Despite record off market shenanigans, the December gold contract's OI relative to registered remains at a record high of 46% with one day to first notice.

Games bankers play

Total open interest (OI) for gold futures contracts has fallen significantly from a high of 580,000 19 trading days ago to 473,000 as of yesterday’s close (Nov 26):

Despite the sell off, OI on the upcoming December contract had been running well over average. On Friday of last week OI was about 20,000 contracts over trend with 3 days to first notice. Monday’s $80/oz sell off knocked OI back to trend at 36,400 contracts which is about the same as the mean of 35,100 with one day to first notice.

Monday’s sell off reduced OI by 55,900 contracts compared to the typical 41,000 so I could surmise that 14,900 contracts fled in the sell off:

Are shorts desperate to close positions? Likely … as OI relative to registered gold is far over average. With one day to first notice OI is 46% of registered compared to the mean of 29%. Without the excess number of positions closing on Monday, this metric would be far higher … 64% instead of the post beat down 46%.

If you’ve followed my thread you know that these sell offs in the days before first notice are common. Monday’s price drop was predictable. The fact that it occurred while the 10 year yield and the DXY dropped was notable. Somewhere I read the drop was due to a reduction in tension of all those wars. Yeah right.

Digging deeper … on the comex report, off exchange trades are shown as Block trades, EFP and EFR or collectively called PNT/Clearport. Example below:

Volume in each of those 3 categories have shot the moon recently. I track cumulative volume after day 44 to first notice. Why 44 days? At that point OI all contracts are into their plateau period.

See below where block trades were running about typical when volume shot up about 2 weeks ago and surged again on Monday:

EFP is well into record territory now 150% greater than the mean:

Even the EFR or exchange for related had a spike on Tuesday. Related means the contract was exchange for something similar to gold … like a position in an ETF.

All of those trades need not be at market prices, nor do they impact prices because they are off market. The net is that in the days before first notice, record volume is occurring off exchange at undisclosed prices. I’ve hypothesized that bankers settle with each other in this manner with one party incentivizing the other to close. Next, the players can reenter the market with fresh positions to manipulate price.

And just so you know … trading volume is running on trend, so all this extra off-market activity is not due to greater total volume:

The other way bankers game the market is to settle positions off exchange directly with each other … no pretense of EFP or block trades. The positions just vanish. I can track some of those if they occur between the preliminary report and the final report which follows about 10 hours later. Yesterday saw 10% of the December gold contracts vanish in that manner which is one of the highest ever:

Statistically that 10% reduction is 7 standard deviations from the mean … so it isn’t a statistical fluke.

Look for a price rebound after the shorts survive first notice day.

Anecdotal story … I’ve been hiking the Appalachian Trail through Maryland and WV surrounded by small towns in rural America. There (still) are Trump signs everywhere. I didn’t see a single Harris sign until 15 miles outside Pittsburgh. To the Yanks … happy Thanksgiving.