Harvey Organ's Gold and Silver report - July 10 , 2013 ( Comex gold falls again - dealer gold now below a million ounces , still a dead calm at JP Morgan for both registered and eligible gold ) .... Data for today , news and views to consider....

Currencies Go Berserk As Bernanke Kills King Dollar

Submitted by Tyler Durden on 07/10/2013 - 19:02

We noted earlier the brief chaos that the minutes created but - following Bernanke's promise to print moar - the after-hours collapse in the USD against every major (and minor) currency pair in the world is tremendous.USDJPY is over 200 pips off the day's highs (JPY surging below 98.50), GBPUSD is getting smashed higher (+275 pips from pre-close), and EURUSD is screaming higher (up 220 pips from the US close breaking above 1.3200). Retaliation for Carney and Draghi's comments? Who knows... but the currency wars are back on (and the 'other' currency is surging to $1290 per ounce).

About Those Gold Shorts....

Submitted by Tyler Durden on 07/10/2013 - 18:39

One wonders: at what price does the squeeze of the collateral-scarce (as per today's ongoing negative GOFO) yellow metal begin now that Bernanke has made it clear (supposedly) that the new gameplan is just more of the same old?

http://harveyorgan.blogspot.com/2013/07/july-10brinks-dealer-gold-falls-to-only.html

Wednesday, July 10, 2013

July 10/Brinks dealer gold falls to only 4.18 tonnes/total comex dealer gold falls to 30.66 tonnes/total comex gold falls to 220.68 tonnes/

Good evening Ladies and Gentlemen:

Gold closed up $1.50 to $1247.40 (comex closing time ).  Silver is up by only 3 cents to $19.15  (comex closing time)

In the access market at 5:00 pm, gold and silver finished trading at the following prices :

gold: $1263.40

silver:  $19.34

 

At the Comex, the open interest in silver fell by 1543 contracts to 133,851.  

  

The open interest on the entire gold comex contracts rose by 1720 contracts to 431,574 with  gold's rise in price by $11.00 on Tuesday. No doubt we had new speculators enter the arena on the short side and the commercials continued to cover. Their aim to become net long in gold.

Tonight, the Comex registered or dealer inventory of gold falls below 1 million oz to 985,969 oz or 30.66 tonnes.  This is getting  dangerously low.  The total of all gold at the comex (dealer and customer) falls again and registers a reading of  7.095 million oz or 220.680 tonnes of gold.

JPMorgan's customer inventory remains constant at  136,380.609 oz or 4.24 tonnes.  It's dealer inventory also remains  constant at 401,877.493 oz but it still must settle upon contracts issued in the June delivery month which far exceeds its inventory.

The total of the 3 major gold bullion dealers( Scotia , HSBC and JPMorgan)  in its Comex gold dealer account registers only 26.03 tonnes of gold. The total of all of the dealers falls to 30.66 tonnes!!

And tonight, Brinks dealer inventory falls to a record low of only 4.18 tonnes of gold!!

JPMorgan's customer inventory is now at a extremely low 136.38 million oz or 4.24 tonnes of gold.

The GLD  reported another loss in inventory  tonight to the tune of .68 tonnes with an inventory reading of 939.07 tonnes. The SLV inventory of silver showed a loss in silver inventory of 530,000  ounces. The game will end when the GLD runs out of physical metal.

Today, gold was all over the place trading into a very thin market after the release of the FOMC minutes.  Last night Bill Holter stated this last night in conjunction with news that the 6 months out we have a negative GOFO:


" tomorrow is the day, it will be different. Yes, FOMC minutes, Ben Bernocchio testifying and 2%, 1%, flat, hard down I know, let's see what happens but we now have 6 month GOFO negative. This is not because of retail coin buyers, this is because someone big has a big problem with supply...the cash markets are beginning to dictate to the paper markets. I'll bet you a beer the next time I see you that either tomorrow or Thurs. turns out to be an inflection point where the action changes, Best regards, Bill"

Let us see what tomorrow brings.

Today we have physical commentaries from  Bill Kaye talking with Eric King of Kingworldnews , Bill Holter and Dave Kranzler again harp on the backwardation of gold today.  Bill Holter asks are we in a short squeeze  (western interpretation) or are we in a physical buyers panic (eastern interpretation)

On the paper side of things, we have commentaries from Michael Snyder, of Economic Collapse blog  on Italy's continuing deterioration  with their economy.
Graham Summers discusses the huge drop in Chinese exports and what it means to the global economy.

We will go over these and many other  stories today, but first......

Let us now head over to the comex and assess trading over there today.

Here are the details:

The total gold comex open interest   rose again  by  1720 contracts from 429,854  up to 431,574 with gold rising in price by $11.00 on Tuesday. No doubt we had more specs enter the short side and commercials were continually covering.  The large specs are slowly being let to the slaughterhouse.  We are now into the the non active July contract and here the OI rests at 112 up 9 contracts . We had 2 delivery notices filed on Tuesday so in essence we gained 11 contracts or an additional 1100 oz gold will stand for the July delivery month.  The next active delivery month for gold is August and here the OI fell by 8595 contracts from 215,775 down to 197,180 as we are now 3 weeks away from first day notice for the August contract month. The estimated volume today was fair at 179,625 contracts. The confirmed volume yesterday was  good at 194,185.  

The total silver Comex OI fell by 1543 contracts with silver rising in price on Tuesday by 10 cents.  The total of all comex silver OI stands at 133,851 contracts. We are now into the big delivery month of July  and here the OI fell by 201 contracts down to 1257. We had 211 notices filed yesterday so in essence we gained 10 contracts or 50,000 oz. The next big delivery month is September and here the OI fell by 488 contracts down to 79,662.  The estimated volume today was anemic coming in at only 30,795 contracts.  The confirmed volume yesterday was also poor at 39,252.  

 

Comex gold/May contract month:

July 10/2013

 the July  contract month 

Gold	Ounces
Withdrawals from Dealers Inventory in oz	156,457.92 oz (Brinks)
Withdrawals from Customer Inventory in oz	nil
Deposits to the Dealer Inventory in oz	nil
Deposits to the Customer Inventory, in oz	49,922.859 (, HSBC,)
No of oz served (contracts) today	0 ( 000  oz)
No of oz to be served (notices)	112  (11,200 oz)
Total monthly oz gold served (contracts) so far this month	80  (8,000 oz)
Total accumulative withdrawal of gold from the Dealers inventory this month	329,994.08 oz
Total accumulative withdrawal of gold from the Customer inventory this month	285,319.02 oz

We  had huge activity at the gold vaults

The dealer had  0 deposits but did have 1 huge withdrawal.

i) from the dealer Brinks:  156,457.92 oz  (no doubt to settle on issuance from Brinks dealer)




total dealer withdrawal:  156,457.92  oz

We  had 1 customer deposit today :

i) Into HSBC; 49,922.859 oz



total customer deposits:  49,922.859   oz








 we had 0   customer withdrawals



 Total Customer withdrawals:  nil  oz

my goodness, folks are in a hurry to remove gold from registered comex vaults.






Today we had 0 adjustments




Thus tonight we have the following JPMorgan gold inventory which remains constant:  (same as Tuesday's level)

JPM dealer inventory:  401,877.493 oz   12.50 tonnes
JPM customer inventory:  136,380.609 oz  or 4.24 tonnes




As we reported to you 5 weeks ago, that JPMorgan withdrew a huge amount of gold from its customer account:

 Out of JPMorgan:  217,844.96 oz.

If you will recall, we needed to see 100,000 oz of gold removed from JPMorgan's customer account. (1000 contracts served upon our longs in mid May).

The last Tuesday in May (May 28), we  had 15,416.93 oz removed from the JPM's customer account. No doubt that this gold was part of the 1000 contracts issued by JPMorgan customer account and thus we calculated that as of tonight 28,389.579 oz was settled upon, leaving 71,611.00 oz  still left to arrive in the settling process.

 Tuesday, June 11, we had 217,844.96 actual ounces leave JPMorgan

and on, June 28.2013 we had 4,817.251 oz leave jPMorgan customer account

and on Friday  July 5.2013: we had 6,831.54 oz leave jPMorgan customer account


Summary for the last week of issuance from JPMorgan:


On Friday, June 28th we had 23 notices filed and all of these were issued by JPMorgan on the customer side.

Tuesday we had 24 contracts were issued and all from the dealer or house account.
Thursday, 20 contracts were issued and all from JPMorgan's dealer or house account.
Friday,we had 10 contracts were issued and all from JPMorgan's dealer or house account.


In summary on the customer side of things for JPMorgan:





On Friday, the 28th of June, I reported that we had from the beginning of June,  2543 notices or 254,300 oz issued.  If we add the 71,611.00 oz owing from  May issuance, we get  325,911 oz.  If we subtract the actual withdrawal of gold from JPMorgan of 229,493.75 (which includes Friday's  withdrawal customer side 6,831.54),  this still leaves 96,417.25 oz that needs to be settled upon from the vaults of JPMorgan customer side.

The total dealer comex gold lowers again and it rests tonight below 1 million oz at  985,969 oz or 30.66 tonnes of gold.The total of all comex gold, dealer and customer falls again  tonight to  7.095 million oz or  220.68 tonnes.




Now for JPMorgan's dealer side and what the inventory should be:




 On  June 11.2013 we reported that 4935 contracts have been issued by JPMorgan's house account(dealer account) since first day notice and not yet subtracted out of inventory.

Tuesday, July 2:  24 contracts (notices) were issued by JPMorgan's dealer or house account.
Wednesday:  July 3:  20 contracts were issued by JPMorgan's dealer or house account.
Friday:  July 5:  10 contracts were issued byJPMorgan's dealer our house account.


You will also recall 4 weeks ago on  Saturday (and again on that following Monday night,) I reported that JPMorgan had 470,322.102 oz in it's dealer account. From that day until now, 68,444.61 oz was either withdrawn or adjusted out(on the dealer side), leaving the dealer side  at 401,877.493  oz where it sits tonight.

On the dealer side here are the last 23 trading sessions as to notices issued from JPMorgan's dealer side:


 Friday:  zero
 Monday:  1

 Tuesday:  0
 Wednesday :  0

 Thursday:  0
 Friday:  0
 Monday:  0 .
 Tuesday:  0
Wednesday: 0
Thursday:  0
Friday: 0
Monday:0
Tuesday: 0
Wednesday: 0
Thursday:0
Friday: 0
Monday:  0
Tuesday: 24
Wednesday: 20
Thursday/Friday:  10
Monday:  0
Tuesday: 0
Wednesday:0



Thus,  5000 notices have been issued by JPMorgan (dealer side) for the month  of June and the beginning of July  for 500,000 oz  and these ounces have yet to settle from JPMorgan's dealer side.


JPMorgan's dealer vault registers tonight 401,877.493 oz.

Somehow we have a huge negative balance as   i) the gold has not left JPMorgan's dealer account and has yet to settle

and

ii) it is now deficient by 98,122.51 oz   (401,877.493 inventory - 500,000 oz issued =  -98,122.51 oz)

In other words, the entire 401,877.493 oz must be first transferred out of Morgan's dealer category ( in the same format as in the customer category) leaving it with zero,  plus the 98,122.51 of additional deficient gold

JPMorgan has not had any deposits in gold in quite some time. As a matter of fact, zero ounces has entered on the dealer side from the beginning of 2013.


How will JPMorgan satisfy this shortfall??

Another disturbing piece of news is the low dealer gold inventory for our  3 major bullion banks(Scotia, HSBC and JPMorgan). Their dealer gold remains at  26.03 tonnes tonight



i) Scotia:  199,044,026 oz or 6.19 tonnes   (prev 7.204 tonnes)
ii) HSBC:  236,168.152 oz or  7.34 tonnes
iii) JPMorgan: 401,877.493 oz or 12.50 tonnes

total: 26.03 tonnes

Brinks dealer account which did have  the lions share of the dealer gold falls again tonight  after falling badly Friday night to  134,524.79 oz or 4.18 tonnes (on Friday they had over 13 tonnes and today only 4.18 tonnes!!)



Today we had 0 notices served upon our longs for nil  oz of gold(and none were issued by JPMorgan from neither their dealer nor customer account). In order to calculate what I believe will stand for delivery in July, I take the OI for July (112) and subtract out today's notices (0) which leaves us with 112  notices still left to be served upon our longs.

Thus  we have the following gold ounces standing for metal:

80 contracts served x 100 oz =  8,000 oz, +  112 contracts left to be served upon x 100 oz  =  11,200 oz to give us  19,200 oz  or .5972 tonnes of gold.  We  gained 1100 additional gold ounces standing for July. 

Ladies and Gentlemen: we have a three-fold problem:

i) the total dealer inventory of gold falls to a very dangerously low  level of only 35.52 tonnes and none of the 9.5 tonnes delivery notices from May and the major part of the 30.70 tonnes from June  issued by JPM  on its dealer side  has  yet to leave.

ii)  a) JPMorgan's customer inventory remains at an extremely low 136,380.609 oz.
If you are a customer of JPMorgan and have your gold in its vault, I think it is best to remove it before we have another fiasco like MFGlobal.

ii  b)  JPMorgan's dealer account rests tonight at 401,877.493 oz.  However all of this gold has been spoken for plus an additional 98,122.51 oz of deficient gold.

iii) the 3 major bullion banks have collectively only 26.03 tonnes of gold left in their dealer account.

and finally a graph to illustrate just how much gold has left the dealer (registered category )

(courtesy Mark Lundeen:

end






now let us head over and see what is new with silver:

Silver:

July 10/2013:  July silver contract month:

July contract month

Silver	Ounces
Withdrawals from Dealers Inventory	nil
Withdrawals from Customer Inventory	47,390.47 oz (Delaware,CNT,)
Deposits to the Dealer Inventory	nil
Deposits to the Customer Inventory	nil
No of oz served (contracts)	181  (905,000 oz)
No of oz to be served (notices)	1076 (5,380,000 oz)
Total monthly oz silver served (contracts)	2220  (11,100,000)
Total accumulative withdrawal of silver from the Dealers inventory this month	143,024.57
Total accumulative withdrawal of silver from the Customer inventory this month	940,248.5  oz

Today, we  had good activity  inside the silver vaults.

 we had 0 dealer deposits and 0  dealer withdrawals.




We had 0 customer deposits:



total customer deposit:  nil oz



We had 3 customer withdrawals:

i) Out of CNT;  198,305.84  oz
ii) Out of Delaware:  2946.30 oz
iii) Out of Brinks; 245,255.38 oz





total customer withdrawal  :  446,507.52 oz

  

we had 2  adjustments  today

i) Out of Scotia:  1,000,352.559 oz was adjusted out of the customer and this landed into the dealer account of Scotia

ii) Out of Delaware:  35,419.297 oz was adjusted out of the dealer and back into the customer account.





Thus we have the following:

Registered silver  at :  48.317 million oz

total of all silver:  165.611 million oz.

The CME reported that we had 181 notices filed for 905,000 oz today. 

To calculate what will stand for this active delivery month of July, I take the number of contracts served thus far this month at 2220  x 5,000 oz per contract = 11,100,000 oz  + 1076 notices left to be served upon our longs x 5000 oz per contract = 5,380,000 to give us a total of 16,480,000 oz

we gained 10 contracts or 50,000 oz additional silver oz will stand this month.

Thus  here are the standings:

  

2220 contracts served x 5000 oz per contract (served) or 11,100,000  oz +  1247 notices x 5,000 oz or  6,235,000 =  16,480,000 oz

end

The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.

There is now evidence that the GLD and SLV are paper settling on the comex.

Now let us check on gold inventories at the GLD first:




July 10.2013:  we lost .68 tonnes of gold today

Tonnes939.07

Ounces30,192,195.27

Value US$37.913  billion

July 9.2013:  we lost another huge 7.21 tonnes of gold



*   *   * 

selected news and views.....

I am not sure why the Financial times promises that leased gold shortage "means nothing"

you decide...


(courtesy Jack Farchy/London Financial times)



 

Financial Times promises that leased gold shortage means nothing

Submitted by cpowell on Wed, 2013-07-10 01:58. Section: Daily Dispatches

Gold Borrowing Cost Hits Post-Lehman High

By Jack Farchy
Financial Times, London
Tuesday, July 9, 2013

http://www.ft.com/intl/cms/s/0/bd819998-e8b2-11e2-8e9e-00144feabdc0.html...

The cost of borrowing gold has risen to the highest since the post-Lehman Brothers scramble for supplies, as the bullion market adjusts to a new era in which Western investor demand is less dominant.

The niche gold lending market, largely the preserve of a few big banks and central banks, has been uneventful in recent years as investors have built up large holdings and lent them out on the market, keeping rates depressed.

But as investors have turned sellers in recent months, availability of gold in the lending market has been squeezed, bankers said

The squeeze has triggered a sharp rise in gold leasing rates -- the implied interest rate for lending gold in the market in exchange for dollars. The one-month gold leasing rate has risen from 0.12 per cent a week ago to 0.3 per cent on Tuesday, the highest since early 2009.

The move reflects the dramatic shift in the gold market over the past few months as investors have liquidated their holdings en masse, triggering a 25 per cent collapse in prices since the start of the year.

"The market spent 10 years getting long," said David Rose, global head of metals trading at HSBC. "Liquidation is going to be around for a while."

Several other factors have contributed to the tightness in the leasing market, traders and analysts said.

Strong buying in Asia has created additional demand for physical gold, with refineries operating at full capacity to meet orders.

"There has been some borrowing interest recently. It's related to the demand for physical," said Joni Teves, precious metals strategist at UBS, noting that the price of physical gold in China remained more than $40 an ounce above benchmark London spot prices.

At the same time, expectations of rising US interest rates as the Federal Reserve tapers its programme of quantitative easing have made banks less willing to lend gold.

Finally, some medium-sized gold miners have started hedging their future production, traders said, a trade which has the same effect on the market as borrowing gold.

The lack of liquidity in the leasing market has pushed gold forward rates, known as "gofo," into negative territory, meaning that gold for future delivery is trading at a discount to physical market prices -- a rare situation that has occurred only a few times in the past 20 years. The last time forwards were negative was in November 2008, when a scramble for physical gold spurred a sharp price rally.

Traders said that investors were alert for the possibility that the current tightness could trigger a squeeze among hedge funds with short positions in gold, potentially driving prices higher. "It has piqued people's interest," said one senior precious metals banker. Gold was trading at $1,248.50 a troy ounce on Tuesday, up 5.8 per cent from a three-year low at the end last month.

Nonetheless, few believe a rally would be long-lived. "Every rally we see is a short-covering rally which quickly evaporates," said Mr Rose of HSBC.

Although leasing rates have rallied sharply in recent days, they remain well below the peaks of previous eras. In 2008 one-month leasing rates rose as high as 2.7 per cent while in 1999 they reached 9.9 per cent, according to London Bullion Market Association data.

This morning, GOFO is minus for 6 months out. 

Dave Kranzler of the GoldenTruth comments:




Holy negative GOFO!



I parsed through all the data going back to 1999 yesterday. There were only 4 instances when GOFO went negative: Sept 1999, March 2001, Nov 2008 and now. In all previous cases, the negative rates lasted only 2 days AND coincided with market bottoms forming. In 1999 (Washington Agreement + the selling of 1/2 of England's gold) and 2008, significant bottoms that preceded big, extended moves higher.
This time around, today is the THIRD day in a row of negative GOFO. It tells me that not only is delivery situation for 400 oz bars extraordinarily - maybe historically - tight, BUT the western Central Banks are having problems finding enough gold to alleviate the situation. Also, this is the second day in a row GOFO is negative out to 6 months and the 1 month negative rate has become more negative 3 days in a row.
Something really ugly is happening behind Bernanke's curtain.

http://www.lbma.org.uk/pages/index.cfm?page_id=55&show=2013

WEDNESDAY, JULY 10, 2013

GOFO Explained And Why It's Now Very Bullish For Gold

This (the price correction in gold) is good news. Gold is doing what it should do. And it is giving us another good opportunity to buy a life vest before the boat sinks.                              - Bill Bonner, LINK 

Something curious and very rare has occurred in the "bowels" of the gold market.  The Gold Forward rate (GOFO) has gone negative.  This has occurred only four times in the last 14 years.  Each time a negative GOFO has been connected to significant bottom in the gold market:  in 1999 a secular transition from a 20-year bear market into a yet-undetermined in length bull market;  in 2000 + 2001 it correlated with a move that lead to the 1st cyclical bull market high of $1020 in 2006;  in 2008 it correlated with the price correction from the 2006 high and marked the climb to the all-time record cyclical high of $1900 in 2011;  and now.

A negative GOFO rate means that gold in hand today is worth more than U.S. dollars in hand.  Think about that the next time someone tries to explain to you why gold has no value.  This is a sophisticated transaction being executed by sophisticated banks.  They are not in the business of leaving money on the table for others.  If they are willing to pay money to get their hands on gold, it means they are placing a higher value on gold than on dollars.  That's just the law of the time value of money in action.

The severity and degree of manipulation that has been required to "help" along the current 2-yr price correction in the metals sector is testament to the degree of desperation the Fed and the Government are feeling in order to try and support the dollar's use as the global reserve currency.  Like all good things, that is coming to an end.  The negative GOFO rate being observed right now is in unprecedented territory.  The previous three observations were one and two-day affairs.  Today is the third day in a row we are observing a negative GOFO.   That this is occurring is also testament to the degree of manipulation that underlies the market right now.

Why?  You can read what the GOFO is and my analysis of what it means here:  Why The GOFO Is Very Bullish For Gold

In short, the GOFO is the interest rate that is used in a gold-for-dollars swap transaction.  Someone who is long gold and needs dollars for short term use can use his gold as collateral and get a much lower interest rate in borrowing the dollars.  But when the GOFO is negative, it means that someone with dollars needs the short term use of gold and is willing to pay the owner of the gold a rate of interest plus use dollars for collateral.

What it really means is that the massive shortage of good to deliver 400 oz. bars we've been hearing about in Europe, Asia and the Middle East is true.   It tells us that not only is delivery situation for 400 oz bars extraordinarily - maybe historically - tight, BUT the western Central Banks are having problems finding enough gold to alleviate the situation.   Also, this is the second day in a row GOFO is negative out to 6 months and the 1 month negative rate has become more negative 3 days in a row.

Just like the previous three times, I am confident that the current GOFO means the bottom of the 2-yr correction in gold and silver is over and that there is a very high probability that the next cyclical move higher will see new records for both the price of gold and silver.