How Does The COMEX Fix This One

May 31, 2016

As you know, May Futures COMEX gold which traditionally is a non-event was anything but this year.  Last year, a total of 2,500 ounces stood for delivery, this year the number was 221,000 ounces.  The amount standing on April 30 was 5.6 tons which steadily grew throughout the month to 6.89 tons.  This "growth" throughout the month is something that has never happened before to my knowledge.

Now we get the first notice day for June and it's a whopper!  15,493 contracts are standing for delivery, which equates to 1.5493 million ounces or 48.193 tons (last year June had 26.3 tons stand for delivery which bled down during the month).  COMEX claims 23 tons of registered gold.  There appears to be 17 tons from prior months PLUS the 6.8 tons of May standing that this 23 tons will need to service.  The 48 tons for June is EXTREMELY heavy, what will happen if June copies May…and the amount standing grows by 20%.  Where will this gold come from? 

As I wrote last week, the "buyer(s)" seem to be different for the May expiration.  Rather than the amount standing bleeding down during the delivery period, it increased steadily all month.  In the past, it has been my and others' contention that COMEX was paying premiums to make those standing for delivery go away.  It has made ZERO sense at all for longs to fully fund their accounts to make purchase and then mysteriously evaporate and go away.  The only thing that makes sense is premiums were offered and accepted.  This strategy appears to have failed miserably for May.  It is possible that those standing for June gold, saw what happened in May and now have queued up in fear.

This demands watching very closely.  COMEX looks to be nearly 50 tons short of what needs to be delivered.  Can they entice "eligible" (stored customer) gold to move and serve delivery?  We will know shortly!  I might add on a separate topic, OPEC has a meeting this Thursday.  We have speculated Saudi Arabia would at some point announce they will accept Chinese Renminbi (yuan) for oil settlement.  What would an announcement such as this do to a lopsided delivery for COMEX gold?
 
Bill Holter
Holter-Sinclair collaboration
Comments welcome!  bholter@Hotmail.com 

Bill HolterBill Holter writes and is partnered with Jim Sinclair at the newly formed Holter/Sinclair collaboration. Prior, he wrote for Miles Franklin from 2012-15. Bill worked as a retail stockbroker for 23 years, including 12 as a branch manager at A.G. Edwards. He left Wall Street in late 2006 to avoid potential liabilities related to management of paper assets. In retirement he and his family moved to Costa Rica where he lived until 2011 when he moved back to the United States. Bill was a well-known contributor to the Gold Anti-Trust Action Committee (GATA) commentaries from 2007-present. You can reach Bill at: bholter@hotmail.com

 

Due primarily to the California Gold Rush, San Francisco’s population exploded from 1,000 to 100,000 in only two years.