Something Snapped At The Comex

Tyler Durden's picture

There had been an eerie silence at the Comex in recent weeks, where after registered gold tumbled to a record 120K ounces in early December nothing much had changed, an in fact the total amount of physical deliverable aka "registered" gold, had stayed practically unchanged at 275K ounces all throughout January.

Until today, when in the latest update from the Comex vault, we learn that a whopping 201,345 ounces of Registered gold had been de-warranted at the owner's request, and shifted into the Eligible category, reducing the total mount of Comex Registered gold by 73%, from 275K to just 74K overnight.


This took place as a result of adjustments at vaults belonging to Scotia Mocatta (-95K ounces), HSBC (-85K ounces), and Brink's (-21K ounces).

Meanwhile, the aggregate gold open interest remained largely unchanged, at just about 40 million ounces.


This means that the ratio which we have been carefully tracking since August 2015 when it first blew out, namely the "coverage ratio" that shows the total number of gold claims relative to the physical gold that "backs" such potential delivery requests, - or simply said  physical-to-paper gold dilution - just exploded.

As the chart below shows - which is disturbing without any further context - the 40 million ounces of gold open interest and the record low 74 thousand ounces of registered gold imply that as of Monday's close there was a whopping 542 ounces in potential paper claims to every ounces of physical gold. Call it a 0.2% dilution factor.


To be sure, skeptics have suggested that depending on how one reads the delivery contract, the Comex can simply yank from the pool of eligible gold and use it to satisfy delivery requests despite the explicit permission (or lack thereof) of the gold's owner.

Still, the reality that there are just two tons of gold to satisfy delivery requsts based on accepted protocols should in itself be troubling, ignoring the latent question why so many owners of physical gold are de-warranting their holdings.

Considering there are now less than 74,000 ounces of Registered gold at the Comex, or just over 2 tonnes, we may be about to find out how right, or wrong, the skeptics are, because at this rate the combined Registered vault gold could be depleted as soon as the next delivery request is satisfied. Or isn't. 

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Abapom's picture

WTF? why is gold diluted?

to achieve what?


Hitlery_4_Dictator's picture

Notify me when this matters, thanks. When this is reflected in price or when things don't get delivered call me. Otherwise I don't care.

mandalou's picture

You are a very slow person. Over an appetizer at Chili's, I would love to ask how you found zerohedge.

J S Bach's picture

Utter madness.  Explosion imminent.

thesonandheir's picture

Ahh well, no shortage of paper gold so business as usual.

Pinto Currency's picture



Similarly an open interest in London > 10,000 tonnes but an estimated 6 tonnes in London available for delivery.

The market has already failed.

Buckaroo Banzai's picture

Six words:

"Cash Settlement. Cash. Settlement. CASH! SETTLEMENT!!!"

Bumpo's picture

Getting sick of the Zerohedge Snob above. Go fuck yourself.

I need more asshats's picture

Easy Bumpo. Sounds like you're about to Snap and I'm not talking food stamps. Can we get an agent on this guy please?

Save_America1st's picture

<-- Force Majeure?

<-- Farce Manure?

tmosley's picture

Suspect another 9/11 type event is waiting in the wings.

"Oh, of course we can't deliver, ebul tururists blew up our vault!"

SuperRay's picture

Where is Eric Sprott when you need him?  C'mon dude, you're the only one rich enough to call bullshit on this.

philipat's picture

The numbers are so small now that a few tonnes can change the ratio significantly. Just as in December the cover ratio went down from 300X to 150X with a small addition. What is interesting is that at 2 Tonnes the total Comex system has less physicak Gold registered for delivery than SGE delivers EVERY SINGLE DAY.

Commodore Decker's picture

I don't know what the position limit is for a bona-fide hedger on Comex. You could see a big Chinese or Indian jewellry company take a large long position and expect delivery at maturity to ship overseas. I'd expect to see a lot of shorts scrambling to cover since it ain't particlularly easy to source and deliver 100 oz bars in short order.

jerry_theking_lawler's picture

Which ME or LatAm country has the most 'gold' available to steal? Expect airstrikes SOON in said country.

thesonandheir's picture

That would be Venezuela, handily enough they also have oil too.


Latin Spring anyone?

Row Well Number 41's picture

What you think they still have that after the disaster that is the Venezualan economy, and the looting that most assuredly happened?  Doubt it.

lickspitler's picture

I love the Gold articles, all the stackers, resetters and foil hatters go crazy.


    Not the bottom yet.

Stuck on Zero's picture

The Comex reserves the right to cash out people who request delivery. Paper for paper. What could go wrong?

Bumpo's picture

Yup. This point seems to be ignored. Paper gold is for trading. Someday ...

nope-1004's picture



My takeaway from this article:


The comex has 74,000 ounces of gold?

Really?  They gotta be lying.  More like ZERO.


old naughty's picture

let's accept the drawdown is real(?), the Q is why 

Scotia Mocatta (-95K ounces), HSBC (-85K ounces), and Brink's (-21K ounces)

withdrew, to satisfy who?

Father Thyme's picture

is how small the gold is getting.

Manthong's picture

gee.. all of my registerd, qualified, elegible ounces are still here..

and you will need more than light armor to take them away.

Four chan's picture

parker has more gold than comex.

undertow1141's picture

The second they cash settle a large account, the buyers will disappear.

DeadFred's picture

One can only hope. It's a good time to put some way far out of the money puts on SLV and GLD. You can buy them for next to nothing and they are worth a fair bit when people discover there's nothing in the vaults.

illyia's picture

1100 x 542 = 596,200.00


RAT005's picture

I expect most of the SLV and GLD investors will be happy with paper so there probably isn't much downside. 

Four chan's picture

lol stupid paper people.

Tall Tom's picture

I love the Gold articles, all the stackers, resetters and foil hatters go crazy.


The bottom will be ZERO.


The problem with you, lickspitter, is that you still have faith and confidence in a corrupted system which is destined for failure.


You are as the common folk as you confuse price and value. You definitely lack the wisdom to be wealthy. You are the FOOL.


Well the FOOL is the one who confuses price and value. He is the one who can tell you the price of most anything, as most fools can, with the click of a mouse on the Internet. It takes little skill to do that, actually, as the Internet is a wonderful storehouse of information.


On the other hand,, unlike the FOOL, who concerns himself with price, the WISE MAN is not so concerned with the price and is most interested in VALUE.


The FOOL confuses Price and Value as he believes, erroneously that the price IS the value when nothing can be farther from the truth.


On the other hand the WISE MAN understands that VALUE has little to do with PRICE and that the two concepts are generally exclusive. Thus the WISE MAN will eagerly spend his currency for that which has VALUE. The WISE MAN is always seeking VALUE as he understands how to APPRECIATE HIS WEALTH. (I mean that word as a Financial Term).


The FOOL will believe that his wealth is measured by the amount of currency that he has. Thus the FOOL's main concern is that of advancing or declining PRICE. It consumes his every financial decision.


On the other hand the WISE MAN understands that his wealth is measured by the VALUE which his assets have and the knowledge that he has.


The knowledge of these simple truths is what actually separates the WISE MAN from the FOOL. The FOOL will reject them, and lose everything that he owns, whereas, the WISE MAN will embrace them and prosper as a result.


What is VALUE then, if it is not PRICE?


VALUE is the measure of the UTILITY of an item, its usefulness.


Well Gold is an INDUSTRIAL METAL. The Financial INDUSTRY uses it and is very concerned with it.


Perhaps it is why the WISE MAN is not too concerned about declines in the price of Gold as measured in US Dollars.


US Dollars are losing their VALUE, their USEFULNESS. I am not writing that US Dollars have lost all VALUE. But I am writing that their usefulness is in a Long Term decline and will soon be no more.


Thus pricing Gold in US Dollars is a FOOLISH thing to do.


In fact the WISE MAN loses no value as long as he does not sell his metal.


And you, being the FOOL, the POOR MAN, is that which confuses you the most. As you equate wealth with US Dollars rather than to HARD ASSETS with UTILITY, then this is impossible for you to comprehend. It is just a difference in perspective, in mindset, that you have failed to conceptualize.


US Dollars are NOT WEALTH. They are a NOTE for a claim on FUTURE WEALTH. (Real wealth has VALUE.) They are a derivative of that promised future wealth, regardless if that wealth is ever manifested...or not.


A US Dollar is a Federal Reserve NOTE. A NOTE is just a promise to pay. Pay what? It is a payment in lieu of future goods and services. If those future goods and services are not produced or available in sufficient quantity, or, if at all, then the US Dollar is worth much less, or, if not worthless, as a result.


Go ahead and junk this post, reject that which I have told you, and demonstrate your FOOLISHNESS.

Tall Tom's picture

Two FOOLS so far...who refuse to understand...


No problem. I will keep stacking...and losing it in boating accidents.


It is like that game of Monopoly which no one gets...You played it as a kid, right?


Well when the last player bankrupts everybody on the board then he wins, right?


Well what does he win? A bunch of useless Monoploy Money.


What most fail to understand that when it happens it is...THE END OF THE GAME. I mean it cannot be more clear.


And likewise those who accumulate Bernanke Bux for the sake of Bernanke Bux are going to end up with the same as the winner of a Monopoly Game...absolutely NOTHING.


And it will be tthe END OF THE GAME.


Of course I will seek wealth and value over Bernanke Bux any day of the week.


I will accumulate Gold...regardless of the price.


Only fools who believe in this fraudulent and corrupted system will not. They measure their wealth in terms of Bernanke Bux. and as the END OF THE GAME develops I will be laughing at the fools.


Go on ahead and junk this and keep on getting promises which will not be Bernanke Bux...or COMEX Gold Contracts.


The price of Gold (Contracts) will be ZERO at the end of the game.


Here is to laughing at my junkers.

J Jason Djfmam's picture

Gold foil hat.

Two birds, one stone.

raeb's picture

The Chinese are too smart to disrupt the Comex as this would gun the price of gold and make aquisition just that much more costly.  If you are a stacker you should feel the same.  Just be happy gold is not to the moon yet.

Keyser's picture

Why do you think China has been hoarding gold for years? They knew this day would come... The USD / UST will vanish and gold is their hedge... It will most likely be China that causes the "event" in PMs and I can think of no better way than for them to do it  than to blow up the Comex... 

Manthong's picture

well, the tell will be when they destroy the dollar by dumping >$2T in reserves and reveal their real gold holdings because they know WalMart is closing another couple of thousand stores.

curbjob's picture

If I had a oz for every Comex default story I've read ...


okay, this one has charts

Mentaliusanything's picture

I don't understand.

The World produces a new 2860 metric Tons/ year

China= 400+ T

Australia= 250+T

Russia= about 450T

USA= 210+T


These are metric Ton's, so New supply is approx. 92 million Troy ounces per year.(and it never disappears but goes to storage and is stored as value in jewellery and other industrial uses with very little 'Bleed')

I truly don't understand what the problem is?. Comex may have one but there is 92 Million troy ounces new, every year.

I hold some gold and silver but It's a pass down from when credit was exchanged for Gold. No traveler ever left home without it in the early 1900's. I hold some British gold sovereigns, half sovereigns but mostly US gold Eagles and silver Dollars all between 1890 and 1914. It was necessary for travel in SE Asia and China during that time.

Down vote me if you want but I truly do not understand. Comex may have a big problem but Gold exists in large quantities everywhere. It basically has to and must do. Its Gold and it is rarely lost to the World. Which is why it makes for sound money as it grows slowly and cannot be printed. Nixon was forced to cover for the Vietnam War, the convertibility and other Forces but it remains to this day a huge mistake. Sound money is what the World badly needs and Gold is a great peg to stop the printing presses.

Maybe I am missing something in my old age

Mentaliusanything's picture

Ok, now I think I understand. Comex makes money by printing certificates that are paper claims against gold they are unwilling to buy with the paper currency they receive.They invest that Fiat to earn more paper over the return on Gold. That is counterfeit and they will suffer if the 'hard' gold price runs against them. 

Where is the Financial police, If banks are required to hold reserves around 10 - 15 loaned to one held then something is way way bad in this gearing.

pmbug's picture

Check your assumptions.  How much of annual new mining production makes it to the open market?  Here's a hint (see first chart):

curbjob's picture

sorry, double post. 

as it is turns out I do have a OZ

gaoptimize's picture

I thought good delivery bars were 400 ounces.  Maybe that is silver.

Mr. Mandelbrot's picture

I'm thinking some kind of nuclear contamination false flag. "Trust us. The gold's all there. It's just too radioactive to safely audit for a few hundred thousand years."

mkkby's picture

This is fuckin silly.  If you want gold, call a mining company.  I'm sure you can buy any amount you want.

Comex means nothing.  It's where gamblers trade their paper.

Tall Tom's picture

Easy Bumpo. Sounds like you're about to Snap and I'm not talking food stamps. Can we get an agent on this guy please?


Can we get an agent on you I need more asshats?


Are you laughing asshat?

I need more asshats's picture

Hey TallTommy do you like this one? It's my favorite.

Imagine if all the US people made the feds chase their tails all day long. Talk about a loss of productivity.

Let's ax Scooby next time we see him ok?

Tall Tom's picture

It would not bother me...Now that will be funny as this...


Opereration Everyone Talk Like a Terrorist All of the Time


Of coutse the video is nowhere to be found anymore because we celebrate our FREEDUMBS.


And you thought that censorship does not happen in America...


The censorship shows you how much impact that the video had. The NSA forced the removal.