Comex Gold
I think the most positive development we can see is for current open interest to increase significantly in Dec 08 Gold Contract. Right now open interest is only 1,557 contracts after 12,164 contracts took delivery and other contracts were settled for cash or rolled over.
nymex.com
Even if all these remaining 1,557 contracts took delivery, it would only get delivery to 50% of registered gold.
If we see open interest increase in Dec Gold to 6,000+ contracts, then COMEX going bust is a real posibility. Only reason investor would want to buy an illiquid Dec contract near backwardation is if they wanted delivery.
Not all registered gold is available for delivery as described below, an additional 6,000+ ounces should make a dent getting registered gold at COMEX to 66% taken out... That should rattle the COMEX market seeing 2/3's of their registered inventory being delivered in a single month...
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prior post:
Currently 40.7% of registered gold has been taken out.
meltdown2011.wordpress.com
TOTAL REGISTERED..... 2,918,028
TOTAL ELIGIBLE............. 5,601,840
COMBINED TOTAL......... 8,519,868
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"For those who aren’t familiar with the terminology, the registered category of COMEX warehouse bullion stocks generally refers to gold and silver bars against which COMEX warehouse receipts are outstanding. The COMEX publishes these stocks on a daily basis and they can be found here: Silver | Gold. The registered category is the total pool of gold and silver available at any time to meet delivery requirements under expiring futures contracts or to establish initial futures contract positions through a transaction called exchange-for-physicals (I’ll explain this another time). It is important to realize, however, that many parties holding COMEX gold and silver in registered form have no intention of making their holdings available for delivery. By this I mean that such parties are neither (1) holding a short futures position against the warehouse receipt nor (2) willing to sell their registered metal (warehouse receipts) to a party with a short futures position. Indeed, a substantial portion of those holding registered metal would have acquired the COMEX warehouse receipts by holding long futures positions for delivery. In other words, these registered stocks are held for investment and not for commercial purposes.
In comparison, the eligible category of COMEX warehouse bullion stocks generally refers to bullion held in the warehouses that meets the specifications of an acceptable COMEX bar (proper weight, size, purity and refiner) but does not have a COMEX warehouse receipt issued against it. For example, an investor might purchase several 1,000 oz. bars of silver from a dealer and then deliver the bars for allocated storage at a COMEX warehouse. This is a private arrangement and has nothing to do with the COMEX. Unless these bars are officially registered (the easiest way to do this is through the aforementioned exchange-for-physicals), they will remain in the eligible category until withdrawn from the warehouse by the investor. Thus, the appropriate way to treat eligible COMEX warehouse bullion stocks is that they represent metal that could potentially be registered at some point in the future but cannot presently be used to make delivery under a short futures contract." |
