http://harveyorgan.blogspot.com/2013/06/comex-puts-disclaimer-on-gold-silver.html
Now let us check on gold inventories at the GLD first: another 2.6 tons of GLD ETF gold leave for parts unknown !
June 4.2013:
June 3.2013:
* * *
selected PM related news - non redundant .....
Author: Lewa Pardomuan & Fayen Wong
Posted: Tuesday , 04 Jun 2013
SINGAPORE/BEIJING (Reuters) -
Chinese gold imports are likely to swell further after more than doubling to an all time high in March as retail consumers pounced when prices plunged to a two-year low last month.
China is the world's second largest buyer after India, and in both countries the steep fall in international gold prices in April unleashed years of pent up demand for coins, bars and jewellery.
That will help bolster prices for the metal, which has been abandoned by funds in other parts of the world in the wake of its historic fall.
"Physical demand picked up significantly over the last couple of weeks. Consumers and industrial users tend to see price drops as buying opportunities," Zhang Bingnan, secretary-general of the China Gold Association, told Reuters.
"Investment demand should continue to stay strong through the rest of the year because of limited investment alternatives," said Zhang, adding that gold sales and processing volumes both spiked in April.
Net gold flows from Hong Kong to China, the world's No. 2 gold consumer after India, jumped to 136.185 tonnes in March from 60.958 tonnes in February, smashing a previous record of 114.372 tonnes in December, data from the Hong Kong Census and Statistics Department showed on Tuesday (www.censtatd.gov).
That makes up more than half of record gold exports to China from Hong Kong in 2012, which stood at 557.478 tonnes.
In March, Shanghai gold futures <0> fetched premiums of more than $30 to global prices, making it cheaper to buy the metal overseas.
April could see imports swell further after the drop in international prices spurred frenzied buying in Asia, leading to a shortage of gold bars and coins in Singapore as well as Hong Kong, which is China's main source for gold imports.
Appetite for gold from India and China is a major factor in international gold prices. The two countries account for more than a third of global demand, according to the World Gold Council. China produced 403 tonnes of gold in 2012, but consumption was more than double at 832.2 tonnes.
Gold tumbled to around $1,321 an ounce on April 16, its lowest in more than two years, after a fall below $1,500 and fears of central bank sales led to a sell-off that stunned investors and prompted them to slash holdings of exchange-traded funds. It stood at around $1,460 on Tuesday.
"April imports will be stronger than March," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. "The world was buying gold and China was no different at all."
A spokesman for Hong Kong jewellery chain Chow Tai Fook, the world's largest jewellery retailer by market value, told Reuters that traffic at its China stores jumped by 50 percent during the May Day holidays.
The surge in Chinese travellers during the three-day May Day holiday also drove gold sales in Hong Kong to rise by an estimated 50 percent, with total gold sales from April 29-May 2 reaching some 40 tonnes, local media quoted Haywood Cheung, president of the Hong Kong Gold and Silver Exchange, as saying.
The jump in Chinese physical demand also prompted some banks to ship in more supplies from London and Swiss vaults, traders said.
With China's economy still on shaky ground, investors there with limited options for their cash could still see gold as attractive. The fall has hurt big funds elsewhere that bet on gold continuing a 12 year bull run, eroding investor confidence in the yellow metal.
China's annual export growth may have picked up slightly in April due to a low comparison from a year ago, while import growth probably eased, a Reuters poll showed, suggesting the underlying momentum for both the domestic and global economies remains tepid.
http://www.zerohedge.com/news/2013-06-04/jpm-comex-gold-slides-new-all-time-low
Submitted by Tyler Durden on 06/04/2013 18:02 -0400
It was a dull day in the metals trade.
Early this morning a friend sent me a note saying that the CFTC had put a disclaimer on its warehouse inventory report. At first I though it was a joke or some hoax. He sent me the links to their site, and I saw that it was true.
While I might agree that Comex is not a primary source of bullion purchasing, it is the gold and silver bullion they hold that is the basis of their trade. It is not supposed to be a pure exercise in paper pricing.
And the timing of this is a definite eyebrow-raiser given all that is happening with regard to the opaque short positions, the record lows in inventory that is reported, overall tightness in global physical supply, and the recent decision by the Hong Kong Exchange to force settle in cash and fold up its trading table.
The US Comex is the major price setting mechanism for gold and silver in the world.
Shocking to say the least, especially since this looks like the kind of statement that an attorney might suggest to an organization that was concerned about their ability to deliver on contracts out of existing inventory according to the terms of their agreements. It drops any pretense to inventory controls and audits.
Tuesday, June 4, 2013
Comex puts disclaimer on gold silver inventory/gold and silver whacked/Dealer comex gold lowers to 47.34 tonnes/
Good evening Ladies and Gentlemen:
Gold closed up down by $14.60 to $1397.10 (comex closing time). Silver fell by 32 cents to $22.40 (comex closing time)
In the access market at 5:00 pm, gold and silver finished trading at the following prices :
gold: 1399.90
silver: $22.54
I am not going into the trading of gold and silver because you all know that it is manipulated throughout all time zones, so I will not waste your time.
At the Comex, the open interest in silver fell by 321 contracts to 144,995 contracts with silver's rise in price on Monday by 49 cents. The silver OI is holding firm at elevated levels . The open interest on the entire gold comex contracts rose by 764 contracts to 375,970 which is extremely low considering we have deliveries which must be subtracted from the June OI . There is no question that all of the weak speculators in gold have now departed. Only the strong remain. The number of ounces which stands on this third day mof the June delivery month is 952,600 or 29.62 tonnes.The number of silver ounces, standing for delivery is represented by 620,000 oz. No doubt this level will climb as the June month proceeds.
Tonight, the Comex registered or dealer gold lowers to 1.522 million oz or 47.34 tonnes. This is getting dangerously low. The total of all gold at the comex fell slightly and now it is just above the 8 million oz at 8.006 million oz or 249.02 tonnes of gold.
The GLD reported another loss in gold inventory to the tune of 2.7 tonnes. The SLV inventory of silver also remained firm with no losses.
On the physical side of things, we have a report from Dave of Denver who noticed today (I verified this) that the Comex officials have put a disclaimer on their gold and silver inventories as to their accuracy. It certainly did not surprise me.
Eric Sprott has presented to us an excellent paper on the bleeding of gold from the GLD.
We also have a very good conversation between Eric King and James Turk at Kingworld news.
On the paper side of things, we have great commentaries for you by Bill Holter on how to prepare yourself for the inevitable, as well as Bill Gross on the state of the USA economy.
We will go over these and other stories 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 by 764 contracts from 375,970 up to 375,970 with gold rising by $20.70 yesterday. The front active month of June saw it's OI fall by 1406 contracts from 4946 down to 3540 contracts. We had 1415 contracts served upon our longs on day no 2 of the June delivery cycle. We thus gained 9 contracts or 900 additional oz will stand this month.This is a huge change from previous months whereby the totals for the amount of gold standing would decrease in the first week and then resume northbound. We saw a change in the silver contract month last month which rose in amount standing after two days. It looks like gold will repeat after silver on this front. The next delivery month is the non active July contract and here the OI rose by 72 contracts up to 599. The next active delivery month for gold is August and here the OI rose by 328 contracts from 215,612 up to 215,940 . The estimated volume today was poor at 111,323 contracts. The confirmed volume yesterday was good at 152,608 contracts. It looks to me like all of the paper gold longs have been washed out!!
The total silver Comex OI completely plays to a different drummer than gold. Its OI fell 321 contracts to 144,995, with silver's rise in price to the tune of 49 cents yesterday. The front non active June silver contract month shows a loss in OI of of 38 contracts. We had 2 notices filed yesterday so in essence we lost 36 contracts or 180,000 additional silver ounces will not stand for the June delivery month. The estimated volume today was fair, coming in at 33,202 contracts. The confirmed volume yesterday was excellent at 51,592.
We had 1 customer deposit today:
i) Into Scotia: 12,963.637 oz
and that is all that entered any vault today from outside.
total customer deposit: 12,963.637 oz
This 12,963.649 oz is the exact oz withdrawn from JPMorgan's customer account yesterday and thus that completes only 12.93% of that 100,000 delivery notice filed a week ago last Friday.
We had 3 customer withdrawals today:
1. Out of JPMorgan 15,416.930 oz
2. Out of HSBC: 33,582.844 oz
3. Out of Scotia : 102.973 oz
total withdrawal: 99,102.747 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).
Today, we also 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 today this was removed.
So we can now add 15,416.93 oz + 12,963.649 = 28,389.579 oz
Thus 28.389% of the 100,000 oz issuance has in all probability been finalized.
We also received notice that we have one adjustment and that too involved JPMorgan:
Out of JPMorgan 49,001.86 oz was removed from the dealer and this entered the customer account. No doubt that this is part of this month's deliveries.
The JPMorgan customer vault inventory thus rises to 367,463.047 oz or rests tonight at 11.42 tonnes.
You will also recall on Saturday and Monday night, I reported that JPMorgan had 470,322.102 oz in it's dealer account.
On Day 1 (first day notice) we had 4571 contracts served upon of which 4551 contracts were issued from the dealer (house account) of JPMorgan.
On Day 2 (today) we had 1415 notices filed of which zero came from HSBC and 192 contracts were issued by JPMorgan's dealer account and 43 notices were issued from their customer account of JPM.
On Day 3: (today) JPM issued 43 contracts from its customer account and 192 contracts from its house (dealer account)
The customer account prior to today stood at 346,844.766 oz and with the removal of the 28,389.579 oz plus the adjustment leaves us with 367,463.047 oz
We are still missing 71,611 oz which must come from JPMorgan's customer account. The initial delivery notice issued from JPMorgan occurred a week ago last Friday.
On the dealer side of JPMorgan: the total number of gold contracts issued from the JPMorgan vault equals 4551 contracts (day 1) + 192 contracts (day 2) + 192 (day 3)
equals 4935 contracts or 493,500 oz
JPMorgan's dealer vault registers tonight 421,323.24 oz
somehow we have a huge negative balance as i) the gold has not left JPMorgan's dealer account yet
and
ii) it is deficient by 72,177. oz
JPMorgan has not had any deposits in gold in quite some time.
How will JPMorgan satisfy this shortfall??
HSBC 's dealer vault gold is also slim as it remains at: 260,323.275 oz (8.09 tonnes)
6049 contracts x 100 oz per contract or 604,900 oz served upon + 3477 contracts or 347,700 oz (left to be served upon) = 952,600 oz or 29.62 tonnes of gold.
We gained 9 contracts or 900 oz of additional gold standing for the June contract month.
We now have the official USA production of gold last year and it registered 230 tonnes. Thus approximately 19.16 tonnes of gold is produced by all mines in the USA per month. Thus the amount standing for gold this month represents 154.46% of that total production.
i) out of HSBC: 324,371.24 oz
ii) out of JPM: 10,431.30 oz
iii) out of Scotia: 60,082.87 oz
total customer withdrawal 394,885.41 oz
Gold closed up down by $14.60 to $1397.10 (comex closing time). Silver fell by 32 cents to $22.40 (comex closing time)
In the access market at 5:00 pm, gold and silver finished trading at the following prices :
gold: 1399.90
silver: $22.54
I am not going into the trading of gold and silver because you all know that it is manipulated throughout all time zones, so I will not waste your time.
At the Comex, the open interest in silver fell by 321 contracts to 144,995 contracts with silver's rise in price on Monday by 49 cents. The silver OI is holding firm at elevated levels . The open interest on the entire gold comex contracts rose by 764 contracts to 375,970 which is extremely low considering we have deliveries which must be subtracted from the June OI . There is no question that all of the weak speculators in gold have now departed. Only the strong remain. The number of ounces which stands on this third day mof the June delivery month is 952,600 or 29.62 tonnes.The number of silver ounces, standing for delivery is represented by 620,000 oz. No doubt this level will climb as the June month proceeds.
Tonight, the Comex registered or dealer gold lowers to 1.522 million oz or 47.34 tonnes. This is getting dangerously low. The total of all gold at the comex fell slightly and now it is just above the 8 million oz at 8.006 million oz or 249.02 tonnes of gold.
The GLD reported another loss in gold inventory to the tune of 2.7 tonnes. The SLV inventory of silver also remained firm with no losses.
On the physical side of things, we have a report from Dave of Denver who noticed today (I verified this) that the Comex officials have put a disclaimer on their gold and silver inventories as to their accuracy. It certainly did not surprise me.
Eric Sprott has presented to us an excellent paper on the bleeding of gold from the GLD.
We also have a very good conversation between Eric King and James Turk at Kingworld news.
On the paper side of things, we have great commentaries for you by Bill Holter on how to prepare yourself for the inevitable, as well as Bill Gross on the state of the USA economy.
We will go over these and other stories but first.....................
Here are the details:
The total gold comex open interest rose by 764 contracts from 375,970 up to 375,970 with gold rising by $20.70 yesterday. The front active month of June saw it's OI fall by 1406 contracts from 4946 down to 3540 contracts. We had 1415 contracts served upon our longs on day no 2 of the June delivery cycle. We thus gained 9 contracts or 900 additional oz will stand this month.This is a huge change from previous months whereby the totals for the amount of gold standing would decrease in the first week and then resume northbound. We saw a change in the silver contract month last month which rose in amount standing after two days. It looks like gold will repeat after silver on this front. The next delivery month is the non active July contract and here the OI rose by 72 contracts up to 599. The next active delivery month for gold is August and here the OI rose by 328 contracts from 215,612 up to 215,940 . The estimated volume today was poor at 111,323 contracts. The confirmed volume yesterday was good at 152,608 contracts. It looks to me like all of the paper gold longs have been washed out!!
The total silver Comex OI completely plays to a different drummer than gold. Its OI fell 321 contracts to 144,995, with silver's rise in price to the tune of 49 cents yesterday. The front non active June silver contract month shows a loss in OI of of 38 contracts. We had 2 notices filed yesterday so in essence we lost 36 contracts or 180,000 additional silver ounces will not stand for the June delivery month. The estimated volume today was fair, coming in at 33,202 contracts. The confirmed volume yesterday was excellent at 51,592.
Comex gold/May contract month:
June 4/2013
the June contract month:
the June contract month:
Ounces
| |
Withdrawals from Dealers Inventory in oz
|
100.000 oz (Brinks)
|
Withdrawals from Customer Inventory in oz
|
12,963.649 oz (JPMorgan)
|
Deposits to the Dealer Inventory in oz
|
nil
|
Deposits to the Customer Inventory, in oz
| 500.183 (Brinks,Scotia) |
No of oz served (contracts) today
|
63 (6,300 oz)
|
No of oz to be served (notices)
|
3477 (347,700 oz
|
Total monthly oz gold served (contracts) so far this month
|
6049 (604,900 oz)
|
Total accumulative withdrawal of gold from the Dealers inventory this month
|
100.000 oz
|
Total accumulative withdrawal of gold from the Customer inventory this month
| 14,289.918 oz |
We again had good activity at the gold vaults
The dealer had 0 deposits and 0 dealer withdrawal.
We had 1 customer deposit today:
i) Into Scotia: 12,963.637 oz
and that is all that entered any vault today from outside.
total customer deposit: 12,963.637 oz
This 12,963.649 oz is the exact oz withdrawn from JPMorgan's customer account yesterday and thus that completes only 12.93% of that 100,000 delivery notice filed a week ago last Friday.
We had 3 customer withdrawals today:
1. Out of JPMorgan 15,416.930 oz
2. Out of HSBC: 33,582.844 oz
3. Out of Scotia : 102.973 oz
total withdrawal: 99,102.747 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).
Today, we also 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 today this was removed.
So we can now add 15,416.93 oz + 12,963.649 = 28,389.579 oz
Thus 28.389% of the 100,000 oz issuance has in all probability been finalized.
We also received notice that we have one adjustment and that too involved JPMorgan:
Out of JPMorgan 49,001.86 oz was removed from the dealer and this entered the customer account. No doubt that this is part of this month's deliveries.
The JPMorgan customer vault inventory thus rises to 367,463.047 oz or rests tonight at 11.42 tonnes.
You will also recall on Saturday and Monday night, I reported that JPMorgan had 470,322.102 oz in it's dealer account.
On Day 1 (first day notice) we had 4571 contracts served upon of which 4551 contracts were issued from the dealer (house account) of JPMorgan.
On Day 2 (today) we had 1415 notices filed of which zero came from HSBC and 192 contracts were issued by JPMorgan's dealer account and 43 notices were issued from their customer account of JPM.
On Day 3: (today) JPM issued 43 contracts from its customer account and 192 contracts from its house (dealer account)
The customer account prior to today stood at 346,844.766 oz and with the removal of the 28,389.579 oz plus the adjustment leaves us with 367,463.047 oz
We are still missing 71,611 oz which must come from JPMorgan's customer account. The initial delivery notice issued from JPMorgan occurred a week ago last Friday.
On the dealer side of JPMorgan: the total number of gold contracts issued from the JPMorgan vault equals 4551 contracts (day 1) + 192 contracts (day 2) + 192 (day 3)
equals 4935 contracts or 493,500 oz
JPMorgan's dealer vault registers tonight 421,323.24 oz
somehow we have a huge negative balance as i) the gold has not left JPMorgan's dealer account yet
and
ii) it is deficient by 72,177. oz
JPMorgan has not had any deposits in gold in quite some time.
How will JPMorgan satisfy this shortfall??
HSBC 's dealer vault gold is also slim as it remains at: 260,323.275 oz (8.09 tonnes)
Tonight the dealer inventory remains tonight at a low of 1.522 million oz (47.34) tonnes of gold. The total of all gold slightly contracts, resting tonight at 8.006 million oz or 248.02 tonnes.
Today we had 63 notices served upon our longs for 6300 oz of gold. In order to calculate what I believe will stand for delivery in June, I take the OI standing for June (3540) and subtract out today's notices (63) which leaves us with 3477 contracts or 347,700 oz left to be served upon our longs.
Today we had 63 notices served upon our longs for 6300 oz of gold. In order to calculate what I believe will stand for delivery in June, I take the OI standing for June (3540) and subtract out today's notices (63) which leaves us with 3477 contracts or 347,700 oz left to be served upon our longs.
Thus we have the following gold ounces standing for metal in June:
6049 contracts x 100 oz per contract or 604,900 oz served upon + 3477 contracts or 347,700 oz (left to be served upon) = 952,600 oz or 29.62 tonnes of gold.
We gained 9 contracts or 900 oz of additional gold standing for the June contract month.
We now have the official USA production of gold last year and it registered 230 tonnes. Thus approximately 19.16 tonnes of gold is produced by all mines in the USA per month. Thus the amount standing for gold this month represents 154.46% of that total production.
end
Silver:
June 4.2013: June silver contract month:
| Silver |
Ounces
|
| Withdrawals from Dealers Inventory | nil |
| Withdrawals from Customer Inventory | 394,885.41 oz (HSBC, Scotia,JPM) |
| Deposits to the Dealer Inventory | nil |
| Deposits to the Customer Inventory | 374,192.375( Brinks,CNT,Delaware) |
| No of oz served (contracts) | 2 (10,000 oz) |
| No of oz to be served (notices) | 138 (690,000 oz) |
| Total monthly oz silver served (contracts) | 22 (110,000 oz) |
| Total accumulative withdrawal of silver from the Dealers inventory this month | 701,301.63 oz |
| Total accumulative withdrawal of silver from the Customer inventory this month | 1,227,181. oz |
Today, we had good activity inside the silver vaults.
we had 0 dealer deposits and 0 dealer withdrawals.
We had 3 customer deposits:
i) Into brinks: 300,417.56. oz
ii) Into CNT: 49,546.315 oz
iii) Into Delaware: 24,228.50 oz
total customer deposit; 374,192.375 oz
We had 3 customer withdrawals:
We had 3 customer deposits:
i) Into brinks: 300,417.56. oz
ii) Into CNT: 49,546.315 oz
iii) Into Delaware: 24,228.50 oz
total customer deposit; 374,192.375 oz
We had 3 customer withdrawals:
i) out of HSBC: 324,371.24 oz
ii) out of JPM: 10,431.30 oz
iii) out of Scotia: 60,082.87 oz
total customer withdrawal 394,885.41 oz
we had 0 adjustments today
Registered silver at : 42.035 million oz
total of all silver: 164.493 million oz.
The CME reported that we had 0 notices filed for nil oz on this third day of delivery notices. In order to calculate what we believe will stand in the month of June, I take the Oi standing for June (102) and subtract out today's notices (0) which leaves us with 102 notices or 510,000
Thus the total number of silver ounces standing in this non active delivery month of June is as follows:
22 contracts x 5000 oz per contract (served) = 110,000 oz + 102 contracts x 5000 oz or 5100,000 oz left to be served upon = 620,000 oz
we lost 180,000 oz silver ounces standing. I am sure we will get that back.
Thus the total number of silver ounces standing in this non active delivery month of June is as follows:
22 contracts x 5000 oz per contract (served) = 110,000 oz + 102 contracts x 5000 oz or 5100,000 oz left to be served upon = 620,000 oz
we lost 180,000 oz silver ounces standing. I am sure we will get that back.
Now let us check on gold inventories at the GLD first: another 2.6 tons of GLD ETF gold leave for parts unknown !
June 4.2013:
Tonnes1,010.45
Ounces32,486,916.77
Value US$45.443 billion
June 3.2013:
Tonnes1,013.15
Ounces32,573,918.24
Value US$45.662 billion
* * *
selected PM related news - non redundant .....
China’s gold imports are likely to increase further after more than doubling to an all time high in March
Author: Lewa Pardomuan & Fayen Wong
Posted: Tuesday , 04 Jun 2013
SINGAPORE/BEIJING (Reuters) -
Chinese gold imports are likely to swell further after more than doubling to an all time high in March as retail consumers pounced when prices plunged to a two-year low last month.
China is the world's second largest buyer after India, and in both countries the steep fall in international gold prices in April unleashed years of pent up demand for coins, bars and jewellery.
That will help bolster prices for the metal, which has been abandoned by funds in other parts of the world in the wake of its historic fall.
"Physical demand picked up significantly over the last couple of weeks. Consumers and industrial users tend to see price drops as buying opportunities," Zhang Bingnan, secretary-general of the China Gold Association, told Reuters.
"Investment demand should continue to stay strong through the rest of the year because of limited investment alternatives," said Zhang, adding that gold sales and processing volumes both spiked in April.
Net gold flows from Hong Kong to China, the world's No. 2 gold consumer after India, jumped to 136.185 tonnes in March from 60.958 tonnes in February, smashing a previous record of 114.372 tonnes in December, data from the Hong Kong Census and Statistics Department showed on Tuesday (www.censtatd.gov).
That makes up more than half of record gold exports to China from Hong Kong in 2012, which stood at 557.478 tonnes.
In March, Shanghai gold futures <0> fetched premiums of more than $30 to global prices, making it cheaper to buy the metal overseas.
April could see imports swell further after the drop in international prices spurred frenzied buying in Asia, leading to a shortage of gold bars and coins in Singapore as well as Hong Kong, which is China's main source for gold imports.
Appetite for gold from India and China is a major factor in international gold prices. The two countries account for more than a third of global demand, according to the World Gold Council. China produced 403 tonnes of gold in 2012, but consumption was more than double at 832.2 tonnes.
Gold tumbled to around $1,321 an ounce on April 16, its lowest in more than two years, after a fall below $1,500 and fears of central bank sales led to a sell-off that stunned investors and prompted them to slash holdings of exchange-traded funds. It stood at around $1,460 on Tuesday.
"April imports will be stronger than March," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. "The world was buying gold and China was no different at all."
HEAVY TRAFFIC
The drop in prices has prompted a gold rush in China, with Chinese shoppers flocking to retailers to buy jewellery and bars.A spokesman for Hong Kong jewellery chain Chow Tai Fook, the world's largest jewellery retailer by market value, told Reuters that traffic at its China stores jumped by 50 percent during the May Day holidays.
The surge in Chinese travellers during the three-day May Day holiday also drove gold sales in Hong Kong to rise by an estimated 50 percent, with total gold sales from April 29-May 2 reaching some 40 tonnes, local media quoted Haywood Cheung, president of the Hong Kong Gold and Silver Exchange, as saying.
The jump in Chinese physical demand also prompted some banks to ship in more supplies from London and Swiss vaults, traders said.
With China's economy still on shaky ground, investors there with limited options for their cash could still see gold as attractive. The fall has hurt big funds elsewhere that bet on gold continuing a 12 year bull run, eroding investor confidence in the yellow metal.
China's annual export growth may have picked up slightly in April due to a low comparison from a year ago, while import growth probably eased, a Reuters poll showed, suggesting the underlying momentum for both the domestic and global economies remains tepid.
http://www.zerohedge.com/news/2013-06-04/jpm-comex-gold-slides-new-all-time-low
JPM Vaulted Gold Slides To New All Time Low
Beginning on May 13, when JPM's commercial gold holdings tumbled to an all time low of 137,377 ounces, the firm's daily Comex updates became erratic with daily reallocations out of its Registered holdings into Eligible. Over the next three weeks, some 209K ounces had their warrants detached, and shifted into customer account, all the while the total number of ounces held in the JPM gold warehouse at 1 Chase Manhattan Plaza, remained flat at 817,167. Then two days ago the first withdrawal in nearly one month took place, with 13K ounces pulled out of JPM's Eligible holdings. Moments ago, the daily Comex update showed that yet another 15.4K ounces were withdrawn out of JPM, following the latest gold withdrawal, offset by a 49K ounces reallocation. This however is still short of the roughly 70K ounces due for delivery. Long story short, as of close of activity on June 3, the total gold held by the JPMorgan depository is now the lowest it has ever been at just 788,786 ounces and once again falling fast.
Then again, as many have noticed, the addition of an peculiar footnote to the daily Comex report which states the following:
The information in this report is taken from sources believed to be reliable; however,
the Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness.
This report is produced for information purposes only.
means that it is quite possible that all of the above numbers are just that, and that in reality JPM (and others) are representing whatever they wish. It is, however, odd that the CME decided to add this disclaimer only now.
http://www.jcaschipper.nl/2013/05/nationalized-abn-amro-offers-fools-gold/
Nationalized ABN Amro offers fool’s gold
In March, Dutch nationalized banking giant ABN Amro send its trading clients a letter explaining that they have changed the conditions for precious metals trading. In their letter[1], the bank explains that they will no longer deliver physical precious metals (gold, silver, platinum and palladium), that they administer prices slightly differently, and that they have found a new custodian. ABN Amro suggests that clients do not have to do anything, stating “we will administer and manage your precious metals holdings in the new manner”.
Of course clients do not have to do anything, but given the new conditions [2], this is hardly advisable or prudent. Investors with precious metals holdings with ABN Amro are potentially facing fatal risks.
Conditions, schmonditions..
For the proper legal context one must understand that ABN Amro uses a separate brokerage vehicle “Stichting beleggersgiro ABN Amro” through which clients can trade amongst others bonds, stocks, currencies, and precious metals. Under the new conditions — and they state this very explicitly — the “Stichting..” promises that they “will attempt to at least hold 70% of invested funds in precious metals” in the vaults of UBS, in Zürich. Why ABN Amro did not mention UBS is a mere aside, but under the new conditions ABN Amro discloses that they “do not guarantee this to be the case”. So it can be more or less 70% and whether it is actually 60% or 72%, it does not matter; the point is, ABN Amro does not give any guarantee of what is in a UBS vault at all.
Yet there is more. Clients who chose to have exposure to precious metals do not acquire anything themselves. Formally, they only hold a claim on ABN Amro’s brokerage vehicle that owns the metals with UBS. However, UBS can also choose to have gold allocated with a third party, a third party unknown to ABN Amro and its clients. So it is not necessarily the case that clients of ABN Amro have an indirect claim on precious metals in an UBS-vault, but to gold in the vault of some unknown third party “somewhere else”. And then there’s the article that stipulates, “the bank and its “Stichting” cannot be held liable for any third party bankruptcies or that of UBS”. ABN Amro goes even as far as to describe what happens if UBS or an unknown third party goes bankrupt: you stand in line hoping to receive an equal share of what is then to be liquidated, “if there is anything left at all”.
Also troubling, if UBS deems market conditions “extreme”, it has the right to ignore orders given by clients of ABN Amro, and UBS is reserved the right to stop their service at any point in time albeit they have to communicate such a decision 30 days prior before ending their bullion services. So if UBS decides to stop their bullion vaulting “service”, ABN Amro clients can only sell off whatever it is they had bought, and of course, they must hope they have the opportunity to do so without UBS autonomously declaring market conditions as too extreme.
So what is ABN Amro actually offering?
It is an intriguing question to ask: what do precious metals investors at ABN Amro really buy? Obviously, it is not an equivalent of physical ownership. It is a “paper only” account and even that is not a proper description because an account is never a one-way street. Despite ABN Amro denominates this account in terms of weight that is valued in euro, clients can never withdraw precious metals, so this denomination is entirely meaningless. Also, it cannot be considered a quasi ETF-certificate because at most, it is an “un-unallocated” claim: the invested funds may be anywhere and likewise the gold. And since physical delivery has been postponed all together, it cannot be regarded as a quasi futures contract or an option on that either.
Given these new conditions, this precious metals investment has become some sort of twisted commodity swap whereby investors swap their money to invest in any upside price potential of precious metals and whereby they take on all sorts of financial counterparty risks without hedging anything at all. Investors always face a price risk, but if one “buys” precious metals with ABN Amro, then one also faces a forced sell-off risk, a (discounted) cash-settlement risk, and last but not least, an outright default risk. And here’s the gist of it: nobody can be held liable if these risks materialize. In other words, investors bet their money on a horse that might or might not exist and for which they can know upfront, this horse will never cross the finish line.
Fiduciary responsibilities?
Personally, I am disappointed in ABN Amro and most prominently in its board. Under leadership of former minister of Finance Gerrit Zalm, ABN Amro is supposed to act as a custodian of Dutch taxpayers who coughed up €17 billion in the nationalization scheme to save ABN Amro from a disorderly collapse from the Fortis holding in 2008. Taxpayers who vested another €13 billion to absorb hidden losses. That’s €30 billion for a bank that nowadays proclaims to have “embedded” a client-centered approach.
Imagine you invested in precious metals with ABN Amro, for example because you deemed them trustworthy and because you wanted to store your precious metals safely. And then ABN Amro tells you they have changed the conditions introducing the very risks you wanted to avoid and tells you, “You do not have to do anything.” If you ask me, ABN Amro has relegated its precious metals clients from “not so savvy” to mere “muppets”.
Taking issue
Some might argue that since ABN Amro fully disclosed their zero accountability, all is fine or say it is OK because Dutch taxpayers are now off the hook for any mishaps in the precious metals markets. But ABN Amro still has to be sold off one day. So if it is not about protecting the interests of small (financial illiterate) investors, or let alone the bigger picture of the precious metals markets (all that paper metal remains a persistent financial taboo), then it still remains a question of jeopardizing ABN Amro’s reputation. In my humble opinion, there are thus 30 billion reasons to take issue with this.
If you are a client at ABN Amro with precious metals, I wouldn’t wait for something to happen. Make no mistake about this: you are potentially left empty handed. And in case people at ABN Amro read this, here’s a question: When something as utterly simple as sticking a lump of metal in a vault, something you apparently cannot guarantee anno 2013 — a banking establishment for crying out loud — then why offer this financial precious metal mumbo jumbo at all? Is your reputation of a trustworthy counterparty not worth anything at all? Is this ABN Amro’s new interpretation of embedding a client-centered approach? Here’s a simple idea: stop offering “fool’s gold” and go back to basics, because if not now, then when? After it is all too late?
As for members of Dutch parliament and Dutch regulators: anyone paying attention? It wouldn’t be the first time you only acted until after it was too late.
[1] A translation of ABN Amro’s letter by Zero Hedge
[2] ABN Amro’s new conditions (PDF, in Dutch)
http://www.tfmetalsreport.com/blog/4757/sprott-discusses-gld-redemptions
Sprott Discusses GLD Redemptions
In their latest newsletter, the good folks at Sprott Asset Management tackle the ongoing redemptions of the GLD.
Again, you can receive these newsletters directly if you click this link and sign up:http://www.industrymailout.com/Industry/View.aspx?id=454626&q=598417271&qz=7aa03e
Redemptions in the GLD are, oddly enough, Bullish for Gold
By Eric Sprott & Etienne Bordeleau
Recent outflows from physical gold exchange traded products (we use the SPDR Gold Shares, GLD) have been interpreted by the financial press as a sign of weakness in the demand for gold as an investment vehicle.1
However, a closer look at the evidence suggests otherwise: the largest outflows in the history of the GLD (see Figure 1) started well before the large drop in the price of gold we observed on April 15th, 2013 (-9%, which represents a 1 in 11 years event)2. In fact, the net redemption of shares of GLD started as early as the second week of January 2013 (on a 3-month cumulative rolling basis). In this note, we will explore the theory that it was the shortage of physical gold and the ensuing arbitrage opportunity that drove market participants to redeem shares of GLD.
So why are the bullion banks3 that act as Authorized Participants for GLD, a group that includes JP Morgan and HSBC and others (who by-the-way were mostly bearish on gold leading to the April Crash), redeeming so many shares of GLD?
One explanation could be that they are trying to match supply and demand so that the net asset value (NAV) of the ETF is in line with its price. Historically, we have observed that large movements in and out of the GLD are associated with large discounts/premiums to NAV (Figure 2). This is due to the constant creation/redemption of the shares to minimize the discrepancies between the ETF share price and the NAV. However, the recent wave of redemptions has occurred even while the premium to NAV has been very stable, hovering around 0% for most of the year.
FIGURE 1: FLOWS IN THE GLD (TONNES) - 3 MONTH ROLLING BASIS
Source: SPDRgoldshares.com and Sprott Calculations.
Last Observation: May 28, 2013 (Week 22).
Source: SPDRgoldshares.com and Sprott Calculations.
Last Observation: May 28, 2013 (Week 22).
FIGURE 2: GLD PREMIUM TO NAV AND GOLD FLOWS
Source: SPDR Gold Trust, Sprott Calculations.
Note: Large flows are defined as weeks where the average % change in tonnes lies in the top or bottom 10% of its distribution (i.e. tail events).
Source: SPDR Gold Trust, Sprott Calculations.
Note: Large flows are defined as weeks where the average % change in tonnes lies in the top or bottom 10% of its distribution (i.e. tail events).
We believe that the answer lies in the discrepancy between the paper and physical markets for gold. Over the past few months, there have been rumours of bullion bank customers unable to redeem their gold.4,5 While, at the same time, physical demand in Asia has been extremely strong this year.6,7 According to the World Gold Council (WGC), Indian imports should reach 230-400 tonnes in Q2 2013 (an increase of more than 200% year-over-year) and imports from China keep breaking records (the WGC now forecasts total Chinese imports of 880 tonnes for 2013).8 This is reflected in the large premium customers in these markets pay over the “London Fix”, the price one should be able to get for physical gold. One way to measure the extent of the demand imbalance for physical gold in Asia is to look at what has been termed the “Shanghai Premium”, which is the difference between the quoted physical gold price on the Shanghai Gold Exchange and the London Fix gold price. Figure 3 above shows a weekly time series of the Shanghai premium in USD/oz. of gold. Since the beginning of the year, the Shanghai premium has been consistently above zero and historically large, reaching more than $50 per oz.
FIGURE 3: SHANGHAI PREMIUM (GOLD, $/OZ)
Source: Bloomberg. Last Observation: May 28, 2013 (Week 22).
Definition: Shanghai Gold Exchange Au9999 Gold (USD) minus London Gold Market Fixing Ltd - LBMA AM Fixing Price/USD.
“The Shanghai Premium is calculated on a weekly basis. Formula: (SHGF9999 Index * CNYUSD Curncy * 31.1g/oz) - GOLDLNAM Index”.
Source: Bloomberg. Last Observation: May 28, 2013 (Week 22).
Definition: Shanghai Gold Exchange Au9999 Gold (USD) minus London Gold Market Fixing Ltd - LBMA AM Fixing Price/USD.
“The Shanghai Premium is calculated on a weekly basis. Formula: (SHGF9999 Index * CNYUSD Curncy * 31.1g/oz) - GOLDLNAM Index”.
PUTTING THE PIECES TOGETHER
It is clear that demand for physical gold in Asia is strong and that the price of gold in these markets is well above the “Western” price. This creates arbitrage opportunities for market participants that have access to large and cheap quantities of physical gold in the West. The bullion banks happen to be the only ones able to redeem GLD shares for gold, and the GLD, with its 1,000 tonnes of inventory, acts like a large physical gold bank.
FIGURE 4: SHANGHAI PREMIUM ($/OZ) AND GLD FLOWS
Source: Bloomberg, SPDR Gold Trust, Sprott Calculations.
Note: Shanghai Premium shown as a 3-month Moving Average GLD flows are rolling cummulative flows over 3 months
Source: Bloomberg, SPDR Gold Trust, Sprott Calculations.
Note: Shanghai Premium shown as a 3-month Moving Average GLD flows are rolling cummulative flows over 3 months
According to the GLD prospectus, the bullion banks can create or redeem units for as little as 10bps (0.10%). Even with transport and insurance costs (which are arguably lower for large transactions and large international banks), there is a clear arbitrage opportunity for the bullion banks when the Shanghai premium (or any other physical gold price premium in emerging markets) is as large as it has been recently.
Moreover, because of the intense demand for physical gold we have seen so far this year, it is very probable that the bullion banks themselves are in a shortage of physical gold, hence the need to use the GLD reserves.
Indeed, since 2005, there has been a strong negative correlation between GLD flows and the Shanghai Premium (-53%) (Figure 4 above). This means that large outflows (redemptions) from the GLD are typically associated with high premiums in the Shanghai gold market. This association has been particularly marked since the beginning of the year, with historically large outflows corresponding to an all-time high in the Shanghai premium.
To conclude, the evidence presented here suggests that, contrary to what has been stated in the financial press, the flows out of the SPDR Gold Trust may have been generated by the bullion banks to take advantage of an arbitrage opportunity in the physical market. This arbitrage opportunity occurred because of the intense demand for gold stemming from Asia and the inability of traditional suppliers to provide this gold (hence the large Shanghai premium). We believe that this activity further supports our hypothesis that there is a lack of availability of physical gold and an obvious dislocation between the physical and paper gold markets.
In these conditions, it is not hard to imagine that prior to April 15, the bullion dealers, with their large resources, were tempted to sell large amounts of gold futures in order to lower the spot price and make the arbitrage even more profitable by increasing the spread and sparking a tsunami of buying in Asia.
To us, this is clearly a bullish signal for gold.
1 http://www.bloomberg.com/news/2013-05-22/gold-etp-outflows-in-2013-topadditions- over-past-two-years-1-.html
2 We say approximately 1 in 11 years because a -9% move is about a 7 standard deviations change and, given that gold price returns follow a Student distribution with about 5 degrees of freedom, this should happen every 10 years (or 2800 trading days). Some have proclaimed that it is a much rarer event, but this would assume that gold prices follow a normal distribution, which is simply false.
3 The bullion banks are: the Bank of Nova Scotia РScotiaMocatta, Barclays Bank PLC, Credit Suisse, Deutsche Bank AG, Goldman Sachs International, HSBC Bank USA, N.A., JPMorgan Chase Bank, N.A., Mitsui & Co Precious Metals Inc., Merrill Lynch International Bank Limited, Soci̩t̩ G̩n̩rale and UBS AG.
4 http://poorrichards-blog.blogspot.com.au/2013/05/clients-denied-gold-atmajor- banks-as.html
5 http://truthingold.blogspot.co.uk/2013/04/the-global-fractional-paperbullion_ 6103.html
6 http://sprottgroup.com/thoughts/articles/where-is-the-gold-coming-from/
7 http://sprottgroup.com/thoughts/articles/the-golden-answer-to-chineseimport- data/
8 http://www.reuters.com/article/2013/05/29/gold-demand-wgcidUSL5N0E93U920130529
2 We say approximately 1 in 11 years because a -9% move is about a 7 standard deviations change and, given that gold price returns follow a Student distribution with about 5 degrees of freedom, this should happen every 10 years (or 2800 trading days). Some have proclaimed that it is a much rarer event, but this would assume that gold prices follow a normal distribution, which is simply false.
3 The bullion banks are: the Bank of Nova Scotia РScotiaMocatta, Barclays Bank PLC, Credit Suisse, Deutsche Bank AG, Goldman Sachs International, HSBC Bank USA, N.A., JPMorgan Chase Bank, N.A., Mitsui & Co Precious Metals Inc., Merrill Lynch International Bank Limited, Soci̩t̩ G̩n̩rale and UBS AG.
4 http://poorrichards-blog.blogspot.com.au/2013/05/clients-denied-gold-atmajor- banks-as.html
5 http://truthingold.blogspot.co.uk/2013/04/the-global-fractional-paperbullion_ 6103.html
6 http://sprottgroup.com/thoughts/articles/where-is-the-gold-coming-from/
7 http://sprottgroup.com/thoughts/articles/the-golden-answer-to-chineseimport- data/
8 http://www.reuters.com/article/2013/05/29/gold-demand-wgcidUSL5N0E93U920130529
Big mines off line recently......
http://www.tfmetalsreport.com/blog/4758/not-so-happy-tuesday
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Finally, I don't know if you've noticed but lately there sure have been a lot of big mines that have been taken off-line.
- There are the well-documented delays at Barrick's Pascua Lama:http://www.bloomberg.com/news/2013-06-03/barrick-says-pascua-lama-output-delayed-past-2014-target.html
- Then we had the massive landslide at Rio Tinto's Kennecott mine in Utah:http://www.news.com.au/world-news/huge-landslide-shuts-kennecott-utah-coppers-bingham-canyon-mine/story-fndir2ev-1226619124124 & http://silverdoctors.com/10-of-us-annual-silver-supply-just-vaporized/
- And now we have this. Freeport's Grasberg mine in Indonesia, the largest gold mine in the world, has been ordered closed for at least 3 months as Indonesian authorities do a safety inspection. http://www.adelaidenow.com.au/business/indonesia-orders-us-owned-mine-to-halt-production/story-fndbbp4c-1226656569293 & http://seekingalpha.com/article/1476581-biggest-gold-mine-in-the-world-shutdown-is-this-the-catalyst-gold-has-been-awaiting
So, now, what to make of all this? Well, if you believe that everything is hunky-dory and that there are no supply issues in gold, then this is no big deal. After all, even though The Grasberg mine is the largest in the world, it still only produces about 30 metric tonnes per year or a little over 1% of all global mine production.
If, on the other hand, you think that the Bullion Banks are living hand-to-mouth and frantically trying to keep their Fractional Reserve Bullion Banking system alive, then it is a big deal. A very big deal.
That's a lot of gold...a lot of currently anticipated and expected supply that isn't coming.How much of this production was already sold forward into the market? And if it was already sold forward, what happens when it fails to materialize on schedule? Hmmmm. Could that lead to those contracts being covered? Could it lead to some new long purchasing as a hedge against supply delays, not only from the suppliers but from the end-users, as well? And with the current CoT structure in gold being akin to an overgrown and dried out California ravine just waiting for a spark...
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http://silverdoctors.com/chart-of-the-day-gold-premiums-in-china-spike-to-120-up-nearly-5-fold-since-april/#more-27381
CHART OF THE DAY: GOLD PREMIUMS IN CHINA SPIKE TO $120, UP NEARLY 5 FOLD SINCE APRIL
Today’s chart of the day examines gold premiums in China in the wake of the April smash. In late April when Jim Willie stated that physical gold was trading at a massive premium in Asia, many readers scoffed. As the Bloomberg chart below demonstrates, 
http://jessescrossroadscafe.blogspot.com/2013/06/gold-daily-and-silver-weekly-charts_4.html
04 JUNE 2013
Gold Daily and Silver Weekly Charts - Comex Puts Disclaimer On Its Precious Metals Warehouse Inventory
It was a dull day in the metals trade.
Early this morning a friend sent me a note saying that the CFTC had put a disclaimer on its warehouse inventory report. At first I though it was a joke or some hoax. He sent me the links to their site, and I saw that it was true.
"The information in this report is taken from sources believed to be reliable; however, the Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness. This report is produced for information purposes only."My reaction to this from earlier today is here.
While I might agree that Comex is not a primary source of bullion purchasing, it is the gold and silver bullion they hold that is the basis of their trade. It is not supposed to be a pure exercise in paper pricing.
And the timing of this is a definite eyebrow-raiser given all that is happening with regard to the opaque short positions, the record lows in inventory that is reported, overall tightness in global physical supply, and the recent decision by the Hong Kong Exchange to force settle in cash and fold up its trading table.
The US Comex is the major price setting mechanism for gold and silver in the world.
Shocking to say the least, especially since this looks like the kind of statement that an attorney might suggest to an organization that was concerned about their ability to deliver on contracts out of existing inventory according to the terms of their agreements. It drops any pretense to inventory controls and audits.
Amazing how simple it can be to communicate with people and have them understand a certain topic, you made my day.
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