GOLD SQUEEZE?

Bill,
Yesterday the Open Interest in the April COMEX gold contract was 362, it is now 2245 contracts. The addition of 1883 contracts so late in the current contract month can only mean the buyer intends to stand for delivery. There are already 11,208 cumulative delivery notices issued this month but almost no deliveries have been made…I know that from observing that there has been almost no physical metal leaving the COMEX warehouse on the gold side. If these new contracts stand for delivery the total to be delivered will be 1.3 Mozs; the dealer inventory stands at 2.68 Mozs. In other words deliveries could reduce available dealer inventory by 50% in a single month. There is always a possibility that these delivery notices get re-tendered (settled in cash) but so far that hasn’t happened. There is certainly the potential for a short squeeze brewing in gold which coupled with the continuing drawdown in physical silver inventories I have been reporting looks like things will get exciting very soon.

The contango in gold has almost disappeared between the cash market and the AUG contract being only $3 as I write this. Silver is actually trading in backwardation between the cash market out to the SEP contract as I write. These are signs of a growing physical shortage.
Cheers
Adrian

ACCOUNTS RECEIVABLES FOR GOLD AND SILVER CAN EVAPORATE

During the 1990’s Mr. Rubin had devised the gold leasing scheme with the intent being elucidated by Dr. Greenspan’s testimony in 1998 that, "Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."

The Gold Anti-Trust Action Committee, GATA, has alleged that central banks are engaged in a gold price suppression scheme. This scheme may include the COMEX’s participation along with Deutsche Bank, the European Central Bank and many others. Mr. Robert Landis, a graduate of Princeton University, Harvard Law School and member of the New York Bar, asserted in August of 2005 that "Any rational person who continues to dispute the existence of the rig after exposure to the evidence is either in denial or is complicit."

GATA alleges that the central banks have less than half the gold claimed. The bullion bank agents like JP Morgan and Goldman Sachs, who is threatening legal action against the owner of investigative financial journalism site GoldmanSachs666.com, may face large amounts of liability from dealing in these types of derivatives…

http://www.runtogold.com/

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Backwardation

These are price quote tables from the COMEX. Look in the column titled last. You can see gold is in backwardation through to June.

Silver was trading in backwardation today. It closed with the April contract having only one half of a penny of contango over MAY. The contango between April and June is 2 pennies. The contango across all contracts has reduced to very low levels. This implies significant shortage of physical silver yet only one bar was taken out of the COMEX today…hmmm!

In gold the warehouse stocks are also comatose and have been for months. Almost no gold moves in or out in volume. There have been 8.5Mozs of inventory for yonks yet GLD is supposedly taking delivery from somewhere on a daily basis quantities of gold that get close to being all the gold mined in the world on any given day! Gold also traded in backwardation today yet the dealers received 10,000 ozs and customers withdrew a piddlin’ 96 ozs…one gold bar!

I am now starting to suspect the reporting from the COMEX warehouses. It starts to smell of being Enronized. Things just don’t jive. This makes me think that the massive squeeze in gold and silver will come out of nowhere because the warehouse numbers are false. How can gold trade in backwardation and the warehouse stocks not have changed for months?
Cheers
Adrian