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.


  1. couple quick thoughts... the short is the one who files for delivery, not the long.

    No contracts were 'lost'. people either sold their long or rolled (sold nearby feb and bot april)

    I think the registered gold argument is a good one. Remember that eligible gold does not necessarily mean all the gold in the warehouse, it is just gold that has been assayed and meets comex specs. I could store a comex eligible bar in HSBC, but until i pay someone to do the tests John Q has no idea it is there.

    1. Yes, understood. The 'shorts who have not yet covered' 'file'. And, the term file seems a bit misleading as well, since 'shorts who have not yet covered' need not take any action until they file to deliver with a warrant or settle by other means.

      I use the term lost as lost to gold settlement process. These lost contracts are 'settled' by means other than the COMEX warrant process - as you point out. The short was able to cover with something other than gold evidenced by warrants.

      Yes, I try to keep all the gold in mind. And, that is why I don't buy in to the COMEX default meme. For example, the total world mine production is about 8 tonnes per DAY, So all the contracts settled on COMEX during a popular MONTH is only 2-4 days of production. The gold is available; at what price?

  2. "Of course JPM or any other participant can always get registered gold from the eligible inventory category by paying a higher price! "

    or by simply attaching a warrant to it...


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    2. Yes, good point. And, unfortunately there is no information available regarding who owns the eligible inventory. The daily COMEX warehouse inventory report, as I read it, is by depository; not depositor. In other words the report shows how many ounces are stored in each warehouse and not who owns it. Do you know of a source for total (eligible and registered) inventory at the COMEX over the last couple years? Harvey Organ has not been reporting the eligible portion for very long.

    3. Nick Laird at Sharelynx is the man for all of the charts. What you'll find, if you go back more than 2 years, is that while COMEX inventories are down over the past few years, they are right back to where they were a few years before that... kinda like GLD...

      it seems to confuse many commentators that visible inventory is correlated with DEMAND, and that reduced supply (inventory) coincides with reduced demand as the gold flows elsewhere.

      anyway: yes: the spreadsheet the COMEX publishes is by depository, and I think this link will have the chart with the data you are looking for in terms of inventories further back in time:

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