Best of the Week
Most Popular
1.Putin’s World: Why Russia’s Showdown with the West Will Worsen - John_Mauldin
2. Stocks Bull Market Grinds Bears into Dust, Is Santa Rally Sustainable? - Nadeem_Walayat
3. Gold and Silver 2015 Trend Forecasts, Prices to Go BOOM - Austin_Galt
4.Gold Price Golden Bottom? - Toby_Connor
5.Gold Price and Miners Soar on Huge Volume - P_Radomski_CFA
6.Stock Market and the Jaws of Life or Death? - Rambus_Chartology
7.Gold Price 2015 - EWI
8.Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - Nadeem_Walayat
9.Gold, Silver, Crude and S&P Ending Wedge Patterns - DeviantInvestor
10.Is the Gold And Silver Golden Rule Broken? - Michael_Noonan
Last 5 days
The Price Of Gold And The Art Of War - 18th Dec 14
Euro Succumbs to ECB QE Expectations and FOMC - 18th Dec 14
John Williams: A Downhill Run for the U.S. Dollar in 2015 - 18th Dec 14
Outrage at Taliban Islamic Fundamentalists Massacre of 132 Pakistani School Children in the Name of God - 18th Dec 14
How Inflation Changes Retirement Benefit Choices - 17th Dec 14
The Real Reason It's Tough to Beat the Stock Market - 17th Dec 14
Russian Currency Crisis and Debt Defaults Could Create Contagion in West - 17th Dec 14
How to Profit From Russia's Stock Market Crash - 17th Dec 14
Russia Crisis - If You Put Your Money in the Bank Will You Get it Back? - 17th Dec 14
Crude Oil Price Crash, U.S. Employment and Economic Growth - 17th Dec 14
Opposing Forces At Play In Gold and Silver Precious Metals Complex - 17th Dec 14
Wall Street Will Always Find An Excuse For Not Raising U.S. Interest Rates - 17th Dec 14
Torture, Terror And Elite Schizophrenia In The UK - 16th Dec 14
Eurozone Conflict Will Bring a Major Stocks Buying Opportunity - 16th Dec 14
Viewing Russia From the Inside - 16th Dec 14
Gold and Silver Stocks Bottom - Are We There Yet? - 16th Dec 14
The Financial Industry Pigmen Win Again - 16th Dec 14
Crude Oil Price Epic Blowout - 16th Dec 14
Asian Stocks Markets: Sand In The Gears Of The Bull Market - 16th Dec 14
U.S. Dollar Trend Forecast 2015 - Video - 16th Dec 14
Silver Price Bottom? - 15th Dec 14
Gold Price Base Building Bullish Pattern - 15th Dec 14
Stock Market Probable Pop-n-Crash Today - 15th Dec 14
Stock Market Time for a Bounce - 15th Dec 14
Stock Market Euphoria: The Mother of All Ponzi Schemes - 15th Dec 14
Gold - The Weight of Time as Trend - 15th Dec 14
U.S. Dollar Collapse? USD Index Trend Forecast 2015 - 14th Dec 14
The Rushing Stocks Bear Market and How to Prepare - 14th Dec 14
Gold and Silver Dreaming of a White Christmas - 14th Dec 14
Cyprus-style Bank Bail-ins to Take Deposits and Pensions - The Global Bankers' Coup - 13th Dec 14
How To Renounce Your US Citizenship And Become Stateless - 13th Dec 14
Stock Market Downtrend Underway - 13th Dec 14
Gold And Silver - Wall Street, aka United States, Pulls Off Another Destructive Coup - 13th Dec 14
U.S. Congress Has Guaranteed the Secular Stocks Bear Market is Not Over - 13th Dec 14
Gold and Silver Starting to Show Bullish Signs - 13th Dec 14
Arab Spring II is Coming Fast - The Unintended Consequences of Lower Oil Prices - 13th Dec 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Dramatic Stock Market Selloff

Comex Gold Shock and Awe

Commodities / Gold & Silver Dec 02, 2008 - 08:57 AM GMT

By: Rob_Kirby

Commodities Diamond Rated - Best Financial Markets Analysis ArticleThis past Friday, Nov. 28, 2008, was first notice day for delivery of the December COMEX [a division of NYMEX] gold and silver futures contracts which trade on the New York Mercantile Exchange. The chart appended below shows that on Friday, 8,600 gold futures contracts @ 100 ounces per contract [and 3,040 silver futures contracts @ 5,000 ounces per contract] were delivered. To try to give some perspective to these numbers the previous delivery month for gold futures was October, 2008 when there were 11,554 deliveries for the entire month – a “big” number by historical standards.


It is important for casual market observers to understand that normally, investors who are speculating on the price of gold DO NOT take delivery of the underlying commodity. Instead, whether they are “long” or “short” the future, they usually “roll” their positions into the next contract month as the current or “spot” month approaches its delivery cycle, which begins with first notice day [Friday was the 1st notice day for delivery of the Dec. Gold and Silver Futures Contracts].

So, looking at the COMEX gold table appended below , readers can see that the Dec. contract was still registering Open Interest of 16,053 contracts as of the close of business on Friday. One can also see that “the bulk” of trading has migrated [rolled] into the next delivery month for gold futures – which is Feb., 2009 with 158,895 contracts of Open Interest .

The remaining contracts “open” in December, 2008 must either be “rolled,” covered or delivered before Dec. 31, 2008 – as per the contract termination contract termination schedule .

When deliveries of precious metal occur at COMEX, there is change in beneficial ownership of warehouse receipts representing the underlying physical metal stored in COMEX depositories :

In this regard, we can say that “elevated” deliveries – instead of market participants simply speculating on price change by “rolling” contracts - are consistent with robust or growing demand for the underlying commodity.

We know that global investment demand has, in fact, been robust and growing – because the World Gold Council has told us so :

Demand for gold at an all-time high

Demand for gold reached a record high in the third quarter as investors sought refuge from the financial crisis and volatile stock markets, according to the Wrld Gold Council.

The WGC said demand for gold reached an all-time quarterly record of $32bn between July and September as investors around the world sought refuge from the global financial meltdown. This was 45pc higher than the previous record in the second quarter of 2008.

Demand for gold via exchange traded funds (ETFs) and bars and coins was the biggest contributor to overall demand during the quarter.

The figures show investment demand from private investors rose by 121pc to 232 tonnes in the third quarter, with strong bar and coin buying reported in Swiss, German and US markets. The quarter also witnessed widespread reports of gold shortages among bullion dealers across the globe, as investors searched for a haven…

Why The Rush to Gold?

The reason that investors are flocking to gold the world over is highly understandable given that banks are failing all over the world and the U.S. Federal Reserve and U.S. Treasury are printing MASSIVE amounts of money to “bail out” many of those who remain in business. We see this empirically demonstrated by monetary aggregate data supplied by the St. Louis Federal Reserve:

While we see signs of “big money” moving into gold through machinations occuring with respect to “deliveries” at COMEX, there are other ‘tell tale' signs that demand for physical metal is in fact SOARING . This is reflected by the recent decoupling of the price of COMEX gold futures and real costs one must incur to obtain physical ounces in coin or bar form. The premiums being paid for physical ounces have decoupled to the point where leading gold web sites now routinely list current ebay pricing for gold bars and coins to achieve “accurate” real world pricing for physical metal.

Why Are People Using Ebay For Pricing Gold?

The reason that investors are turning to alternate reference sources for pricing physical precious metal is that the COMEX futures derived prices for metal are INCONSISTENT with the empirical robust demand story outlined above. In short, the COMEX pricing model appears to be FRAUDULENT, when despite overwhelming demand for the commodity we routinely and increasingly see “ BUYERS STRIKES ” in the futures markets like the one we experienced just this morning in gold and particularly in silver.

These counter-intuitive, fundamental-defying price movements are the basis for claims of market rigging on the part of the U.S. Treasury and Federal Reserve.

These shock and awe campaigns being waged against precious metals on the part of officialdom are intended to instill faith in fiat currencies which has been naturally waning in recent weeks and months in the face of unprecedented money creation being availed to officialdom's crony capitalist friends on Wall Street.

This is why everyone needs to get physical now!

The value of physical precious metal is not the same as prices being falsely derived at COMEX.

By Rob Kirby
http://www.kirbyanalytics.com/

Rob Kirby is the editor of the Kirby Analytics Bi-weekly Online Newsletter, which provides proprietry Macroeconomic Research. Subscribers to Kirbyanalytics.com are benefiting from paid in-depth research reports, analysis and commentary on rapidly unfolding economic developments as well as recommendations on courses of action to profit from chaos. Subscribe here .

Copyright © 2008 Rob Kirby - All rights reserved.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Rob Kirby Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014