How they gonna cover the Silver?
From: Wade 6/18/2010 10:52:26 PM
of 19809
truthingold.blogspot.com
"The Comex had two large silver withdrawals this week. Yesterday's warehouse stock report showed 1.2mm ounces were removed, 900k of it from the "eligible" inventory, which is the investor inventory being "safekept" at Comex depositories but not available to be delivered.
480k of that 900k was removed from Scotia.
With all the discussion and unrefuted (by Scotia) accusations about Scotia's depository safekeeping methodologies, it wouldn't surprise me to see even more gold and silver going forward being taken out of Scotia's customer inventory.
But here's an even more glaring issue:
as of last Friday, the net commercial short position in silver, as per the COT report, was
55,329 contracts.
At 5,000 ozs/contract,
that's 276,645,000 ounces of silver sold short by the big bullion banks
(Mostly JP Morgan, HSBC and BNS - and mostly JPM at that).
What's the problem?
The total silver inventory being reported by the Comex is
118 million ounces.
But of that, 66 million is customer inventory not available for delivery,
leaving
52 million ounces of silver that can be delivered vs. 276 million of short paper silver.
Let's break it down to just July silver.
The July silver open interest is 47,921, which means that there is 239 million ounces of silver that has been shorted for July vs. the 52 million available for delivery.
See the problem?
Historically JPM could count on the longs to sell their position before first notice of delivery day or tender for cash.
If the Comex silver longs start correlating with the trend in the actual physical market, the Comex will default on silver deliveries...
A reader related to me yesterday that he had a silver bar delivery problem with the Comex about three months ago that had to be resolved using his broker's lawyer.
Our fund has experienced several delays in getting silver delivered from the Comex - with HSBC as the counterparty - over the past year.
This includes last year, when our April silver was not delivered until June 20th (7 weeks past contractual last delivery day).
Furthermore, I know that my friend who is a bullion trader here in Denver is having a hard time sourcing any kind of real supply of silver bullion on the "bid side" of the market, which means he's having a hard time finding retail sellers in any kind of size AND his buyers want silver right now. He was definitely postured as a much better buyer and was beating me up to sell him some silver eagles."
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