Is This Why Gold Is Spiking

That JPMorgan has been scrambling day after day in the past week to meet gold delivery requests directed to its vault located deep under 1 CMP is no secret, at least not to our frequent readers. This peaked on Monday when, courtesy of a color-coded Comex scheme, we showed how panicked the lateral moves between various Comex gold vaults had become to preserve the illusion of physical availability.

However, as yesterday's Comex report showed, instead of tapering, JPM was just slammed with yet another 70K delivery (registered to eligible warrant detachment), which will likely appear on either today's or tomorrow's settlement. And since the other gold vaults appear to have no more freely transferrable gold to hand over to JPM as everyone is now scrutinizing their every move under a microscope, JPM may no longer have the option of ignoring the mess its vault is in. Which means it has one option: to start buying the metal in the open market.

And sure enough, breaking from the "standard" of the past 8 months, in which JPM was drowning in Issues, for both House and Customer accounts, the firm's House accounts just saw the largest Stop (i.e. taking delivery) since December of 2012, amounting to over 210K oz.

Has JPM, flooded with demands for physical, finally thrown in the towel, and seeing that the deluge in delivery requests is "untapering", had no choice but to turn to the one place it has left to replenish its stocks: the market?

Still, here is the big picture - until the 2103 August Stop, the balance for JPM House accounts was:

  • Issues:  15,293
  • Stops:   636

And Clients:

  • Issues: 17,458
  • Stops:  1,444

In other words, there is a ways to go.

Source: CME