Ratio of Open Interest to Registered (Deliverable) Gold on Comex 298 to 1 New All Time High

"And the great owners, who must lose their land in an upheaval, the great owners with access to history, with eyes to read history and to know the great fact: when property accumulates in too few hands it is taken away...

Repression works only to strengthen and knit the repressed. The great owners ignored the three cries of history. The land fell into fewer hands, the number of dispossessed increased, and every effort of the great owners was directed at repression."

John Steinbeck

The number of potential claims (open interest) to the total amount of gold registered as 'deliverable' into those claims has reached a new high ratio of about 298 to 1.

It appears that JPM has been accumulating physical bullion which, if recent history repeats, it may be prepared to deliver into the demand for gold bullion during the active month of December if required. Some of that gold is being held in the Nova Scotia warehouse, acquired on the October contract, in addition to their own.

There are those who will say that this means nothing.  And yet, we have never seen such high ratios of potential claims to gold marked for delivery before.

A 'New Gold Rush'

Why is this happening now?   It is because those who are holding their gold in the Comex warehouses do not wish to see their bullion swept away in a physical short squeeze that may begin in an overseas market, at these prices.

If a run on the available 'float' of bullion begins in earnest, the unwinding of the high levels of claims per ounce and hypothecation of ownership, especially in unallocated accounts, could provide some serious fireworks.

A determined campaign to control the price of gold, that has been underway since early 2013, led by the new London Gold Pool, is bumping up against shortages in available gold in New York,  London, and Switzerland.  The cause of course is well known, the truly impressive demand for physical bullion in the 'Silk Road' countries of China, India, Russia, and Turkey.

These sorts of things will always end in collapse, as one or two key players begin to withdraw their support and shepherd their national holdings, even repatriating them to their home countries in order to control the integrity of their ownership in an increasingly hypothecated, fragile market.

When the music stops, the rush for available seats may be more disorderly than the money masters will allow themselves to imagine.



Related:  Why Austria Is Repatriating Its Gold From London


These charts are from Nick Laird at goldchartsrus.com.

Gold Daily And Silver Weekly Charts

I am restraining an impulse to create some new intermediate long positions out of trading discipline.  There has been no buy signal yet.

I also wish to see how we fare through the Non-Farm Payrolls Report on Friday.

This smackdown in the metals is starting to look very over-extended.

I don't like to traffic in 'feelings' and 'intuitions' but I must say this is starting to look like something important is developing within the long precious metals and monetary reserves macro trend that has been in place since at least 1999.

And, be still your beating hearts, Facebook will be reporting their numbers after the bell tomorrow.

A nation of virtual shopkeepers, con men, and consumers.

Have a pleasant evening.

SP 500 and NDX Futures Daily Choice - La Vie En Rose

"If at the start this cancerous growth in the nation was not particularly noticeable, it was only because there were still enough forces at work that operated for the good, so that it was kept under control. As it grew larger, however, and finally in an ultimate spurt of growth attained ruling power, the tumor broke open, as it were, and infected the whole body.

The greater part of its former opponents went into hiding. The German intellectuals fled to their cellars, there, like plants struggling in the dark, away from light and sun, gradually to choke to death."

Sophie Scholl

The economic news came in weakly this morning, inspiring yet another round of 'will they or won't they raise rates' in December. Stocks were largely flat, but the auto sales numbers came in well, and this inspired a further rally in stocks that pushed them to levels that seem a little lofty.

I am waiting to see if stocks will keep going through the Non-Farm Payrolls report.

It is going to take quite a bit of time and effort to the repair the damage to the real economy and to society that we have allowed the financiers and their crony capitalists to inflict.

Have a pleasant evening.

Physical Gold Demand In the 'Silk Road' Countries Continues at a Record Pace

As you may recall the 'Silk Road' countries are China, India, Russia, and Turkey.

A recent article noted that flagging clearing volume for gold in London indicates a 'lack of interest' in the precious metals.

But does it really?

I think that anything like this must be viewed in the context of the global markets.

As has been shown here earlier, the 'float' of freely available, unencumbered physical gold has been declining in London and in New York, while at the same time volumes and delivery of physical bullion in Asia has been increasing.

So, is it demand for gold in decline, or is the real trading action in physical bullion moving from London and New York to the increasingly robust metals markets in Asia?

Gold is moving from West to East.  And so is the locus of physical trading in these metals.

This is the other interpretation of the same facts within a broader context.

Gold Daily and Silver Weekly Charts - Manipulation Will Continue Until Confidence Returns

Nothing worth reporting happened at The Bucket Shop.

Let's see if gold can set a bottom at the end of the trend channel here and give us a reason to be bullish shorter term.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Looting At Will

Stocks rallied today on easy money and first of the month inflows from mom and pop's 401k's and IRA's.

Have a pleasant evening.

Meet the LBMA Market Making Bullion Banks and 'Loco London'

While much of the conversation regarding gold and silver centers on the Comex, the London Bullion Market Association which has a 200+ year history is lesser known amongst American readers.  It has a significant role in the global physical bullion markets.

Show below from the LBMA website is a thumbnail sketch of the current major bullion bank market making players there.   This has changed a bit since NM Rothschild relinquished their seat and chairmanship in 2004.

The daily price fixes came under quite a bit of scrutiny specially in the  precioius metals price rigging scandal in 2014.

There are many more banking member of the LBMA, but they do not provide market making functions at this time.

This is from the LBMA website.


Of the fifteen LBMA Market Makers, five are full Market Makers and nine Market Makers. The five Full Market Makers quoting prices in all three products are:

• Barclays Bank Plc
• Goldman Sachs International
• HSBC Bank USA NA *
• JP Morgan Chase Bank *
• UBS AG

*Also provide vaulting operations for physical bullion in London

The ten LBMA Market Makers who provide two way pricing in either one or two products are:

• Citibank N A (S)
• Credit Suisse (S,O)
• Deutsche Bank AG (S,O)
• Mitsui & Co Precious Metals (S)
• Morgan Stanley & Co International Plc (S,O)
• Societe Generale (S)
• Standard Chartered Bank (S, O)
• Bank of Nova Scotia -ScotiaMocatta (S, F)
• Toronto-Dominion Bank (F)
• BNP Paribas SA (F)

(S=Spot, O=Options, F=Forwards)

Definitions of Spot, Forward and Options

Spot (S). The current price in the physical market for immediate delivery of gold. This is normally taken to mean loco London delivery two working days after the date of the deal.

Forward (F). A transaction in which two parties agree to the purchase and sale of gold at a future date, commonly 1, 3, 6 and 12 months but also for longer dated tenors or dates into the future (see table above). Forward contracts are an important part of many swap arrangements.

Options (O). This gives the holder the right, but not the obligation, to buy or sell gold at a pre-determined price by an agreed date, for which he pays a premium (or a cost). The premium is the amount of compensation the seller receives from the buyer. The right to buy is commonly referred to as a call option and the right to sell as a put option.

Also from the LBMA website:

Loco London
The term Loco London refers to gold and silver bullion that is physically held in London. Only LBMA Good Delivery bars are acceptable for trading in the London market. The Loco London concept has evolved within the market. In the second half of the 19th century, gold from Californian, South African and Australian mines was sent to be refined and sold in London.

With this business as a base, and in tandem with the increasing acceptance of the London Good Delivery List, clients from all over the world opened bullion accounts with individual London bullion dealing houses. It soon become evident that these Loco London accounts, which were used to settle transactions between bullion dealer and client, also could be used to settle transactions with other parties, by transfers of bullion in London. Today all third party transfers, on behalf of London market clients, are effected through the London bullion clearing system. Each segment of the market is described below.

Note: In this case 'loco' may derive from the Latin word 'locus' meaning to put in the place or location. It is not an acronym that I know of, and is ordinarily not capitalized in LBMA documents. It does not imply that the London gold trade is 'loco' in the modern sense, although it is understandable why some should think so. I suspect that the loco London rule was intended to rule out gold held in vaults outside of the general vicinity of London and especially overseas. Remember that this is a very old organization with a long history. Shaken by claims of fraud and price manipulation, it seems to be in decline now, becoming a price leveraging paper market like New York, with the physical precious metals markets moving more to Asia.

Related:
Nick Laird: The London Gold Float Is Running Unusually Low of Bullion
Shrinking Supply of Gold Available for World Demand