Sunday, May 4, 2014

US Mint Coin Sales YTD: Gold Weaker and Silver Stronger

Sales of gold Eagle and Buffalo coins by the US Mint have been very slow this year.  Year to date sales are down 58% from 2013 and 7% from 2012.  Gold coin sales in April 2013 we exceptional.  Sales have not been this slow since 2008.  Is demand weak or supply constrained?  Sales have been increasing each month since January.  





























Silver Eagle sales on the other hand have been very strong.  Year to date sales of 18.5 million coins are 1% more than in 2013 and a record.  2014 sales were off to a slow start in January because 2014 silver Eagles were released in smaller allotments over a longer time than in previous years.

















Friday, April 4, 2014

US Mint Coin Sales YTD: Gold Weak and Silver Strong

Sales of gold Eagle and Buffalo coins by the US Mint are off to a very slow start in 2014.  Year to date sales are down 46% from 2013.  Gold coin sales have not been this slow to start a year since 2008.  Is demand weak or supply constrained?  Sales are off to a strong start in April.  Only 4 days in, April sales are already more than half of March sales.



























Silver on the other hand is off to a very strong year.  Year to date sales are only 2% less than 2013, which was a record year.  2014 sales were off to a slow start in January because 2014 silver Eagles were released in smaller allotments over a longer time than in previous years.



























http://www.usmint.gov/about_the_mint/index.cfm?action=PreciousMetals&type=bullion

Thursday, April 3, 2014

COMEX Gold Futures: 2,642 Apr-2014 contracts settled on the first day!

More April contracts file than Feb contracts
On Monday 6,015 contracts filed which is slightly more than the 5,920 Feb-2014 contracts that filed on first notice day.  Surprisingly almost all 6,486 of the open interest from last Friday filed on Monday.  And, then on Monday 2,642 contracts settled.  That's a lot of gold changing hands on the first day.  

On first notice day for the Feb-2014 contract only 55 contracts settled.  And, it took 7 business days for over 2,600 contracts to settle.   Only 68 contracts settled on first notice day for the Dec-2013 contract.  

Why the big rush?
It is the short who must file and 'deliver' the metal.  And therefore I presume that the short has until the end of the contract month to obtain and present the requisite warrants.  I need to re-read the CME rule book to confirm this - or maybe you can.  The JP Morgan house account has issued 59% of the warrants month to date.  Bank of Nova Scotia has been the largest recipient or stopper of this gold.  Why did Scotia need this gold so soon?  And, why did JP Morgan give it to them?

Is JP Morgan's Powder Running Dry?
In Dec 2013 JP Morgan house account stopped 6,254 gold contracts after issuing multiples of that during Q2 2013.  Year to date JP Morgan house account has issued 4,323 which is almost 70% of the gold stopped in December.  Could the JPM house account be down to less than 200,000 ounces?  Maybe.  But I wouldn't be on it, because JPM can always get more.  Rumor is that Ukraine is 'sold' out, but there are other opportunities.  And some believe that JPM is a front for the Fed.  And the Fed is believed to still have physical control of a few thousand tons.

COMEX gold inventory has been growing lately.  I expect to see some significant withdraws soon given the rush in recent settlements.  Why rush if you are planning to keep you gold in the system?

Sunday, March 30, 2014

COMEX Gold Futures: April Open Interest Still less than February's

OI for Apr-2014 Lower than that for Feb-2014 Contract
The April and February Gold futures contracts are very popular on the COMEX.  As of last Friday, open interest (OI) in the Apr-2014 contract is 6,473 contracts.  There is 1 more weekday until first notice.  In January with 1 more day until first notice, open interest in the Feb-2014 contract was 8,993.  Also, in November 2013, with 1 day to go for first notice day the open interest for Dec-2013 gold contracts was 33,656.  However use caution when comparing to the December contract because it is typically by far the largest settlement month of the year.

OI for Apr-2013 Dropped on Friday

The chart below shows that for most of April open interest had been consistently higher during March for the Apr-2014 contract than it was during January for the Feb-2014 contract.  On Friday, however, open interest dropped below that of the Feb-2014 contract with one week day to go before first notice.















Forecast 3,000 Apr-2014 Contracts to File on First Notice Day
At the end of January 5,865 Feb-2014 contracts filed for settlement on first notice day, which was about 3,000 contracts less than open interest from the previous day.  We will probably see a similar decline in open interest on Monday, so expect about 3,500 Apr-2014 contracts to file on Monday.

Inventory was Sufficient for April
COMEX registered gold inventory of 637,592 ounces appears to be more than enough to settle only 3,000 contracts for 300,000 ounces.  Registered gold inventory is almost 200,000 ounces higher than before February when 5,865 contracts were settled.  Also, eligible gold inventory has grown by 594,436 over the last 2 weeks and is now 5% more than at the end of January.

Why all the Recent Deposits to Inventory?
All the recent deposits to eligible inventory are curious, because the gold is apparently not necessary for April settlements.  Perhaps current gold inventory is in the 'wrong' hands.  If the short, who must deliver gold in the settlement process, does not own the gold in inventory then the amount of inventory is irrelevant.  Or perhaps the bullion banks are preparing for a future month.  June is typically a big month.  Or perhaps an owner is demanding a large withdraw and recent deposits are to offset the impact.  Or perhaps the current dip in prices is being used to un-rehypothecate current inventory.  Time will tell.  Although we will probably never get to know 'the rest of the story' - good day!.

Saturday, March 22, 2014

COMEX Gold Futures: April Open Interest less than February's


The April and February Gold futures contracts are very popular on the COMEX.  As of last Friday, open interest (OI) in the Apr-2014 contract is 126,502 contracts.  There are 6 more weekdays until first notice.  In January with 6 more days until first notice, open interest in the Feb-2014 contract was 128,788.  Also, in November 2013, with 6 days to go for first notice day the open interest for Dec-2013 gold contracts was 149,434.  Comparisons to December are difficult, however because December is typically by far the largest settlement month of the year.

The chart below shows that, until today, open interest had been consistently higher during March for the Apr-2014 contract than it was during January for the Feb-2014 contract.  The average difference over the last 11 week days is 6%.  















The bullion banks seem to have the upcoming settlement month of April well under control.  Open interest is comparable to that for Feb-2014.  Registered gold inventory is much higher now now than before the February settlement month; 632,592 ounces last Thursday versus 370,137 6 days before first notice day for Feb-2014.  And, the COMEX still has about 10 times as much eligible gold in inventory as registered gold.  Total registered and eligible gold in COMEX inventory is down 7% from the end of January.

Until today . . . . Everything is fine and normal until the curtain is pulled back.  He was just an ordinary guy, eatin' Barbeque, nothing exciting about him . . . until today!!!






   

Saturday, March 15, 2014

COMEX Gold Futures: April Open Interest 10% more than Feb OI

The April and February Gold futures contracts are very popular on the COMEX.  As of last Friday, open interest (OI) in the Apr-2014 contract is 170,323 contracts.  There are 11 more weekdays until first notice.  In January with 11 more days until first notice, open interest in the Feb-2014 contract was 154,804.  

The chart below shows that open interest has been consistently higher during March for the Apr-2014 contract than it was during January for the Feb-2014 contract.  The average difference over the last 11 week days is 7%.  














Typically, all the excitement is in the last week before first notice.  But, if trends hold more gold contracts will settle on the COMEX during April than in February when 3,832 contracts settled.  The bullion banks seem to be preparing for more settlement activity, because registered inventory is now 637,593 ounces compared to only 370,137 ounces in mid-January.  

On the other hand, total registered and eligible gold inventory has declined to 7,104,660 ounces today from 7,828,052 at the beginning of the year.  Eligible gold can easily be registered by creating a warrant, which presumably requires only a few keystrokes.



Saturday, March 1, 2014

COMEX Feb-2014 Gold Contract Delivery: 383,200 ounces settle; 65% of first notice day

5,920 Feb-2014 contracts filed for delivery on first notice day January 31st.  3,832 contracts settled by delivery and the remaining 2,088 contracts were 'lost' to the process and settled by other means.  














Refer to my previous posts on this topic for  more commentary and definitions.

During February, JPM, Deutsche Bank, and Bank of Nova Scotia issued 46%, 12%, and 28% of all settlements.  HSBC and Barclays stopped or taken ownership of 59% and 29% of all settlements.  


Month to date those who were short Feb gold futures contracts have been able to settle almost all open interest.  In order to cover, 197,692 ounces of gold were added to registered COMEX inventory during February, which increased registered inventory to 637,592 ounces.   About 75% of the increase or 151,019 ounces of gold was added to eligible inventory and is new to the COMEX system  http://harveyorgan.blogspot.com/2014/02/feb-272014gld-and-slv-hold-constantgold.html   The rest of the increase came out of eligible inventory.  In summary, 637,592 ounces were needed in inventory to cover 592,000 ounces of open interest on first notice day.  Gold prices are up 7% month to date, which helped secure the additional gold for COMEX inventory and settlement.


The shorts were able to cover.  Although this month cost them a bit; 7% price increase.  It has been almost a year since gold appreciated during a major delivery month.  Amazing how the shorts were able to settle 592,000 ounces of contracts from first notice day with only 439,900 ounces in registered inventory at that time.  As a long, I would have (and am) held out for much more than 7%.

March is a very small delivery month.  Countdown to the big delivery month of April begins!




Saturday, February 22, 2014

COMEX Feb-2014 Gold Contract Delivery: 341 contracts to go - Weekly Update

5,920 Feb-2014 contracts filed for delivery on first notice day January 31st.  As of last Friday, 3,639 have been settled and 1,940 have been 'lost' to delivery.  The trend looks very similar to the last major delivery contract month of Dec-13.  














Refer to my post from last week for more commentary and definitions.

Thus far in February, JPM, Deutsche Bank, and Bank of Nova Scotia have issued 45%, 12%, and 38% of all settlements.  HSBC and Barclays have stopped or taken ownership of 62% and 27% of all settlements.  


Month to date those who were short Feb gold futures contracts have been able to settle almost all open interest.  In order to cover, 208,686 ounces of gold were addded to registered COMEX inventory month to date, which increased registered inventory to 648,586 ounces.   About 75% of the increase or 151,019 ounces of gold was added to eligible inventory and is new to the COMEX system  http://harveyorgan.blogspot.com/2014/02/feb-21gold-rises-by-680silver-by-10.html   The rest of the increase came out of eligible inventory.  In summary, 648,586 ounces was needed to cover 592,000 ounces of open interest on first notice day.  Gold prices are up 7% month to date, which helped acquire the additional gold for COMEX inventory and settlement.

COMEX eligible inventory is about 6.5 million ounces.  COMEX will not experience a delivery default with this much available gold.  Of course higher prices may be necessary to entice the owners to sell it.  

Here is an excellent post regarding the relevance of registered and eligible gold inventory at the COMEX by Bron Suchecki.  Thanks to Kid Dynamite for referring it.
http://www.perthmintbullion.com/us/blog/blog/14-01-08/Comex_Stocks_Claims_On_Bullion_Well_Below_Historical_Highs_At_5_1.aspx


Sunday, February 16, 2014

COMEX Feb-2014 Gold Contract Delivery: 746 contracts to go - Weekly Update

5,920 Feb-2014 contracts filed for delivery on first notice day January 31st.  As of last Friday, 3,286 have been settled and 1,888 have been 'lost' to delivery.  The trend looks very similar to the last major delivery contract month of Dec-13.  
















Refer to my post from last week for more commentary and definitions.

Last week, Deutsche Bank joined JPM and Bank of Nova Scotia as major issuers.  Together they have issued 91% of the settlements this month.  HSBC and Barclays have stopped (taken ownership) of 89%.


Monday, February 10, 2014

COMEX Feb-2014 Gold Contract Delivery: 1,760 contracts to go

5,920 Feb-2014 contracts filed for delivery on first notice day January 31st.  As of last Friday, 2,549 have been settled and 1,611 have been 'lost' to delivery.  The trend looks very similar to the last major delivery contract month of Dec-13.  
























As expected COMEX participants have recently added to registered gold inventory in order to satisfy settlement demand during the February contract month.  Registered inventory has grown from 439,900 ounces on January 31, 2014 to 657,395 ounces last Friday.

JPM Continues to Dominate Settlement Activity
So far this month JPM House Account and Bank of Nova Scotia House Account have issued or delivered 59% and 32%, respectively of all warrants for settlements of the Feb-14 contracts.  HSBC House Account has stopped or taken ownership of 64% and Barclays has stopped 25%.   Once again JPM House Account is the majority of the volume.  This month JPM is on the issue side after stopping 6,254 contracts or 96% of the notices during December 2013.  

Same As it Ever Was
History is repeating itself.  In December 2012 JPM House stopped 50% of the delivery notices.  And then in February 2013 JPM House issued 7,005 contracts which was 53% of the total.  During 2013 JPM with both their house and customer accounts went on to issue the vast majority of notices during March, April, May and June.  You might remember what happened to gold prices during that time.  

But, The Ammo is Running Low
Registered gold inventory at the COMEX is so much lower this year that it would be difficult for any participant to push prices lower.  For example, where could JPM get over 900,000 ounces of registered gold to issue now as they did last April between their house and customer accounts?  At the beginning of February 2013 COMEX had 2,295,000 ounces of registered gold in inventory.  To start this February COMEX had 439,900 ounces in inventory.  Of course JPM or any other participant can always get registered gold from the eligible inventory category by paying a higher price!  Last year at this time gold was $1,660/ounce.


Monday, February 3, 2014

US Mint Sales Jump, Really? - just like every January! Misleading headlines.

US Mint monthly sales of gold (Eagle and Buffalo) and silver Eagle coins are presented in the graphs below.  Even with my limited knowledge of the coin industry, I can see that dealers' purchases are seasonal.  Sales always jump up in January compared to prior month of December.  The more relevant comparison is to last year, where sales are actually down significantly.  Check out the misleading headlines below.

























Also, be careful not to use January sales as an unbiased indicator of demand because supply may have been constrained.  The Mint may have started shipping 2014 coins later in January this year than last.  And, allocations of the new coins may have been smaller at the beginning of this year than in previous years.

This blogger seems to know the US coin business: http://news.coinupdate.com/us-mint-gold-and-silver-bullion-sales-fall-short-of-prior-year-3135/


U.S. Mint Gold-Coin Sales Jump 63% in January; Silver Triples
http://www.bloomberg.com/news/2014-02-01/u-s-mint-gold-coin-sales-jump-63-in-january-silver-triples.html

US Mint Bullion Coins Soar to Highs in January Sales

http://www.coinnews.net/2014/02/03/us-mint-bullion-coins-soar-to-highs-in-january-sales/

Sunday, February 2, 2014

COMEX February Gold Futures: First Notice Day for Settlement: 57% fewer contracts than last year.

57% Fewer February Contracts File Notice on First Notice Day

Last Friday, the fifth and last Friday of January the total open interest (OI) in gold futures on the COMEX was 375,065 contracts of which 5,905 filed for settlement during February.  Friday, January 31 was first notice day.  Last year, first notice day for the February contract was Thursday January 31.  13,910 contracts filed notice last year on first notice day.


I was expecting at least 7,500 contracts to file notice.  Total open interest has been about 10% less than in 2013.  Yet notices filed on first notice day are down 57%.  In addition, the number of Feb-2014 contracts filed is down 42% from Dec-2013.  On November 27, 2013 the first notice day for Dec-2013 contracts 10,157 contracts filed.  The bullion banks were able to convince a lot of Feb-2014 contract holders to roll over to future dated contracts.  

Still No Brave Entrepreneurs Trying to Squeeze the Shorts 
Shockingly no enterprising hedge fund manager has tried to stand for delivery of enough contracts to really squeeze the shorts at the COMEX.  An investment of $740M could have doubled the number of contracts standing/filed last Friday.  A large amount of demand would drive up prices given that the COMEX banks' vaults have only 439,900 ounces of registered gold in inventory.  Last year at this time inventory was 2,925,000 ounces.  Higher prices would pry eligible gold lose so that it could be registered.  

We're still waiting for the 21st century Hunt brothers.  Carlos Slim, George Soros, Putin, could easily come up with several $100M.  Perhaps gold is more dangerous than silver because it's reserve banks turf.  Look what happened to the US Presidents that started to break the power of the reserve banks over gold and the US dollar.

Contracts Typically Lost to Settlement Even After First Notice
Those who are short the 5,905 Feb-2014 contract have yet to cover.  They must cover or issue warrants for delivery by the end of the month unless they can convince the long to accept an equivalent, which might be future dated contracts, GLD shares, or even cash.  Therefore, even though 5,905 contracts filed notice much fewer contracts could be settled by the end of February.  For example, 3,664 of the 10,157 Dec-2013 contracts filed on first notice day were 'lost' to settlement during the month.

Registered Inventory Could Prove Enough to Cover February 
Current inventory of registered gold could be enough to cover settlements during February if roughly 1/3 of Feb-2014 contracts are lost during the month.  This is rough because multiple contract can be settled with the same gold/warrant during the month.  Also portion of registered gold must be in the hands of owners who are not shorts who have yet to cover.  

But Shorts Will Soon Need Inventory for March and especially April which is typically a big settlement month.  The amount of leverage in the system continues to impress.  A month ago total open interest was 384,219 contracts, of which 215,736 were Feb-2014 expiry.  At the moment, 5,905 contracts are settling a month old obligation of 215,736 - over 36:1 leverage.

Note: last Friday's data as reported by the COMEX is 'preliminary'.  I will update this post when the final data for Friday is available.  Typically the final numbers are only slightly different from the preliminary.


Saturday, January 25, 2014

COMEX February Gold Futures: Countdown to First Notice Day for Settlement (update Jan 25)

OI for February Contracts down 21% from Huge Last Year
Last Friday, the fourth Friday of January the total open interest (OI) in gold futures on the COMEX was 417,855 contracts of which 117,098 were for February expiry.  Total OI is down about 8% from this time last year and OI in February contracts is down about 21%.  Although the amount of February contracts is a bit lower the trend in January with 12 trading days behind us is following that of last year.  OI has been 10-15% less than prior year for the last several months at least which is as long as I have been closely tracking the data.

Note: last Friday's data as reported by the COMEX is 'preliminary'.  I will update this post when the final data for Friday is available.  Typically the final numbers are only slightly different from the preliminary.















Last year 13,910 contracts for 1,391,000 ounces of gold filed on first notice day.  Last year first notice day for Feb contracts was on Thursday January 30th.  This year it is on Friday January 31st.

You can read more of my comments on the set up for February in this post:
http://rikgreeninvestorforum.blogspot.com/2014/01/comex-february-gold-futures-countdown_19.html

Sunday, January 19, 2014

COMEX February Gold Futures: Countdown to First Notice Day for Settlement (update Jan 19)

COMEX Needs Much More Registered Gold For February

This February will be a very exciting month at the COMEX.  In February 2012 13,910 contracts filed notice on first notice day and 13,063 contracts ultimately settled with 1,306,300 ounces of gold.  Although open interest is about 15% lower this year than last, February should still prove to be a very exciting month because the COMEX has only 370,137 registered ounce of gold in inventory as of Thursday January 18th.  At this time last year, registered inventory was 2,276,000 ounces.

Eligible Inventory Available for Registered - At What Price?
COMEX has over 7 million ounces of eligible gold in inventory that can be quickly converted to registered by creating a warrant.  Eligible gold owners will be able to demand higher prices for their gold.  This is very bullish for physical gold.  Although paper gold prices are another story and may not immediately react.

My first post on this topic has a bit more background:
http://rikgreeninvestorforum.blogspot.com/2014/01/comex-february-gold-futures-countdown.html

OI for February Contracts down 17% from Huge Last Year
Last Friday, the third Friday of January the total open interest (OI) in gold futures on the COMEX was 415,680 contracts of which 155,185 were for February expiry.  Total OI is down about 8% from this time last year and OI in February contracts is down about 17%.  Although the amount of February contracts is a bit lower the trend in January with 12 trading days behind us is following that of last year.  OI has been 10-15% less than prior year for the last several months, at least which is as long as I have been closely tracking the data.

Sunday, January 12, 2014

COMEX February Gold Futures: Countdown to First Notice Day for Settlement

February OI Down 15% from 2013
Last Friday, the second Friday of January the total open interest (OI) in gold futures on the COMEX was 406,327 contracts of which 183,466 were for February expiry.  Total OI is down about 8% from this time last year and OI in February contracts is down about 15%.  Although the amount of February contracts is a bit lower the trend in January with only 7 trading days behind us is following that of last year.





15% Less Than Last Year is Still Huge
Last year a massive 13,910 contracts filed notice on first notice day, which was the last Thursday in January.  First notice day for Feb-2014 contracts is Thursday, January 30th.  My forecast is for 7,500 contracts to file notice.  

I should clarify, as KD commented on one of my earlier posts, that the term 'filing notices' is a bit misleading.  Longs do not decide to file.  Effectively, all contracts that expire during the contract month that have not been covered as of the first notice date are filed.  The seller or short is in control as they decide when to cover.  Of course, longs and owners of gold decide the price.

More Registered Gold Needed for February Deliveries
Typically, some contracts that file are ultimately settled without delivery or 'lost' to the delivery process.  Last February 7% were lost.  So even if 7,500 contracts file, deliveries will probably be less.  The COMEX currently has 416,563 ounces of registered gold in inventory.  There are almost 7.8 million ounces of eligible gold in COMEX inventory which is readily transferrable to registered by attaching a warrant.  Therefore do not expect a delivery default at the COMEX.  Eligible gold owners may demand a higher price, but the gold is available and ready for settlement.

Another clarification: the terms delivery and settlement are used to denote transfer of ownership, which at the COMEX is effected by transferring warrants.  Ownership of gold is evidenced by warrants.  Registered gold has a warrant attached.  Eligible gold does not. Warrant transfers are used to deliver or settle contracts so that physical movement of bullion is not necessary.

Friday, January 10, 2014

COMEX Monthly Gold Delivery Dominated by JP Morgan in 2013

JP Morgan accounted for most of the delivery activity in most months of 2013.  During the first half of 2013 JPM was on the issue side of the activity.  Both sides of a delivery, issuing (delivering) and stopping (receiving) are reported by the COMEX.  The number of deliveries or contracts stopped/issued is represented by the yellow bars in the chart below.  

January is a slow month for futures contracts and therefore for delivery notices.  Only 224 contracts remained to be settled on first notice day at the beginning of this January.  

February is a big month!  I am forecasting that at least 7,500 contracts will need to be settled this February, which is significantly less than in February 2013.  I am guessing that the number of Feb settlements will be lower than last year because: 1) total open interest and open interest in February contracts is about 10% and 15% lower, respectively than at this time last year  2) more contracts settled in December than the year before which may have satisfied or pulled forward some demand for physical  3) COMEX registered gold inventory is low and the COMEX banks will entice more Feb contract holders to roll over to a future month.  Currently, COMEX gold inventory is about 417k ounces in registered and 7,361k ounces in eligible.  Also, my forecast is conservative because utilizing historical ratios is risky in volatile situations.  But, it's all I've got.

I learned from commentor Mick that the same gold/warrants may be used to settle multiple contracts in a given month because the same firm can stop and then issue the same warrant.  So to the extent that stops and issues by the same firm are netted together the same gold can be used to settle multiple contracts.  By reviewing the monthly CME delivery notice report for 2013, the average number of contracts that are stopped and issued by the same firm in a typical month is about 15% of the total volume.  

If 7,500 contracts need to be settled during February, COMEX will need more registered gold.  Let's say about 300k ounces more, at least.  The gold is readily available in eligible inventory.  But at what price?  






Data for JPM notices in the chart above includes both the JPM customer and JPM  house accounts.  The table below shows data for those accounts individually.

Tuesday, January 7, 2014

COMEX Needs 50+% More Registered Gold for February

JP Morgan Stopped 96% of Notices in December 
10,157 December 2013 COMEX Gold future contracts stood for deliver on first notice day November 27th.  By December 30th, the end of the contract month 64% or 6,493 delivery notices were issued and stopped.  The remaining open interest was lost; possibly to cash settlements or rolled over to new, future dated contracts.  JP Morgan house account stopped 6,254 or 96% of the delivery notices.  Thus ownership of 625,400 ounces of gold in COMEX registered inventory was transferred to JP Morgan during December.  CME Group reporting shows that HSBC, Bank of Nova Scotia, and Jefferies Bache were the largest issuers.

For comparison, in December 2012 there were 3,253 delivery notices or 46% of the 6,999 contracts that stood for delivery on first notice day.  The bar charts below show how deliveries and lost contracts progressed each day of the December contract month.

JP Morgan Now Owns Most Registered COMEX Gold
COMEX registered gold inventory on November 27th was 590,817 ounces.  During the month 133,017 ounces were added from deposits and transfers from eligible category.  So the beginning balance plus additions totaled 723,834 ounces from which 649,300 were issued and stopped during December.  Since JP Morgan house account stopped 96%, it stands to reason that they now own most COMEX registered gold.

COMEX Registered Gold Inventory Roll Forward:
Beginning Balance 11/27/13         590,817
Deposits                                    93,917
Adjustments/transfers                 39,100
Withdraws                              (240,693)
Ending Balance 12/31/13            483,141

Is JP Morgan's recent acquisition of COMEX registered gold bullish for the precious metal?  It depends what JPM does with it.  JPM also stopped the majority of contracts in Dec 2012 and then apparently used the metal along with a lot of other gold to help smash prices in April, May, and June 2013.  JPM house account issued a net 14,575 contracts worth of gold in the first half of 2013.

COMEX registered gold inventory has been declining and is perhaps a less ambiguous bullish signal.  Inventory is down to 483k ounces from 591k at the beginning of December and down over 2.5M ounces from about a year ago.    http://jessescrossroadscafe.blogspot.com/2014/01/comex-warehouses-registered-inventory.html

Forecast Gold to Settle in February = 750,000 ounces
February is the next big delivery month for gold COMEX futures.  As of last Friday open interest for February contracts was 214,460 contracts which is 56% of total open interest.  A year ago total open interest was 11% higher and the open interest for February was 254,987 or 60% of total.  Ultimately 13,910 February 2013 contracts filed on first notice day, January 31, 2013.  If the same proportion files this February, 11,699 contracts will file notice.  And, if 64% of those hold out for delivery as in December 2013 about 7,500 contracts will stand for delivery of 750,000 ounces.  

Registered Gold Inventory is about 270,000 ounces Short for February
Since registered inventory is currently about 480k ounces, about 270,000 ounces must be added to registered inventory to satisfy estimated settlements during February.  This assumes that JPM house account which currently owns most of the registered gold issues or sells all its gold during February.  If there are other sellers that must issue gold for delivery they will need to add it to the registered category first, which would increase registered inventory that much more.

Eligible Gold Inventory is 7.4 million ounces 
Do not expect a delivery default.  Eligible gold can easily be converted to registered by attaching a warrant.  COMEX eligible gold inventory is currently about 7.4 million ounces or 15 times the amount of registered.  At what price would eligible gold owners sell?  Presumably these owners hold their gold as eligible instead of registered precisely because they do not want to sell it - at least in the short term.























http://www.cmegroup.com/trading/metals/precious/gold_quotes_volume_voi.html

The foregoing estimates assume that all issuances/stops during December were made with registered gold.  COMEX rules allow for "Exchange for Related Position (EFRP)".  So it is possible that settlements were made with cash, new futures contracts, and shares of GLD, for example.  Data regarding non-gold settlements is unavailable.





Friday, January 3, 2014

Rik Green Investor Forum Growth Portfolio down 1% in December and 17% in 2013

The growth Port-faux-lio lost 0.8% of its value in December while the S&P 500 gain 2.4%.  Gold was down 4.1% and silver was down 2.6% during the month and all the Port-faux-lios precious metals related investments lost a similar amount.  CVX saved the monthly results and was up 2.7% including dividends.  CVX is 42% of the port-faux-lios value.


Good thing that I held off rotating more CVX to precious metals last month.

Year to date the Port-faux-lio lost 17.2% while the S&P gained 30%.  CVX gained 20% including dividends.  PHYS was down 30% and the miners and silver funds were down about 40%.  A terrible year.  At least 2014 is off to a good start.



Thursday, January 2, 2014

US Mint Coin Sales: Record Silver up 26%. Gold up 24% from 2012.

US Mint sales of Gold Eagle and Buffalo coins in 2013 were 24% more than 2012 and less than sales in 2009, 2010 and 2011.  
















Gold coin sales were much lower in the second half of 2013 than during the first six months of the year.  Declining prices during the first half of 2013 stimulated demand.
















US Mint sales of Silver Eagles set a record in 2013 and were 26% higher than in 2012.  




























Gold coin sales in 2013 totaled 1,095,500 ounces which equals 34 tonnes.  As comparison, annual global gold mining output is about 2,700 tonnes.  Daily COMEX trading volume of gold futures is typically over 150,000 contracts with a value of 100 ounces per contract or 15 million ounces.

Silver Eagle sales in 2013 totaled 42,675,000 ounces which equals 1,327 tonnes.  Annual global silver mining production is about 24,000 tonnes.  Daily COMEX trading volume of silver futures is about 50,000 contracts with a value of 5,000 ounces per contract or 250 million ounces.

GLD Inventory of Gold Drops Below 800 Tonnes, a five year low, when Gold was less than $1,000/ounce

I finally found some time to look at GLD and SLV exchange traded plans (ETP) inventory and price history.

Gold inventory at GLD fell to just below 800 tonnes in the last days of December 2013.  The last time GLD has 800 or fewer tonnes of gold was in December 2008 when the price of gold was $780 per ounce.  In 2008, the gold bull market was strengthening which eventually pushed prices over $1,800.  2013 is the reverse.  Gold buyers are so bearish that they wish to own only 800 tonnes even with the price at $1,200.

Remember only Authorized Participants (AP) in GLD, such as HSBC, Goldman, JP Morgan, Scotia, Deutsche, Citi, and UBS are allowed to create or redeem baskets of 100,000 GLD shares in exchange for bullion.  The Trust is responsible to manage inventory so that the price of GLD shares tracks that of gold.















Interestingly, silver inventory at the SLV Trust has remained flat while price dropped during the last year.  It seems that silver bears are not as pessimistics as gold bears.  There are many other possible causes of the disparate behavior of GLD and SLV inventory.  What's your theory?