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.
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.
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?
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!.
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!!!
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.
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!
