COMEX - Silver And Gold Accident Waiting To Happen

In this video, Mike Maloney talks about COMEX; which is an accident of silver and gold going to happen. He explains how he come up with the idea using charts and statistics.


I hope that this is wrong. I hope that the Federal Reserve isn't working through JP Morgan to manipulate gold lower because if they are that panicked it means that there is something pretty bad right around the corner.

I just wanted to make a quick video about the silver shortage and why it is so much different this time than last time. Back in 2008 and 2009, the products that went into shortage right away were the sovereign coins like silver eagles, gold eagles, silver maple leaves and gold maple leaves and things like that, and small bars. But for gold in bars of 1 kilo, 100-ounce or 400-ounce those remained available. And in silver, 1000 ounce commodities exchange bars and bags of silver shot remained available. Those are the things the industry uses.

And so there was no shortage at the mints of the raw materials. This time around on July 7th the US Mint announced that they were suspending silver eagle sales. The price has been going down ever since then but there's been a rush on gold and silver. And all of the mints are having trouble sourcing product. They have just been scouring everywhere to try and come up with enough silver to be able to continue minting the coins. And it has affected my business. It's put us behind on delivery of our Pegasus coins and our modern ancient series. The mints are getting caught up. But it's got us behind by a week or more and I want to thank -- we've got a great customer base out there and I want to thank them for their patience. I've even delayed release of our newest modern ancient coin because we just feel that it's not right to release a new product and start promoting it when we haven't finished delivering our previous product.

There's a whole lot more going on in the precious metals market than just the silver shortage and the shortage in the materials that industry needs to keep on running. Something's been happening on the commodities exchange that has become news lately. This is how much gold there is on the Commodities Exchange in what is called the registered category. There's two categories on the Commodities Exchange eligible which is eligible to be registered. Registered is gold that's registered and available for delivery into futures contracts that people are closing.

And what's happening here is you see this goes back to the year 2000. It starts out at about a million ounces and then takes a little dip below a million ounces. But this was when gold was 250, 300 bucks an ounce. This was back in 2000, 2001 and then it runs up to over five million ounces in the registered category in the 2006 timeframe. And this is the crash of '08 and the shortages that developed in '09. But then in just the past year or so a couple of years a whole bunch has been taken off of the Commodities Exchange and the registered category has dwindled to just about 350,000 ounces where it used to average between two and four million for most of this century.

Now at the same time open interest, the number of contracts, has exploded to 43.5 million ounces. And the result is that the number of claims per ounce. So, in other words if you've got a futures contract you expect that you can lay claim to gold that is being promised for delivery to you in your futures contract and that's supposed to be in the vaults at the Commodities Exchange available for delivery to you. Well, we had a spike back in 2013 it looks like here where it went over a hundred claims per ounce and hundred people thinking that they can lay claim to the same ounce of gold. In other words, a hundred owners per ounce. But these things are almost always settled by cash.

Lately the demand for physical delivery has been surging and it has almost doubled. But the number of claims per ounce is now at a record 124 people thinking that they can demand the same ounce of gold for delivery. This is an accident just waiting to happen and the resolution to this, the only resolution, is if there is a default. If for some reason more people want their gold than gold that exists on the COMEX is for the price to go up enough to get people that have gold in the eligible category to put it into the registered category. And those people right now are not letting go of their gold. They're waiting for higher prices.

Now one of the things that would happen though with a default is I think those people would demand far higher prices. There would be more of a panic situation going on. And so, you would see a huge gap up occur overnight and gold prices would start soaring.

And then lastly, something that has happened in just the last few months when the Office of the Controller of Currency came out with their quarterly report. What they revealed was that in the first quarter of this year derivatives on commodities had exploded. They have averaged -- these are quarters. The red bars are contracts that are less than one year exposure. And the blue bar is total. So, contracts that are longer than one year. But it totals about $200 billion worth of commodities derivatives each quarter and then suddenly the first quarter of 2015, it explodes to about four trillion. And this line here is the percentage of derivatives that JP Morgan owns. And it was going along at around 50-60 % and then suddenly it's exploded to 96%. The amount of JP Morgan's derivatives went from a $131 billion worth to $ 3.8 trillion. So 2900% increase bringing the total derivatives to 2.9 to almost 4 trillion. Now it used to average just 200 billion. So it's 20 times what it used to be. Now this could be like a fat finger entry. This could be a mistake that got past the proofreaders and stuff. Except there's one other thing that's very suspicious that at the same time the category for gold derivatives has been dropped from the report and gold got lumped in with foreign exchange.

So, the FOREX market which is one of the -- foreign exchange exchanging currencies is one of the largest markets on the planet. And to put gold in there does two things first of all that means that the Office of the Controller of Currency is recognizing gold as a currency. But second, it's burying it in something much larger where you can't really see what the gold derivatives are because it would be such a tiny percentage of it. And now for one entity to put almost four trillion into gold probably means that they would be acting as a proxy for somebody else that can whip up four trillion in a heartbeat. And there's a possibility that this could be JP Morgan acting has an agent for the Federal Reserve and the plunge protection team which doesn't have to expose their manipulations. They're legally allowed to do stuff like this. It's part of the presidents working group on financial markets that was created after the crash of '87.

And so this is very suspicious and when you take that in conjunction with all this other stuff that's happening, big things could be happening soon. So just in case this is like a fat finger entry or something like that I've got my researchers looking into this. I really encourage everybody to try and dig up more on this. I hope that this is wrong. I hope that the Federal Reserve isn't working through JP Morgan to manipulate gold lower. Because if they are that panicked it means that there's something pretty bad right around the corner. So it would be nice to uncover all of this and find out that this is just a mistake. But if not, I've already got my position. So, thank you very much for watching. And we'll see you in the next video.

All the world is trying to expand its currency supplies right now thinking that they can stave off deflation and they can't, and I'll show you why. As they print currency you can't get the public to take on more debt if they don't want.

Written by Mike Maloney on August 10, 2015.