Friday, May 20, 2011

The Silver Fallout

Scorched earth policy by Bankers in silver

It seems to me that the bankers are undergoing a scorched earth policy as demand for physical silver explodes globally and our clever bankers continue to raid in the paper comex.  Today I wrote to Gary Gensler and Bart  Chilton at 6:30 am this morning outlining the ridiculous:  the comex sent down zero delivery notices in silver. They could not find 5000 oz of silver to deliver upon our longs and yet they flooded the comex with paper silver contracts causing the price to fall.  Today at closing time, the price of gold fell to $1490.70 for a loss of $4.30.  Silver was weak all day falling to $34.12 at comex closing time for a loss of $1.01 and then continuing its downfall to $33.70 in access trading right now.

Let us go straight to the comex and see how trading fared today:

First the gold comex:

The total gold comex open interest rose by 4044 contracts to 517,190 from Friday's reading of 513,146.
The reading today of course is basis Friday---we are always one day back with respect to open interest.  The front options expiry month of May saw its OI fall from 37 to 36 for a drop of one open interest contract.  We had one delivery on Friday so we neither gained or lost any gold and lost zero ounces to cash settlements.  All eyes will be on the June delivery month.  Today the open interest fell from 281,683 to 271,519 which is quite normal with 2 weeks to go before first day notice.  The estimated volume at the gold comex today was 116,854 which is slightly below average.  The confirmed volume on Friday was a monstrous 221,960 contracts.
The bankers were quite adamant in trying to move gold down in price on Friday and again today.

Now for silver:

The total silver comex OI surprised everyone today as it rose instead of falling.  It rose by 1873 contracts from 121,213 to 123,086.  Our bankers were not impressed that zero silver leaves left our silver tree. The next statistic is also unnerving our bankers.  The front delivery month of May somehow saw our open interest rise from 303 to 325 for a gain of 22 contracts despite 2 delivery notices on Friday.  Thus we gained in silver oz standing and lost nothing to cash settlements. The next front month of July saw the OI actually rise from 64,417 to 65,595.  The estimated volume today was good at 75,899.  The confirmed volume on Friday was huge at 126,218 contracts.

Here is the chart for 5/16/2011 regarding deliveries and inventory changes at the comex. This will be the start for the May comex month for gold and silver.

Withdrawals from Dealers Inventory
Withdrawals fromCustomer Inventory
364 oz (HSBC, Manfra)
Deposits to the Dealer Inventory
Deposits to the Customer Inventory
 2411  (Manfra)
No of oz served (contracts)  today
 1400   (14)
No of oz to be served  (notices)
 2200 (22)
Total monthly oz gold served (contracts) so far this month
 37700  (391)
Total accumulative withdrawal of gold from the Dealers inventory this month
Total acculumulative withdrawal of gold from the Customer inventory this month

Withdrawals from Dealers Inventory
Withdrawals from Customer Inventory
Deposits to the Dealer Inventory
Deposits to the Customer Inventory
No of oz served (contracts)  today
zero oz  (0)
No of oz to be served  (notices)
1,625,000  (325)
Total monthly oz silver served (contracts) so far this month
2,085,000  (417)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal of silver from the Customer Inventory this month.

Let us start with gold.

Again we experienced zero oz of gold enter the dealer for the umpteenth time. The customer category received a small 2411 oz of gold which entered the Manfra vault.
There were no withdrawals from of gold from the dealer.  We did see a tiny 364 oz of gold leave two vaults:  

300 oz leaving HSBC
and 64 oz leaving Manfra.

There was an adjustment whereby 1105 oz of gold was removed from a customer inventory due to a counting error.

The comex folk notified us that 14 notices were received for a total of 1400 oz of gold. The  number of notices filed so far this month total 391 or 39100 oz. To obtain what is left to be served upon, I take the OI for the front delivery month (36) and subtract out today's deliveries (14) which leaves me with 22 notices or 2200 oz of gold to be served upon.

Thus the total number of gold oz standing in this non delivery month is as follows:
39100 (oz served) +  2200 (oz to be served)  =  41,300 oz or 1.284 tonnes of gold
Friday we had a reading of: 41,300 oz so we neither gained nor lost any ounces.

And now for silver:

The dealer received zero oz of silver today.  The customer received 57,500 oz which landed in the Delaware vault.
As for withdrawals, the dealer had a small 5091 oz leave the HSBC vault.
The customer saw two transactions:

1. a huge 243,575 oz leave HSBC
2. 3000 oz leave Delaware.

total withdrawal from customer:  246,575 oz 
We did have an adjustment of 5131 oz where silver leaves the customer and enters the dealer inventory, probably a lease arrangement to settle upon some longs.

As I mentioned above, the comex notified us that we received a grand total of zero notices to deliver or zero ounces. And this is a delivery month??  In other words, the bankers supplied a huge number of non backed paper silver and yet could not find any silver to deliver upon our longs.  This is totally ludicrous. The total number of notices filed so far this month remain at 417 or 2,085,000 oz of silver. To obtain what is left to be served upon, I take the new Oi for May (325) and subtract out today's deliveries  (0) or 325 notices to be served upon  ( 1,625,000 oz)

Thus the total number of silver oz standing in this delivery month is as follows:

2,085,000 oz +  1,625,000 =   3,710,000 oz 
we had a reading of: 3,590,000 oz on Friday so we gained 120,000 oz.

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