverse its registered to eligible adjustment, but more curiously, the second largest vault, that of Scotia Mocatta (behind only HSBC) saw a comparable adjustment, whereby 16,644 ounces of gold, or about half a ton, and 14% of its vault total, were adjusted away from "registered" and into the "eliglble" category.

This means that the already record low total registered holding across the Comex system, declined once again this time by 8.3% and hit a new all time low of 185,315, or less than 6 tons.

 

This means that what was already a record dilution factor, with over 200 ounces of paper gold claims for every ounce of deliverable gold, just soared even more, and following today's 8% drop, there is now a unprecedented 228 ounces of paper claims for every ounce of deliverable "registered" gold.

 

For those who missed the full story from earlier today, please read on.

 

* * *

Just over one month ago, when looking at the latest changes in registered gold held at the Comex ,we were stunned not only by the collapse in this series to a record low of just over 350k ounces or barely over 10 tons, but also by the surge in "gold coverage", or the amount of paper gold claims on physical gold, which exploded to a record high 124 per ounce.

This is what we said on August 3:

While on its own, gold open interest - which merely represents the total potential claims on gold if exercised - is hardly exciting, as we have shown previously it has to be observed in conjunction with the physical gold that "backs" such potential delivery requests, also known as the "coverage ratio" of deliverable gold.

 

It is here that things get a little out of hand, because as the chart below shows, all else equal, the 43.5 million ounces of gold open interest and the record low 351,519 ounces of registered gold imply that as of Friday's close there was a whopping 123.8 ounces in potential paper claims to every ounces of physical gold.

 

This is an all time record high, and surpasses the previous period record seen in January 2014 following the JPM gold vault liquidation. 

 

Another way of stating this unprecedented ratio is that the dilution ratio between physical gold and paper gold has hit a record low 0.8%. Indicatively, the average paper-to-physical coverage ratio since January 1, 2000 is a "modest" 19.1x. As of Friday it had soared to more than 6 times greater.

One month ago we showed this record surge in gold claims as follows:

 

But if last month was shocking, then what the COMEX revealed yesterday was absolutely jaw-dropping.

Here is the most recent update provided by the CME on eligible and registered gold.

 

What it reveals is that while JPM saw another 90,000 ounces of gold once again withdrawn from its vault, this time in the eligible category, for some reason a whopping 121,124 ounces of registered gold were reclassified as eligible. In doing so, JPM's registered gold (red line in chart below) tumbled to a record low of just 19,718 ounces - an 86% collapse in just one day -  and well under 1 ton of gold, some 600 kilos of physical gold available to meet delivery requests to be specific!

 

JPM's dramatic adjustment also meant that total Comex registered gold has likewise tumbled to the lowest in history of just 202,054 ounces - just over 6 tons - available for delivery.

 

Zooming in only on the registered gold since 2014:

 

Not surprisingly, the latest collapse in registered gold took place while the gold open interest remained flat, and in fact has been modestly rising in the past year as seen below:

 

Which brings us to the punchline chart: the Comex gold "coverage" ratio, or the amount of paper claims for every ounce of physical. As of Friday this number was literally off the chart (it would not have fit on the previous chart shown up top), soaring to a mindblowing 207 ounces of paper gold claims for every ounce of deliverable gold. This also means that the dilution ratio between physical gold and paper gold has hit a new all-time low of just 0.48%!

 

And while we know what caused this epic surge in potential claims on gold - namely the relentless outflow in registered gold - what we don't know is whether this is a systemic event, one which threatens the next Comex gold delivery request with an "insufficient product" response, and a potential default, or simply a one day abnormality.

What we do know is that, if only for one day, something at the Comex has snapped.

We will keep a close eye on today's Comex update to see if JPM reverses this "adjustment" and adds at least a few more tons of deliverable gold to its vault, and if not, perhaps a phone call or two may be in order.

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Maplehood's picture

And gold is down $10...

Cow's picture

yes. now down even more.  makes sense /s

premium for 20 oz quantity of eagles is now $50 over spot

Bokkenrijder's picture

Is China retaliating for all those unexplained chemical warehouse explosions and stock market sell offs?

NoDebt's picture

"what we don't know is whether this is a systemic event, one which threatens the next Comex gold delivery request with an "insufficient product" response, and a potential default, or simply a one day abnormality."

They'll just settle in cash when (if) the gold runs out.  

Anyone new to ZH should realize this has been going on with COMEX to one degree or another for a LONG DAMNED TIME.

Pinto Currency's picture

 

 

IN gold, extreme shortage leads to price collapse

whotookmyalias's picture

In years past this crap would have gotten people hanged or worse. Today it's just SOP.

giovanni_f's picture

That was before the merger of Skynet and The Matrix.

Pladizow's picture

This doesnt matter until more than 0.48% stand for delivery!

Soul Glow's picture

Hey now we can trust them!  They're bankers!

:)

Pinto Currency's picture

 

 

Expect 1M oz to be added to the registered Comex inventories.

It's just a number.

 

Infinite paper suppy of gold and silver available. 

You want paper metal, you can have paper metal.

SWRichmond's picture

So JPM moves metal from Registered to Eligible, making this number all the buzz, then they proceed to show why it doesn't matter by moving metal from "Eligible" to "Registered"?

Just another manipulated metric?

Pinto Currency's picture

 

 

Why would this number be real?

Silver physical market is locking and so is the gold market.

But the paper gold and silver markets will have infiinite supply.

 

Four chan's picture

exactly, the absolute fools in the paper market should get into real and leave the manipulators their manipulations worth less than nothing.

MillionDollarBonus_'s picture

I'm getting bored of these gold and silver conspiracies. The international gold market is absolutely enormous, and the idea that a small group of entities could manipulate a market of this size is simply ludicrous. It's shameful that this conspiracy nonsense continues after many people have lost entire fortunes by following the advice of goldbugs. Mining stocks are probably one of the worst performing assets out there, yet goldbugs continue to promote them. Haven't people lost enough money trading this dead market? Why can't you people just let it go and join the real world of investing? There are fantastic opportunities in stocks and bonds, yet you people are fixated on this tiny worthless market? WHY?

agent default's picture

A bit like LIBOR and FX right?  Oh wait.

coinhead's picture

Why take teh chance you will be teh lucky boy who receives his g0ldcoin from Comex?  Buh your Bitcoin and take delivery of them today!

https://localbitcoins.com

Next to Arch Stanton's picture

I typically enjoy MDB posts - usually pretty creative.  This one rubbed salt in an open wound as I have taken an ass-pounding on mining stocks.

agstacks's picture

The real MDB is/was creative, and used brilliant satire; this is just common trolling. 

BaBaBouy's picture

NOW 228 CMX PAper To 1 PHYS GOLD...

All Hell, Lets Go 350 To 1, What Da Feck...

Weeee... This Is Funn...Lets Skate On Even THINNER ICE...

ilion's picture

"...perhaps a phone call or two may be in order."

best joke of the day. 

Squid-puppets a-go-go's picture

you watch. as of tomorrow they will no longer publish the series

 

Lore's picture

What is the cover ratio of paper cattle futures to real cattle? 

philipat's picture

This has all become SO obvious and it is clear that "They" don't give a rat's ass what "You" think because they have The Fed, The Treasury and the "Regulator" behind them. Pushing Gold down by $20 whilst dumping massive amounts of naked paper Comex Shorts is the equivalent of a giant "Fuck you". They don't care and they won't stop until the system collapses, they are "All in" balls to the wall on Gold. Gold WILL NOT be allowed to rise until after the system collapses IMHO.

jeff montanye's picture

same folks or ones just like them were in charge from 2000 to 2011 and gold and silver rose a lot.

market prices fluctuate.  the stock (etc.) doesn't know you bought it.

The9thDoctor's picture

It's shameful that this conspiracy nonsense continues after many people have lost entire fortunes by following the advice of goldbugs. Mining stocks are probably one of the worst performing assets out there, yet goldbugs continue to promote them. Haven't people lost enough money trading this dead market? Why can't you people just let it go and join the real world of investing? There are fantastic opportunities in stocks and bonds, yet you people are fixated on this tiny worthless market? WHY?

I've been enjoying Million Dollar Bonus_'s satire for years.  However I truly agree with his post today.  I'm more interested in income producing assets than stocks though, but the gold and silver market is for total fools.

Tarshatha's picture

Yawn, the steam roller is almost here.

g speed's picture

so what is it then---enormous or tiny---the gold market I mean----you're a dumb shit MDB-----

jeff montanye's picture

well it's both: absolutely enormous and tiny and worthless, depending on what is needed.

 

MontgomeryScott's picture

@ g,

 

EXCELLENT tracking and intelligence skills are worth a lot. A SHITLOAD, in fact.

I'd almost forgotten about 'Mellion Dollar Bogus' (et.al). I am thankful for your rememberance.

I respectfully disagree with your conclusions. 'MDB' is NOT a 'dumb shit'.

MDB is a DIPSHIT.

There IS a difference, you know.

 

MontgomeryScott's picture

... as that 'mechanical man' android thingie that I have grown fond of is used to saying:

"OH, SHIT!"

https://www.youtube.com/watch?v=oWoPdZ986oo

 

The CO(mmodities). M(etals). EX(change) (INC., Ltd., etcetera) is gonna go DOWN.

(YAWN, says you)

A steam-powered madacam roller really has NOTHING to do with this story, or the insight that is being given free of charge to those such as yourself (because you predicted it already, you 'fart smucker'!).

Your 'avatar picture' reminds me of a targeting practice scenario where I was given three black dots to focus my open sights upon. 72 weeks on ZH, and STILL you JUST DON'T GET IT.

TEOTWAWKI.

I feel fine, thoough.

https://www.youtube.com/watch?v=Z0GFRcFm-aY

Tyler Durden with a skateboard (as a child), with his dog, in a ramshackle house that used to belong to someone he knew a long time ago, had as much fun as this video depicts.

(YAWN, says you)

COMEX is gonna fucking SNAP and CRASH IN FLAMES.

You're not 'from around here', are you?

 

 

 

tmosley's picture

"I'm getting bored of these gold and silver conspiracies."

Note the period at the end of that sentence.

So are we all, MDB, so are we all.

JimS's picture

My God, you're a dumbass. I would be practising my target shooting, if I were you.  :)))) You do know how to handle a weapon, correct?

cooky puss's picture

It's MDB, second to none in extreme sarcasm! Boy did he deliver with that one.

MontgomeryScott's picture

That really SAD part is that YOU think that it's (he's, she's) KIDDING.

Is this Helen Chenowith or Mr. Yellen's avatar?

TELL US, Mariah Angelou/Hillary Rodham!

https://www.youtube.com/watch?v=vN3R-Ivd8yA

 

YOU are fucking with the primordial powers of the UNIVERSE.

(What was that guy's name in the movie 'Network'? "Mr. Beale"?)

'It's MDB, "SECOND TO NONE"!'

FUCK YOU. (Seriously)

I get my news from Brain Williams over at PMSNBC, Ms. Palin!

BurningBetty's picture

When they can move FX-markets in either direction then moving price of gold in either direction would be the equivalent of letting a fart out. Gold market is tiny compared to FX market. It's like non-significant.

Calmyourself's picture

I don't get it, your saying some idiot holding paper gold at 200/1 deliverable is supposed to be scared now that it is 228/1, is that about it?

He is already an idiot, nothing worries him the fed has his back ask him..

Sages wife's picture

Hey,MDB_,or whoever the fuck you are, which is it?

-"The international gold market is absolutely enormous, and the idea that a small group of entities could manipulate a market of this size..."

-"...yet you people are fixated on this tiny worthless market."

g speed's picture

ya beat me by one minute ---shucks

Trogdor's picture

I'm getting bored of these gold and silver conspiracies.

JesusChrist .... didn't we spray for you?

SumTing Wong's picture

Anyone want to pass the hat so that we can buy up that last 6 tonnes this afternoon?

Magnum's picture

Yes I can confirm you are correct.  There is a break in the spot price of silver vs actual price over the counter.  There is no real supply at even $6 over spot.  I have been in the market several years and I've never seen it quite like this but it's just the last two weeks or so.  A month ago, spot was nearly the same as today, and there was still LOTS of inventory to buy at $3 or $4 bucks over spot.  Now there is no inventory and we're talking $6 over.  So the next few weeks will be interesting.

actionjacksonbrownie's picture

$2 over spot for generics, and $4 over spot spot for Maples at SGB. Buy all you want with no wait - they are in stock.

MontgomeryScott's picture

SDBearings still has some of the best service. Maple Syrup is very good on pancakes.

It's coming up on 'last call'.

https://www.youtube.com/watch?v=97ECZMvbLxg

'I'm gonna tell you a story,...'

'Everybody funny. Now, YOU funny TOO!'

Magnum's picture

actionjacksonbrownie.  Thanks for the mention re: SilverGoldBull I was not familiar with them becuase I usually buy from a local coin shop.  SilverGoldBull is actually out of Canada maples, go to their website and try to order.  They tell you the ship date is around September 19.  So you have to get on a waiting list deal there.  They have a Canada silver coin with a privy mark for an extra $1 per coin (getting to about $6 over) and that's in stock with no wait.  Ebay is a good indicator, and inventories are extremely low today compared two a month ago.  Locally, supplies are basically gone from displays.  No real inventory to speak of.  Will be an interesting few weeks ahead.

MontgomeryScott's picture

A week ago, I paid $4.99 over 'spot'. The trend in PHYZ will accelarate rapidly from now on, I think, Magnum.

AS AN ASIDE:

Every time I see the BBC "presenter" 'Jane Standley', I seem to have an issue with 'premature ejaculation (demolition)' within a 22-minute timeframe. Would you consider changing your Avatar to 'Allotah Vagina' instead? i could probably maintain my #7 erection for a whole day's time period with this one!

 

viahj's picture

i'm all for PM price suppression at this point as i am not a trader but an aquirer and it allows me to receive more ozs for my FRNs. take advantage of USD strength (artifical or not) and aquire tangible assets.  this extra time is to your advantage as the end game is upon us. 

Oldwood's picture

If the markets do not distinguish or differentiate paper gold from metals, then it would seem that gold "printing" would ultimately be deflationary to gold prices, pushing down paper as well as metal prices. Even though we all know the difference, will a trader give a fuck if their "holdings" are paper or metal...going up or down. Sure, once we have seen the ever coming but not ever quiet here yet "collapse", maybe then those holding physical will prosper, but until then, their metal is being devalued like those who hold paper gold or paper dollars.

The world has rotated from productivity as the primary path to wealth, to gambling. All that matters is placing the bet, not whether the supposed "asset" they hold is actually worth anything enduring or useful.