The COMEX will default in the next week or several weeks

Discussion in 'Bullion Investing' started by SilverForLife, Apr 17, 2013.

  1. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    Every Comex warehouse certificate is backed by a numbered bar. Every owner can decide to take possession if they wish. I don't see it as a problem.
     
  2. Avatar

    Guest User Guest



    to hide this ad.
  3. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    I've been very busy lately. Apparently, my absence caused the metals markets to collapse, but now that I'm back, they can resume the bull market. ;)
     
  4. medoraman

    medoraman Supporter! Supporter

    Starting to look a little more interesting at these levels, don't you think? Not a buyer yet, but paying attention now. Provided you physically can buy at these levels, which I think would take a couple of more months at least. At least I see a vendor online is now offering ASE's in the low 27's, still high but better.
     
  5. desertgem

    desertgem Senior Errer Collecktor

    On a local note, last night at a coin club meeting, the auction material was from a large San Diego area B&M, and the premium on Canadian Maple Leaf silver was $2.25 +spot. Same for Mexican Libertads, spot + $2.25. Silver rounds were less, but I forget how much as I just bought a tube of the Maples and 4 Libertads. Also bought a 1/4 AGE at spot + $28. There was silver left on the table as some see lower, but the coins were excellent, not just beat up ones.

    Jim
     
  6. InfleXion

    InfleXion Wealth Preserver

    Having a numbered bar doesn't mean anything when they re-use the same numbers for multiple certificates. It is commonly known that they have less than 2% of the metal for all their contracts, at least with precious metals. There would be no need to track the physical metal they have if every certificate was 100% backed, which is simply not the case.
     
  7. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    It's getting close. My maximum buy price for silver is still $20, but I might dabble in the mining stocks if it goes much lower.
     
  8. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    I've never seen any credible report indicating that any comex warehouse certificates were fraudulent. The certificates list the number and weight, and it is unlikely to find two duplicate bars since very few bars are exactly 1000 ounces. I don't think it is relevant that many contracts are unbacked since it is mostly paper trading settled in cash. The only thing that matters is that the physical side is handled honestly - and it has been in every case so far.
     
  9. InfleXion

    InfleXion Wealth Preserver

    I suppose credibility is in the eye of the beholder. I have been over this with mikem2000 before and provided a couple examples, but the first and foremost I would point to is Adrian Douglas's congressional testimony that the silver market is over 50 times leveraged paper to physical.
     
  10. medoraman

    medoraman Supporter! Supporter

    I wouldn't disagree about the amount of leverage. However, have you ever looked at leverage percentages in other commodity markets? Most commodity markets are cash settled, leveraged markets. I think you need to understand how ALL commodity markets work, and if you did I believe it would allow you to view the silver market as not any different.

    I understand that looking at a commodity market some things might appear askew. When you understand how all of them work, silver looks like just another commodity market. Its a LITTLE different simply because of the nature of silver, but not significantly.

    I simply find the authors online who point out "facts" about pm markets take advantage of the general public's lack of understanding of these markets. PM is not a unique set of circumstances, its a little different but everything people object to strenuously ALSO apply to ALL OTHER COMMODITIES. They really aren't making up special rules just to manipulate investors, though many will never believe that.
     
  11. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    I suppose that is likely to happen with a tiny commodity like silver. But even if the physical ounces in Comex completely covered the amount traded on paper, the situation would be the same because the owners of the silver are not necessarily the same folks as the paper traders, so the traders can't use someone elses silver to cover their contracts. It is also possible that the silver used to back the contracts is stored privately and not at Comex. It becomes very complicated to analyze.
     
  12. justafarmer

    justafarmer Senior Member

    I checked silver this moring - April open interest stood at 14 - certainly the COMEX has this amount in warehouse. I guess we'll have to wait till next month for the pending default.
     
  13. InfleXion

    InfleXion Wealth Preserver

    Try looking at gold instead. Silver is only being drained from dealer inventories. Gold is what the COMEX is losing at a fever pitch.
     
  14. justafarmer

    justafarmer Senior Member

    Prior day's open interest stood for April Gold Contracts stood at 211. I believe the COMEX Warehouses can handle this also. I expect open interest to be even small by day's end. Don't April contracts expire today? I am still fairly certain we'll have to wait until at least the end of next month for that pending default.
     
  15. medoraman

    medoraman Supporter! Supporter

    Anyone have any real numbers of how many ounces have left and arrived at the Comex the last few months, as well as historical and seasonal averages? That is what would be required to support such a statement.
     
  16. sodude

    sodude Well-Known Member

    Another month without a default? That's great news for the bullion commentators because they can predict it will happen next month again.
     
  17. InfleXion

    InfleXion Wealth Preserver

    This is the best I can do for now.

    April 9, 2013:
    Comex Gold Inventories Collapse By Largest Amount Ever On Record:
    http://bullmarketthinking.com/comex-gold-inventories-collapse-by-largest-amount-on-record/

    April 24, 2013:
    Comex Physical Drain Accelerates—With Over $7.8B In Gold Disappearing From All Depositories:
    http://bullmarketthinking.com/comex...over-7-8b-disappearing-from-all-depositories/

    I'm not saying there will be a default. I'm not supporting that statement by the OP. I am simply saying that gold is the primary indicator at this time more so than silver, so I do not think looking at silver inventories is the best approach to gauge the current risk of default.

    I do expect silver to reach a shortage before gold, but people who buy silver are little fish. That's why the dealer inventories are running low and premiums are high. Gold is for big fish, so gold premiums at the dealers are still relatively low, because those people are pulling it off the exchanges instead.
     
  18. saltysam-1

    saltysam-1 Junior Member

    I always find paper trading to be interesting. It's like General Motors makes a car and its sold to five people. As long as no one plans to drive it, they just send you the title to it. If you want the car in your garage, they may send you the one car, or send you your check back and sell it to someone else. I must admit; it does sound like a bridge in Brooklyn, without the delivery, I have heard about. No offense to anyone. I own gold IShares myself.
     
  19. medoraman

    medoraman Supporter! Supporter

    Interesting. However, I would venture that the author is not taking into account how much of this gold was sitting there only because of the "bull market". Look at the graphs, there is still DRAMATICALLY more gold in the warehouses than 10 years ago. I wonder what the interaction between the bull market and such huge increases in inventory were to begin with, and now. I simply believe the author is very quick to jump to "they do not trust the COMEX warehouse" conclusion. If they didn't trust the COMEX warehouse, why did owners increase its stockpile by 800% in ten years?

    Interesting articles, and I thank you for them, I am just stuck with some questions about it, and believe the writer of the article is pretty quick with some conclusions he wishes to draw. Could it be some long term holders of gold only put them in the COMEX to profit from the bull market run, and now believe its over so taking redelivery?
     
  20. InfleXion

    InfleXion Wealth Preserver

    We can only speculate. My speculation is that anybody who believes the bull market is over has no incentive to demand physical gold. Why not just sell the paper and not demand delivery?

    It should also be noted that the larger half of the physical metal depletion was while gold was hovering around $1600 all of Q1 this year, and there was very little price action until the paper selloff. The physical outflows did not impact the price. They are rather a result of people removing their metal which has been accelerated by the now lower prices (just over half of the downtrend in supply took place in Q1 2013 as the largest quarterly outflow ever, and now that amount has been nearly equalled in just the month of April) .

    The trend is what is concerning. It's not sustainable. Maybe it will trail off, but right now it's gaining steam. Something to keep an eye on. If it doesn't trail off on its own then they will have to become physical buyers as well, and that will impact the effectiveness of the paper to control the price.
     
  21. jiggysmb

    jiggysmb Member

    Anything posted on SD is speculation to sell their products. That site has become a joke with good comments being deleted that oppose the few regulars, which I may say seem to type and mistype very similar leading me to think someone may have a multipersonality problem.
     
Draft saved Draft deleted

Share This Page