Monday, November 29, 2010

Baby Wants A Rocket Ride

Harvey Organ reports on Gold and Silver open-interest in the December contract as first notice day arrives:

Let us start with the gold comex:

The total open interest for all future months lowered by 8329 contracts to 599,335. It seems that there must have been some short covering by the bankers.

The key number is the open interest for the front month of December and the final reading for today (basis Friday) was 59,412. That means that 5.9 million oz of gold are standing as of Friday night.

The long holders had to place their entire 100% of money for a gold contract if they wanted to stand for delivery. This will be very exciting to watch.

The estimated volume for today was a very spectacular 269,920 contracts. The confirmed volume for Friday turned out to be a rather robust 265,518.

Now for silver:

The total open interest for silver remained relatively constant at 137,130 for a drop of only 814 contracts. It seems that the demand for these contracts was unending.

The total open interest for the front month of December and by far the most important number of the day, came in at 17,208 or 86.19 million oz of silver. Friday's number in OI was 28,268 so the drop was around 11,000 contracts which was very small as we entered first day notice today. The estimated volume for today was 125,092 which is huge for the end of November. The confirmed volume for Friday was also a very high 114,395.

The Comex May Have A Problem...
The Golden Truth
I have to allow for the typical accounting revisions that the Comex sometimes makes a day later. BUT, right now based on the o/i for gold and silver, the Comex is potentially insolvent.

Friday being the day before first notice, anyone with an account not funded to take delivery of a long position has to either sell or be liquidated by the end of last Friday's access session. I know this because I had a silver position liquidated a few years ago when I forgot what day it was lol. Any open long positions as of this morning are capable of taking delivery of gold and silver.

With that said, the open gold o/i as of this morning is 59,412 contracts. This translates into 5.9 million ounces. The Comex gold inventory shows only 2.6 million ounces of gold registered and approved for delivery. There is a total of 11.4mm ounces.

In silver, there are 17,208 open contracts. This translates into 86 million ounces. The Comex reports 48.5 million ounces available and approved for delivery, 107.2 million total ounces.

What does this mean, in the context of the cartel being unable to force liqidate a majority of the open gold/silver positions? Everyone reading this can use their imagination and I'm not willing to predict how this will unfold, but right now the Comex has a problem.

Clearly the hated CRIMEX goons are in over their heads. To say they are in a heap of sh*t would be an understatement. All eyes will be glued to their Precious Metals quote sources tomorrow as this impending CRIMEX default scenario unfolds. Be right and sit tight folks. Baby wants a rocket ride.

An interesting side note: at 11PM est the Chinese Yuan is trading at 6.66 vs the US Dollar.

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