By comex reporting there are two categories ... house accounts and customer accounts. House accounts are banks or brokers trading on their own behalf. Customers accounts are any entity that has an account at a broker or bank. The trades are executed in that account (not the brokers account). Customer accounts could be you, I, family offices, LLC's, corps, miners etc.
One thing I didn't get into (a minor detail) I group the broker house accounts in with the customer accounts. Basically, I wanted a metric that was bullion banks and non-bullion banks.
Exchange for physical. I know this piece was an advanced discussion. I'm not getting paid for any of this and already spend a chunk of time on it. I'd suggest to keep reading as I cover the basics at times.
Thanks for the great analysis Michael. I'm convinced that US wealth has gotten word that the Trump administration is planning to monetize the US gold reserves so they're jumping on the bandwagon.
I'm always suspicious of the data especially in a system which was designed to obfuscate truth while attempting to appear transparent. That said, you can bet that the truth would reveal the system is more tenuous than the appearance.
"Instead of bullion banks just exiting short positions to protect their short position, bullion banks prepared to deliver metal. Why didn’t they just close to avoid the buying deluge? That’s an answer for another day."
Because we'd be looking at 60.000 $ Gold, 5.000 $ Silver and a lot of coffins then.
This such a confusing narative that im trying to untangle.
But this paragraph really helped to capsulize some clarity:
"Cause and effect. The EFP spread blew out because of the surge in buying in NYC AND there isn’t enough metal to settle those longs. If there was enough metal at comex, there would be no price disengagement with London spot."
That is indeed the key - and open interest has been falling quite steeply in the past few weeks as physical deliveries have been increasing. There appears to be big stress brewing in the physical market as evidenced by the borrowing fees for SLV and GLD going parabolic. I suspect the banks raided the ETFs to settle their shorts with metal. What happens next if the physical demand stays unabated?
This is the physical squeeze we have been waiting for. There is still just as much gold in the world - the question is the price at which it becomes available. Silver is far more vulnerable than gold - the refiners do not have enough capacity to meet COMEX demand and are 100% refining gold. This means silver will have to wait to be refined and physical silver available for delivery will run out before gold does. The only way to stop it will be a gold revaluation but to what price? $5,000?
I think 5 is the simple starting price for the murmuration (look it up). Musk's DOGE or Trump's DOGEy CryptoConCoins Reserve won't stop the inevitable. History..... rhymes?
I agree but HOW the revaluation comes about will determine the price. If other central banks revalue, they will be cautious and it will be to market. BUT if the Fed revalues first, then they might go higher but there will be instant demand for an audit. So do they have to buy back the 8,000 tonnes first? Ultimately, the price will be whatever the price is at which China is happy holding US debt, instead of buying gold... which is probably more than $20k
I was thinking last week it might be the FED and/or the US gov that wants the gold back on US soil.
And just two days ago a guest at some YT channel i watch frequently, was saying that same thing.
Listening to the new administration's occasional comments this looks to have some merit. And it would be wise too.
What do you think?
That may be happening, but there is no evidence I see to back that up.
When you say customer accounts, can you just clarify that for me with an example?
By comex reporting there are two categories ... house accounts and customer accounts. House accounts are banks or brokers trading on their own behalf. Customers accounts are any entity that has an account at a broker or bank. The trades are executed in that account (not the brokers account). Customer accounts could be you, I, family offices, LLC's, corps, miners etc.
One thing I didn't get into (a minor detail) I group the broker house accounts in with the customer accounts. Basically, I wanted a metric that was bullion banks and non-bullion banks.
Silver is down today (Friday Feb 7 ) but gold is about flat. Something is certainly happening under the covers.
It would be nice to of mentioned WTF an EFP spread actually stands for/is/means. No clue.
Exchange for physical. I know this piece was an advanced discussion. I'm not getting paid for any of this and already spend a chunk of time on it. I'd suggest to keep reading as I cover the basics at times.
I guessed and I'm no expert :-/.
(just saying 🤔).
Thanks for the great analysis Michael. I'm convinced that US wealth has gotten word that the Trump administration is planning to monetize the US gold reserves so they're jumping on the bandwagon.
Can any of the data be believed other than the retail purchase prices?
The "official" narrative smokescreen sure can't.
I'm always suspicious of the data especially in a system which was designed to obfuscate truth while attempting to appear transparent. That said, you can bet that the truth would reveal the system is more tenuous than the appearance.
Agreed.
There are quiet (but increasing) moves being made to the exits before to locking the normies into paper and digital hell.
Luckily people like you are monitoring the trends.
"Instead of bullion banks just exiting short positions to protect their short position, bullion banks prepared to deliver metal. Why didn’t they just close to avoid the buying deluge? That’s an answer for another day."
Because we'd be looking at 60.000 $ Gold, 5.000 $ Silver and a lot of coffins then.
Another excellent article. Thank you
Thanks Michael!!
I'm a new subscriber.
This such a confusing narative that im trying to untangle.
But this paragraph really helped to capsulize some clarity:
"Cause and effect. The EFP spread blew out because of the surge in buying in NYC AND there isn’t enough metal to settle those longs. If there was enough metal at comex, there would be no price disengagement with London spot."
They have certainly designed a complex system. If you miss any part of it, all the rest is confusing.
Buyers taking delivery really seems simple, what's the response from the banks
It appeared that banks kept their short position, or a lot of them. They, thus had to deliver physical.
I suspect that if banks had closed their short instead of delivering metal, we'd have seen a lot bigger price spike.
That is indeed the key - and open interest has been falling quite steeply in the past few weeks as physical deliveries have been increasing. There appears to be big stress brewing in the physical market as evidenced by the borrowing fees for SLV and GLD going parabolic. I suspect the banks raided the ETFs to settle their shorts with metal. What happens next if the physical demand stays unabated?
MOAR
This is the physical squeeze we have been waiting for. There is still just as much gold in the world - the question is the price at which it becomes available. Silver is far more vulnerable than gold - the refiners do not have enough capacity to meet COMEX demand and are 100% refining gold. This means silver will have to wait to be refined and physical silver available for delivery will run out before gold does. The only way to stop it will be a gold revaluation but to what price? $5,000?
I think a step change revaluation would be at a much higher price than $5k.
I think 5 is the simple starting price for the murmuration (look it up). Musk's DOGE or Trump's DOGEy CryptoConCoins Reserve won't stop the inevitable. History..... rhymes?
I agree but HOW the revaluation comes about will determine the price. If other central banks revalue, they will be cautious and it will be to market. BUT if the Fed revalues first, then they might go higher but there will be instant demand for an audit. So do they have to buy back the 8,000 tonnes first? Ultimately, the price will be whatever the price is at which China is happy holding US debt, instead of buying gold... which is probably more than $20k