Bizarre activity on the June silver contract as 30% of contracts vanish yesterday due to midnight settlements. This weeks total = 8.6 million oz.
Someone wants some silver and someone else doesn't want to deliver
An extreme number of contracts are being settled after hours on the June silver contract. A week ago I wrote a piece on this where I noted that 712 contracts (3.6 million oz) had settled over the prior 3 days:
https://econanalytics.substack.com/p/extreme-midnight-settlements-prevent
That was extreme, but since then, the situation has become bizarre.
This week on May 7, 377 contracts settled (18% of open interest). On May 8, 514 contracts settled (21% of open interest) and yesterday (May 9) 727 contracts settled (30% of open interest). The total over those 3 days is 1,618 contracts or 8.1 million oz! The cumulative total of off exchange settlements is now 11.7 million oz.
How does that compare to prior months? Most of the time it’s nearly zero! In those cases the data plots on or near the axis (see plot below).
My guess is that someone is shorting the contract during trading hours … not with the intent to sell metal but to suppress price. Next, the short is settling with longs using off exchange deals and paying a premium to settle. Maybe the word is getting out and more and more longs are lining up for a pay off.
Despite these midnight settlements the open interest on the contract remains high at 1,733 contracts (8.7 million oz). Had (only) last nights 727 contracts not vanished, OI would be an all time high. It’s pretty clear that someone wants a lot of silver and someone else doesn’t want to give it to them.
+++++++++++++++++ Silver Vaults
1.15 million oz arrived at comex vaults split between Loomis and MTB. 247 koz of that went straight to registered (at MTB) and that is an exact match of the 50 delivery notices issued by HSBC’s “customer” account.
That HSBC account continues to bring new metal into comex, sell and issue delivery notices. It’s about 30 million oz over the last 6 contracts. I just penned this piece about what may be occurring …
https://econanalytics.substack.com/p/is-hsbc-depressing-comex-price-while
Meanwhile 1.06 million oz moved out of Brinks’ vault which matches 3 transfers out of registered at Brinks over the prior week.
+++++++++++++++++ Gold Vaults
Nothing doing:
Tip your beer this weekend to those June silver longs!
I read your piece on HSBC potentially playing both side to accumulate at a net lower cost. I’ll tell you, the HSBC selling has never sat well with me. Why would a Chinese bank be a net seller was my internal monologue. Regardless, things getting spicy. Be interesting to see a big long demand metal and go public.
Seems the question that matters is: Who are these longs settling, and for what terms?
No disrespect but counting contracts is not why zi subsctibed.