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There Are Now 293 Ounces Of Paper Gold For Every Ounce Of Physical As Comex Registered Gold Hits New Low
Unlike Bitcoin, which has doubled in the past few weeks (as the predicted Chinese buying onslaught indeed materialized), it hasn't been a good week for spot gold prices which have tumbled from $1,180 to just over $1,100. While the reason for the selling is unknown, with recurring speculation that an imminent Fed rate hike will make holding gold even more unwelcome in real terms (if not in India where gold now pays interest on par with inflation), what we do know is that as of yesterday the total registered gold at the Comex had dropped to a fresh record low following another transfer of "registered" gold into "eligible."
This reduced overnight the total amount of eligible gold by a third to just over 151,000 ounces, or under 5 tons as the zoomed in chart below shows.
And since the gold open interest continues to rise modestly...
... this means that as of today, the gold "coverage" ratio, or the amount of paper claims for every ounce of physical, has just hit a new all time high of 293 ounces of paper per ounce of registered physical.
Curiously, the last time we observed a comparable surge in the Comex dilution ratio took place just two months ago when a comparable "adjustment" reduced JPM's "Registered" inventory by 122,124 ounces. Back then many said the adjustment would be promptly reversed.
Two months later not only has that not happened, but JPM is now down to just 10,777 ounces of Registered while many other vaults continue to see either outright withdrawals or comparable adjustments.
How much longer can this exponential surge in the dilution ratio continue? We don't know, although with less than 5 tons of registered gold left in the Comex vault system, we hope that the mystery of what is really going on at the Comex will finally be unveiled.
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What happens if paper gold holders want or demand to be cashed out in the actual physical metal as per the contract and the vault can't deliver ? What happens when China,Russia,India reset the worth of their Gold to some astro number, backing their currency with it.
As more paper gold holders start to demand delivery, prices will start to rise in the physical market to bring forth the supply needed to meet that demand. Paper sellers forced to pay these higher prices for physical will start demanding higher prices on paper contracts accordingly.
Not only that, but physical gold us being redeemed out of ETFs, where are the ETFs going to reload from?
Gold paper will be toilet paper...
If you sold food - wheat say... 300 fake wheat contracts to one real one... trucks roll up and say "where's the wheat? It's time to make bread".. and the comex says..." oh well maybe the crop next year will produce wheat... wait till then, we are out of wheat now. here is your cash back go find wheat somewhere else" ... now what do you suppose will happen to the price of REAL wheat... ready to be loaded on the truck? People need to eat now... when loss in fiat is full blown... people want Gold now... they will reimburse you with worthless fiat that is cheap and readily available, when it gets too expensive to print fiat they will add more and more zeros.... trillion dollar US bill... put Obama's face on it.
Can you imagine going to Walmart and buying something... and they present you with a raincheck for a backordered item that will never be filled - as the factory in China shut down, or has such reduced output and will never follow through with worldwide orders.
Now when was the last time you agreed to such a deal? Too good to be true...
And in some cases Walmart then charges a storage fee and management fees to this contract for the good that shall never be delivered.
Then they come back to you and try to get you to sell the raincheck back to them at a reduced price...
This is about it...
The USA in it's entirety is one big FRAUD..... everything about the nation is corrupt.
It is a nation built on cheating and criminal activity. A plague on the planet earth...
Don't forget to vote for Hillary. Twice. lol.
some big bitcoin exchange has just been hacked...enough said...its just electrons that someone will steal