| From: Black Blade | 3/20/2023 12:37:18 AM | | | | | | The Comex Is In Far Worse Shape Than SVB If The Run On Physical Accelerates....................................
Sunday, Mar 19, 2023 - 12:30 PM
Via SchiffGold.com,
Given the potential impacts of the ongoing banking crisis, I will start this article with the conclusion.
The current banking crisis could not have come at a worse time for the Comex system. Inventories have seen massive depletion over the last 2+ years as investors have slowly been pulling physical out of the vaults. I have previously called this a run on the vault but labeled it as a stealthy one. As though certain investors did not want to raise the alarm, but slowly take possession while inventory was still available.
Now that confidence in the banking system has been put to the test, people will look to alternative means to store their wealth and get their money out of the financial system. The easiest and safest way to do this would be to own physical precious metals, as people have done for thousands of years.
It is likely that demand for physical metal could increase significantly in the months ahead. The futures market is already showing a massive move in the price of gold, which is knocking on the door of $2,000. It’s only a matter of time before this moves into the physical market. When it does, the Comex vault run will pick up steam.
Investors looked at SVB and saw that it was undercapitalized and people could only get 80-90 cents on the dollar. If investors were to do the same due diligence on the Comex they would find an even worse fractional reserve system in the metals market. The recent discovery by the LME that some of their inventory was stones rather than nickel should only serve as another wake-up call that the supply of physical metal is extremely tight. If everyone rushes for physical at the same time, there won’t be nearly enough to satisfy demand at current prices (silver has 15 paper ounces per 1 physical ounce!).
We could be only months away from seeing a break in the Comex system. SchiffGold will be working all weekend to take orders. Best to get physical locked in at current prices while you still can.
Current Trends
This analysis focuses on gold and silver within the Comex/CME futures exchange. See the article What is the Comex? for more detail. The charts and tables below specifically analyze the physical stock/inventory data at the Comex to show the physical movement of metal into and out of Comex vaults.
Registered = Warrant assigned and can be used for Comex delivery, Eligible = No warrant attached – owner has not made it available for delivery.
Gold
Gold is now in its 11th straight month of net outflows, seeing 285k ounces leave the vault so far in March. The exodus of metal has slowed since last year when some months saw almost 3M ounces leave Comex vaults.
Figure: 1 Recent Monthly Stock Change
As mentioned above, this could change quickly and may already be changing! As the chart below shows, this latest week was the busiest week of outflows in the last month. Given the price of gold finished the week at $1993, the ongoing banking crisis, and general fear in the market… it seems likely that demand for physical could be ready to soar. That could drive larger outflows from Comex vaults in the near future.
Figure: 2 Recent Monthly Stock Change
Pledged gold continues to decline, but similar to the inventory at large, the drop has been slowing.
Figure: 3 Gold Pledged Holdings
Silver
Outflows in silver continue at a strong pace, seeing 3.5M ounces in outflows MTD. Registered is actually seeing inflows for the second month in a row, most likely because inventory of Registered had reached dangerously low levels. As mentioned previously, the real floor is not actually zero but somewhere higher. This is for optics to keep confidence in the fractional reserve silver trade.
Figure: 4 Recent Monthly Stock Change
Unlike gold, the outflows slowed this week. The big moves into Registered occurred just as the March silver contract started its delivery. If Registered silver was not getting close to the bottom, why did the Comex have to move 7M ounces of silver into the Registered category to handle the March delivery volume? This metal was moved specifically to handle that demand which indicates available silver stocks are getting dangerously low.
Interestingly, the metal has not flowed back into Eligible as it typically does after delivery. The data shows that it was none other than JP Morgan taking the majority of the delivery at 5.2M ounces. Perhaps JP decided to obtain silver specifically for the purpose of keeping it in Registered to inflate the numbers. This move increased JP Morgan’s total allocation of Registered from 32% to 41.6%. This means almost half of all Registered silver now sits in JP Morgan vaults… most likely for optics.
Figure: 5 Recent Monthly Stock Change
The table below summarizes the movement activity over several time periods to better demonstrate the magnitude of the current move.
Gold
- Over the last month, gold saw inventories fall by 2.1%
- Registered remains a bit higher than Eligible
- Since last year, total gold holdings have fallen by 36.8% or 12.4M ounces
Silver
- Registered has increased 19.3% in the last month
- Total Registered remains below 40M ounces and has still seen a drop of 55M ounces in the last year
Palladium/Platinum
Palladium and platinum are much smaller markets but it’s possible that is where the market breaks first.
- Palladium saw a drop of 2.7% during its delivery month
- Platinum was very quiet during the month
Platinum is heading towards its next delivery month in April. In January, Platinum looked like it could break the Comex. At the time, we highlighted they had only bought a few months. Well, we are now close to where inventory will be put to the test once again.
Figure: 6 Stock Change Summary
The next table shows the activity by bank/Holder. It details the numbers above to see the movement specific to vaults.
Gold
- 6 vaults lost gold over the month while none added
- Outflows were evenly distributed across all vaults
Silver
- JP Morgan only shows a net gain of 520k ounces, but as noted above, Registered inventories increased more than 5M ounces
- This indicates JP Morgan was moving the metal from within its own vaults
- CNT, HSBC, and Manfra all saw fairly large declines in their inventory
Figure: 7 Stock Change Detail
Historical Perspective
Zooming out and looking at the inventory for gold and silver shows just how massive the current moves have been. The black line shows Registered as a percent of total.
Inventories in gold have been falling evenly in both categories, which is why the black line has stayed relatively flat even while supplies have been crashing. It’s amazing how closely the ratio has stayed to the 50% mark. In October, the ratio reached 45%, but quickly rebounded to 50%.
In September 2019, all of the Registered stood for delivery, so it is likely this ratio is now being actively maintained to make sure confidence persists in the system. Given current market dynamics, this confidence could be put to the test.
Figure: 8 Historical Eligible and Registered
Silver has seen far more concentrated outflows from Registered, getting as low as 10.9% of total inventory in February. With the move by JP Morgan, the ratio has since recovered to 13.3%, but this is still at historically low levels compared to history.
Figure: 9 Historical Eligible and Registered
The recent “spike” can be seen on the far right side of the chart above. From this perspective, the moves by JP Morgan seem much smaller. A similar spike-up happened in March 2022 which quickly reversed as metal started flowing back out of Registered immediately after. Will 2023 see a similar pattern?
Figure: 10 Historical Registered
The LBMA had been seeing similar outflows of silver from their vault, but that appears to have stopped for now.
Figure: 11 LBMA Holdings of Silver
Available supply for potential demand
Coverage on the Comex continues to deteriorate. On Jan 26, before the recent sell-off in gold, the amount of paper gold for each Registered physical ounce was 4.6. That is the highest level since July 2020, right before all the new supply was added. The ratio now sits at 4.2, but the drop has mainly been driven by a fall in Open Interest rather than a surge in inventory.
Figure: 12 Open Interest/Stock Ratio
Coverage in silver is far worse than gold. The paper to Registered physical ratio reached 22 ounces on Feb 2nd. It had drifted lower to 19.5 and then after JP Morgan stepped in, the ratio dropped to 15.4.
This means that after the move by JP Morgan, there are still 15 paper contracts for every physical ounce of metal available.
Figure: 13 Open Interest/Stock Ratio |
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| From: Black Blade | 3/20/2023 8:07:25 AM | | | | | | Gold tops $2,000 on flight to safety after Credit Suisse collapse
Commodities 1 hour ago (Mar 20, 2023 06:22AM ET)
By Geoffrey Smith
Investing.com -- Gold prices topped $2,000 for the first time in 11 months on Monday, as the collapse of Credit Suisse (SIX:CSGN) stoked fears of wider financial instability and drove investors to haven assets.
Gold futures in Europe rose as high as $2,014.90 an ounce, before retracing to be at $1,990.65/oz by 06:00 ET (10:00 GMT), up 0.7% on the day.
Haven assets such as bullion have performed strongly in the last three weeks, as three mid-size U.S. banks have collapsed, followed by Credit Suisse, a bank deemed by regulators to be a Global Systemically Important Bank (G-SIB). Credit Suisse is by far the largest bank to collapse in the last decade.
The rise in financial stability has convinced a growing number of investors that central banks will have to halt their interest rate hikes, for fear of triggering a broader financial sector crisis. That has brought bond yields down sharply, raising the relative attractiveness of gold, which doesn't bear interest.
Two-year bond yields, which are typically sensitive to interest rate expectations, extended their sharp drop in morning trading in Europe. By 05:00 ET. the benchmark 2-year Treasury note was down 9 basis points to 3.76%. It's now fallen 1.3 percent in the last two weeks. In Europe, meanwhile, the 2-year German note yield was down 20 basis points at 2.24%. It has fallen 1.2 percent since concerns about banks in the U.S. and Europe started to take center stage.
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| To: Black Blade who wrote (29602) | 3/20/2023 1:00:13 PM | | From: dara | | | | This move increased JP Morgan’s total allocation of Registered from 32% to 41.6%. This means almost half of all Registered silver now sits in JP Morgan vaults… most likely for optics.
Incredible! |
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| To: dara who wrote (29604) | 3/20/2023 8:21:03 PM | | From: Black Blade | | | | JP Morgan has a long history of Silver market manipulation and has been hit with lawsuits and penalties over the years. It doesn't seem to phase them one bit as they just keep on manipulation the price of Silver by "papering over" the market with "paper silver" contracts (not physical silver) because there simply isn't enough silver to cover if the counter parties ever called in their positions. This is partly due to rules put into place when the Hunt Brothers cornered the silver market in the 1980s. The regulators simply changed the rules on them and caused the Hunt Brothers to declare BK as a result. There is no true "free market" in commodities anymore unless investors demand delivery of the underlying commodity. Even then, the regulators changed the rules making it possible for market makers like JP Morgan to pay off in USDs rather than actually delivered the (non-existent) physical Silver.
I just buy and hold the physical PMs and have my own personal "central bank" should the economic and banking crises keep destroying wealth. As they say "if you don't hold it you don't own it".
- BLACK BLADE |
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| From: Black Blade | 3/25/2023 12:19:13 AM | | | | | | "It's Getting Real": Unease Over Banking Sector Turmoil Spurs Huge Demand For Physical Precious Metals
Friday, Mar 24, 2023 - 11:11 AM
Authored by Allan Stein via The Epoch Times (emphasis ours),
Coin Heaven co-owner Gabe Wright saw precious metals demand rise to new heights during the pandemic, but nothing as spectacular as Silicon Valley Bank’s (SVB) collapse.
“It’s getting real,” Wright said, standing behind the glass showcase filled with various silver and gold bullion, coins, jewelry, and sterling in his busy Cottonwood, Arizona, shop on March 20.
“On a dime, it turned around—big time. It’s unprecedented,” he said. “We’ve seen the demand high, but not like this. Of course, SVB started this phase we’re in.”
Gabe Wright, co-owner of Coin Heaven in Cottonwood, Ariz., holds gold and silver coins, two of the hottest selling items on March 20, 2023. (Allan Stein/The Epoch Times)
And where the buying phase—more like a buying frenzy—ends up is anybody’s guess, Wright said.
U.S. coins minted with 90 percent silver, known as “junk silver,” were in high demand at Coin Heaven in Cottonwood, Ariz., on March 20, 2023. (Allan Stein/The Epoch Times)
Once regarded as a “barbarous relic” by the Wall Street financial sector, gold and silver are now in heavy demand to hedge against inflation and financial risk.
Wright said retail demand for precious metals could soon outstrip supply, and if more banks fail, to expect a full-blown “panic.”
He agreed that U.S. Treasury Secretary Janet Yellen didn’t help matters by not announcing a government bail-out for SVB after depositors withdrew $42 billion in early March, spurring the bank’s collapse.
The Federal Deposit Insurance Corporation (FDIC) insures depositor accounts up to $250,000.
Almost immediately after the run on SVB, people began buying gold and silver on the spot market, putting the squeeze on coin and bullion dealers large and small.
As of March 20, gold was on sale at $1,979 per troy ounce, and silver at $22.51 per ounce.
One troy ounce weighs 31.10 grams or 1.1 regular ounces.
Buy Low, Sell High
In November 2011, an ounce of gold rallied to a multi-year high of more than $2,000 while silver soared to almost $50 an ounce before the bull run on precious metals corrected to new lows.
Wright, whose uncle started Coin Heaven in 1985, said that demand for precious metals was robust during COVID-19.
“But after that bank fell, it created quite a panic, and people wanted to get their funds out of banks and into something real and tangible—gold and silver,” Wright told The Epoch Times.
“It’s something you own. There’s no third party involved. It’s solely yours.”
Galina Suvorova, owner of Galina Fine Jewelers in Cottonwood, said business has been steadily increasing since the fall of SVB, and “there’s more interest in bullion—specifically, bullion and coins.”
Read more here... |
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| From: Black Blade | 3/25/2023 12:21:12 AM | | | | | | Platinum seen at $1500 by year-end amid South African power crisis - BofA
Commodities 10 hours ago (Mar 22, 2023 01:02PM ET)
By Barani Krishnan
Investing.com - Platinum prices are expected to rise to $1,500 an ounce by year-end, underpinned by the power crisis in South Africa as chronic electricity outages undermine one of the world's largest operators of mines, Bank of America said in an investors' note Wednesday.
"Power supply [is a] long-standing issue for South African miners," analysts at BofA Securities wrote in the note. "The power situation in South Africa has gained attention as power cuts have become more frequent."
South Africa is a key platinum supplier with a global market share of 75% and it wasn't surprising that platinum prices have remained resilient amid the nation's power crisis, the note pointed out.
Hosting Robert Baxter, CEO of South Africa's Minerals Council, to a fireside chat on the power crisis, BofA said it will take time to ensure stability in the country's electricity supply.
"Bringing power plants back from maintenance, solar water heaters and PV panel systems are among the options to alleviate pressure on the grid. In the medium term, the private sector must bring on capacity," BofA said.
In the meantime, national power Eskom needs to fix its asset base and sell all concessions of power generation capacity that it can't run, BofA said, adding: "Self-generation of power is [a] critical solution for miners."
Given that the crisis won't be resolved anytime soon, BofA said it was optimistic of a large rally in platinum prices by December.
"As such, we remain constructive on platinum and see prices rallying to $1,500/oz by year-end," the BofA note.
Platinum futures on New York's Comex were trading at just over $990 an ounce by 12:45 ET (16:45 GMT). |
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| To: Black Blade who wrote (29606) | 3/25/2023 2:04:40 AM | | From: nicewatch | | | | Saturday March 11, the day after SIVB was seized by the government, Apmex had a record day for Saturday silver sales by ~50% and over 300% above average. For gold it was a Saturday record by ~30% and over 200% above average.
The CEO of bullion dealer Miles Franklin recently said they did about 10% of their entire 2022 sales in the week following the SIVB collapse. |
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| From: Black Blade | 4/14/2023 4:24:27 PM | | | | | | Gold and Silver Surge On Recession Worries and a Dollar Decline ........................................................................................................
Last week, gold and silver saw gains as recession worries persisted. The pair had plenty of tailwinds throughout this week in a declining dollar, continued recession fears, and rate hike bets. In terms of economic news, investors anticipated consumer and wholesale inflation data, which was due out Wednesday and Thursday, respectively.
Gold slipped below the $2,000 level on Monday, as the dollar index ticked higher and investors digested a U.S. jobs report from the prior Friday, showing 236,000 new jobs in March.
Stocks in the U.S. were mixed on Tuesday, as investors anticipated the release of CPI and PPI data. On the same day, the dollar edged lower which cleared the path for a 1% gold uptick to $2,018. On Wednesday, data showed that consumer prices increased by 0.1% in March, which was the smallest uptick for that index in three months. The core rate of inflation, which does not include food and energy, was up by 0.4% in March.
While inflation still rose in March, gains were largely in line with expectations. For some, this meant that the Fed was more likely to pause its current rate hike campaign. In his speech, Chicago Fed President Goldsbee suggested the central bank should be cautious with future rate hikes, especially considering recent banking sector struggles. Some other Fed officials are still favoring a 0.25% rate at the next policy meeting on May 3rd.
Meeting from the Fed’s March 21-22 meeting were also released on Wednesday. The minutes showed that officials remained concerned about inflation, tighter credit conditions, and a recession later in 2023. Recession worries weighed on Wall Street sentiment throughout Wednesday, as The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all ended the day lower.
Gold and silver momentum persisted through Thursday, as the dollar continued its downward trend, and recession worries intensified. Gold neared a fresh all -time high and would end the day 1.6 % higher, at $2,044. Meanwhile, silver managed to breach $26 for the first time in nearly a year.
This morning, gloomier economic news once again drove U.S. equities lower. Data released this morning showed retails sales slid lower by 1% in March, when a 0.5% decline was forecasted. Meanwhile The University of Michigan consumer sentiment survey showed that Americans remain worried about persistent inflation. Despite this morning’s dip, all three major averages are currently on track for small weekly gains.
Gold pulled back from its recent highs this morning as the dollar bounced. Currently, the yellow metal is near $2.003, which is 0.5% higher for the week. Silver is currently eying a 2.2% weekly uptick, at $24.78 an ounce. |
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| From: Black Blade | 4/26/2023 12:54:42 AM | | | | | | What Strong Gold Says About The Weak Dollar ........................................
Tuesday, Apr 25, 2023 - 09:30 AM
Authored by Ruchir Sharma, op-ed via The Financial Times,
The US has been weaponising its currency - but that comes with a cost...
Today commentators overwhelmingly agree that a weakening US dollar cannot possibly lose its status as the world’s dominant currency because there is “no alternative” on the visible horizon. Perhaps, but don’t tell that to the many countries racing to find an alternative, and such complacency will only accelerate their search.
The prime example right now is gold, up 20 per cent in six months. Surging demand is not led by the usual suspects — investors large and small, seeking a hedge against inflation and low real interest rates. Instead, the heavy buyers are central banks, which are sharply reducing their dollar holdings and seeking a safe alternative. Central banks are buying more tons of gold now than at any time since data begins in 1950 and currently account for a record 33 per cent of monthly global demand for gold.
This buying boom has helped push the price of gold to near-record levels and more than 50 per cent higher than what models based on real interest rates would suggest. Clearly, something new is driving gold prices.
Look closer at the central bank buyers, and nine of the top 10 are in the developing world, including Russia, India and China. Not coincidentally, these three countries are in talks with Brazil and South Africa about creating a new currency to challenge the dollar. Their immediate goal: to trade with one another directly, in their own coin. “Every night I ask myself why all countries have to base their trade on the dollar,” Brazilian president Luiz Inácio Lula da Silva said recently on a visit to China, arguing that an alternative would help “balance world geopolitics”.
Thus the oldest and most traditional of assets, gold, is now a vehicle of central bank revolt against the dollar. Often in the past both the dollar and gold have been seen as havens, but now gold is seen as much safer. During the short banking crisis in March, gold kept rising while the dollar drifted down. The difference in the movement of the two has never been so large.
And why are emerging nations rebelling now, when global trade has been based on the dollar since the end of the second world war? Because the US and its allies have increasingly turned to financial sanctions as a weapon.
Astonishingly, 30 per cent of all countries now face sanctions from the US, the EU, Japan and the UK — up from 10 per cent in the early 90s. Until recently, most of the targets were small. Then this group launched an all-out sanctions attack on Russia for its invasion of Ukraine, cutting off Russian banks from the dollar-based global payment system. Suddenly, it was clear that any nation could be a target.
Too confident in the indomitable dollar, the US saw sanctions as a cost-free way to fight Russia without risking troops.
But it is paying the price in lost currency allegiances. Nations cutting deals to trade without the dollar now include old US allies such as the Philippines and Thailand.
The number of countries with central banks looking at ways to launch their own digital currency has tripled since 2020 to more than 110, representing 95 per cent of the world’s gross domestic product.
Many are testing these digital currencies for use in bilateral trade — another open challenge to the dollar.
Though some doubt a dominant dollar matters for the US economy, high demand for the currency in general tends to lower the cost of borrowing abroad, a privilege America sorely needs today. Among the top 20 developed economies, it now has the second highest fiscal and current account deficits after the UK and the second highest foreign liabilities (as reflected in its net international investment position) after Portugal.
The risk for America is that its overconfidence grows, fed by the “no alternative” story. That narrative rests on global trust in US institutions and rule of law, but this is exactly what weaponising the dollar has done so much to undermine. It rests also on trust in the country’s ability to pay its debts, but that is also slipping, as its reliance on foreign funding keeps growing. The last line of defence for the dollar is the state of China, which is the only economy sufficiently large and centralised to challenge US currency supremacy — but even more deeply indebted and institutionally dysfunctional.
When a giant comes to rely on the weakness of rivals, it’s time to look hard in the mirror. When it faces challenges from a “barbaric relic” such as gold and new contenders like digital currency, it should be looking for ways to strengthen trust in its finances, not taking its financial superpower status for granted.
* * *
Ruchir Sharma is chair of Rockefeller International |
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