New record on COMEX – OI to Registered Gold

As these markets get more and more strung out we start to see more telling signs of what may be in store. Back in early August we brought to your attention a record number of futures contracts per registered ounce of gold. Well that record has now been surpassed. We now have a situation on COMEX, the world’s futures platform for gold, where we have a staggering 1 ounce of registered gold backing127.6 claims on that single registered ounce. The graph below illustrates very clearly this epic set up.

Now some may say ‘but that is just registered stock, there is also eligible stock’. That is true, but consider that even then there is only less than 8m oz of eligible as well so we still have over 40m contracts for a total of little over 8m oz of gold in total when adding the measly 325,000 oz registered, immediately available gold. But there is a big difference between registered and eligible gold stocks. Hebba Investments make these insightful points:

“Of course eligible inventories could be converted into registered gold, but investors should remember that there is nothing that requires eligible gold holders to do this to satisfy delivery requests - after all there is a reason they are keeping their gold in eligible status and not available for delivery. In fact, it would make more sense for eligible gold holders not to transfer gold into registered status to satisfy delivery requests as that would mean more of an opportunity to force contract-holders to accumulate physical gold outside of the COMEX to satisfy delivery requests - an obvious way to boost the gold price and the value of their holdings…….The biggest takeaway here is that gold bulls should look at COMEX inventories as a major positive despite the gold price as gold inventories available for delivery continue to drop. That is why we think that investors should consider keeping a large exposure to gold with positions in physical gold….”

 

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Even the bullion forums ( in repeating the above) do add the following:

"The nature of futures contracts is that they expire at a given date. At that point the seller must deliver physical gold to the buyer. However as noted above, the trade in gold futures far, far outstrips that of the actual amount of gold in existence for the very reason that hardly anyone ever takes delivery of physical gold. Some 97% or so of futures contracts are either closed out for cash settlement before expiry or "rolled over" into the next month's contract. Thus paper gold trading can be perpetuated as a cash-only market.

But what if, this time, the buyers of paper gold demanded delivery? Judging by the current extraordinary demand for physical gold, it would be no surprise if many did. You could either sell the physical delivery into the physical market at a much higher price than the futures market is currently dictating or simply hold the gold because that's the asset you wanted in the first place."
http://www.silverbearcafe.com/private/12.08/exposure.html


So only 3% of the contracts are actually based on the metals. Yes , every one would go with metal delivery.....IF IT DIDN'T COST THEM MORE $$$$ to hold until the delivery date deadline. Usually about a 30 day different. So are they are saying gold bugs should buy it this way? No they know most individuals can not play with that much cash, but the bullion wholesellers can, and they are the ones trying to convince you to buy bullion single or your house payment worth , as comex is going to default and gold will go to the moon Let them attack COMEX and drive the price of gold up for you. I would bet they won't ! If the paper ratio was imbalanced, COMEX would raise the margins, they have that right. Doesn't seem to be in the works. BUT , if interest rate goes up, the bullion dealers will have to increase their premiums to carry the metal. Of course blame that on fiat also