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John Kim: Comex issues and stops reports expose Comex physical gold supply problems
By John Kim
Friday, March 28, 2020
Right now, the latest Comex issues and stops reports expose Comex physical gold supply problems. Though I have written about the various reasons why physical gold supply problems manifest many times in the past, this topic still remains one rarely discussed by financial journalists, and never discussed by the mass financial media.
For client accounts, when bullion banks stop more notices than issued, they will lose physical inventory.
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For house accounts, the opposite is true. When bullion banks issue more notices than stops, they will lose physical inventory as well.
Normally when bullion banks manufacture waterfall declines in paper gold and silver prices, as they did earlier this month, with the complicity of the CME’s largely unreported rampage in raising initial and maintenance margins on futures contracts many times within a two-month period in the midst of a stock market crash, they load up on physical gold and silver for their house accounts while ensuring that their clients take almost zero delivery of physical gold and silver ounces. However, if they are unable to execute this clever strategy, this is when physical gold supply problems can manifest.
In fact, I have not seen a single news site in the entire world, except for my own, mention the relentless increase in initial and maintenance margins in gold and silver futures contracts (the 100-ounce gold futures contract and the 5000-ounce silver futures contract) for the past two months in a desperate attempt to knock long positions out of the game and thereby prevent an increasing amount of physical delivery requests.
Just recently, the CME raised margins yet again for 100-ounce gold futures contracts to $9,185/$8,350 for initial/maintenance margins, representing a massive 86% increase in margins, and for 5000-ounce silver futures contracts to $9.900/$9,000 for initial/maintenance margins, representing a gigantic 73% increase in margins, in just a couple months' time.
Normally, such relentless increases in initial/maintenance margins in gold futures markets is sufficient to prevent physical gold supply problems from afflicting futures markets, but the fact that even this reliable manipulation mechanism failed recently is a sign of additional tectonic earthquakes to come in the global financial system.
However, as you can see for the data I have compiled for the behavior of issues and stops for client and house accounts for bullion banks in gold and silver from December 2019 to March 2020, this pattern of normal behavior, in which bullion banks take advantage of their own artificially manufactured paper gold and silver price plunges to load up on physical metals at the expense of their clients, has strongly reversed during this four-month time span.
I have included only data for the major gold (100 ounce) and silver (5,000 ounce) futures contracts below and not for the mini-gold (10 ounce) and mini-silver (1,000 ounce) silver futures contracts. ...
... For the remainder of the analysis:
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