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December 31st, Comex
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Thread: December 31st, Comex

  1. #1
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    Default December 31st, Comex

    On December 31st Comex will have to chose to give up 40% of its holdings of gold (1.1759 million ounces of gold) or default on the contracts and pay back investors with cash. Who's gonna buy paper silver and gold when Comex has no physical reserve? Either way its the beginning of the end for Comex.

    As of December 2nd we have seen backwardation, it is a sure sign that people have lost faith in the ability of Comex to deliver on future contracts. If Comex will give you more gold in a month than now for the same price why wouldn't you pick it up in a month. You would unless you believed that they would be unable to supply you in a month. People are not buying into futures for gold because they know that Comex eventually will not be able to keep its promises. As soon as Comex goes under, the large short positions held by financial institutions like J.P. Morgan will be unable to manipulate the price of gold and silver. The only one who could manipulate it is central banks, by selling of the last of their gold reserves. I think this action is unlikely because they know that they would be giving up their last shred of credibility and hard assets. However, it is not impossible, but even if they do sell their gold reserves the effects would be in the short term and the market would go back up quickly.

    Gold and silver can only go up in the long run relative to U.S. dollars.

  2. #2
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    Default

    Sounds Sweet....i Just Bought Some Dime Rolls On Ebay For The Heck Of It....

  3. #3
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    Default

    Quote Originally Posted by aequitas View Post
    On December 31st Comex will have to chose to give up 40% of its holdings of gold (1.1759 million ounces of gold) or default on the contracts and pay back investors with cash.
    Just curious, why do you think COMEX would even begin to default when the deliveries for the month are only 40% of the Registered inventory?

    COMEX doesn't owe gold or silver to anyone, the shorts do.

    Wouldn't it be the short holders that would collectively have to default before COMEX would be out of business, assuming they would let that happen?

    Correct me if I'm wrong, but in simplistic terms, isn't COMEX really just a middle man, so to speak, for all the traders?

    I may be all wet and it wouldn't be the first time, but I think there is far too much gold in the world along with a great deal of wealth for the COMEX to default. It will more than likely be Silver that is the first to default, simply because there is much less of it and a true shortage could actually cause a default some day.

    If the Central banks have been selling gold into the market to suppress the price for years as everyone believes, then why would they allow the COMEX to default over a few million ounces of GOLD? It just defies logic.

    On the other hand, since the Central Banks supposedly do not hold any Silver, it would be more difficult to prevent a default, assuming there really is a shortage coming in the near future. I'm hopeful and holding my Silver, but not holding my breath.

  4. #4
    chux03 Guest

    Arrow COMEX warning brokers of December Gold sqeeze??

    http://seekingalpha.com/article/1105...d-move-in-gold

    from the article:

    But the job might be done by revaluing the gold to $5,000 or $10,000 per ounce, as the British economist Peter Millar speculated two years ago might be necessary to prevent debt deflation: yet this is admittedly speculation.

    What did Gramley mean by "...the Fed's leverage"? That would suggest that the Fed not only owns "gold certificates" but also future contracts and options on futures. They might be big benefactors in a gold squeeze.

    Speaking of a gold squeeze, I read another report from the Gold Anti-Trust Actioin committee (GATA) saying that the Comex is warning brokers of a December gold squeeze.

    Yes, the Comex is alerting various futures firms about the potential of a squeeze on the December contract and is advising the $840 December shorts to exit their positions. That is the remaining open position.

    There have been 12,636 notices of delivery. The shorts have until December 31 to make delivery. Normally they deliver early to take in cash and earn the interest. They must be delaying.

  5. #5
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    Default Reply

    To be specific I didn't say Comex as a whole would default, I was saying that Comex has to chose between delivering 40% of their physical reserves or paying out in cash (which would be defaulting on delivery.)

    Also, Comex does owe gold. I am not sure of the percent I think I heard 50%, someone correct me if I am wrong on this, is held by Comex for investors and they are charged 1.25% annually for storage and other fee's. This is who is demanding delivery. People holding futures cannot demand delivery their contracts only stipulate payment in cash. Comex has already depleted its stock in the past years. 40% in one month being removed from Comex is huge, if it continues at 1/10th this rate they will have no gold within a year. The removal of gold, the rejection of lower prices in the form of futures, these are indicators of consumers returning to sanity by not trusting Comex. This means that the manipulation is ending which is great for precious metals.

    The important concept is that the amount of material being traded in short positions is totally out of proportion to the ability of Comex to deliver. Hence the market currently is not about supply and demand, it is about how much people are trading on paper. This is not sustainable or realistic, eventually their will be a squeeze, probably sooner rather than later. This squeeze will expose the immoral and absurd market factors in precious metals.

    To put perspective on this whole thing Comex is currently holding 129 Million Ounces of silver. Warren Buffet purchased 127.9 Million ounces of silver in 1999, on his balance sheet for Berkshire Hathaway this purchase was listed under miscellaneous because it was less than 2% of his companies total assets.

  6. #6
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    Default Perfect Storm

    To Chux03:

    I agree their does seem to be mounting evidence that their will be a squeeze. Backwardation is a sign of desperation from Comex, their crying please don't take our gold yet, and so far no one is buying it.

  7. #7
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    Quote Originally Posted by aequitas View Post
    To be specific I didn't say Comex as a whole would default, I was saying that Comex has to chose between delivering 40% of their physical reserves or paying out in cash (which would be defaulting on delivery.)

    Also, Comex does owe gold. I am not sure of the percent I think I heard 50%, someone correct me if I am wrong on this, is held by Comex for investors and they are charged 1.25% annually for storage and other fee's. This is who is demanding delivery. People holding futures cannot demand delivery their contracts only stipulate payment in cash.
    Are you saying that COMEX doesn't have all of the gold on their books and they are short 50% of that gold?

    It sounds like your saying that the only people taking gold out of COMEX is those who have their gold already stored there. Those people do not have to demand delivery and would not show up on the delivery notice. They would simply withdraw their metals. The delivery notice for 1,263,000 ounces so far for December, is "not" for the people who already have gold stored at COMEX. It is longs demanding delivery and the shorts have to provide it. That is not to say that some of those demanding delivery will not already have some gold stored at COMEX, but simply demanding someone add to their pile!

  8. #8
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    Default

    Are you saying that COMEX doesn't have all of the gold on their books and they are short 50% of that gold?
    No, I am saying a large portion of there reserves or stock is held privately and is not there's to trade. This is important when you consider the amount being withdrawn.

    It sounds like your saying that the only people taking gold out of COMEX is those who have their gold already stored there. Those people do not have to demand delivery and would not show up on the delivery notice. They would simply withdraw their metals. The delivery notice for 1,263,000 ounces so far for December, is "not" for the people who already have gold stored at COMEX. It is longs demanding delivery and the shorts have to provide it.
    You are correct that people who have there gold stored are not in the same category, I made an error. But it doesn't change that 40% is a huge amount in one month. Comex will not default as a result of this month alone. This is just a beginning to a pattern.

    I am curious do you believe that backwardation and this huge withdrawl from Comex to be indicative of a pattern that will eventually lead to huge correction in the price of gold? If this is not your belief then what do you believe will happen if people continue to withdraw gold from Comex?

    Who will trade through Comex when it is not backed by the ability to deliver?

  9. #9
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    Quote Originally Posted by aequitas View Post


    You are correct that people who have there gold stored are not in the same category, I made an error. But it doesn't change that 40% is a huge amount in one month. Comex will not default as a result of this month alone. This is just a beginning to a pattern.

    I'll be surprised if we see 10% to 15% removed from COMEX this month, it just doesn't happen. Maybe one day, but I don't believe it is that time yet.

    I am curious do you believe that backwardation and this huge withdrawl from Comex to be indicative of a pattern that will eventually lead to huge correction in the price of gold?

    I honestly don't know if there is anything to this backwardation that will really amount to anything.

    If this is not your belief then what do you believe will happen if people continue to withdraw gold from Comex?

    They are always withdrawing gold, it's just not that significant "yet". Once we see the inventory dropping in large volumes and "not" being replaced, then we can start to lick our chops.


    Who will trade through Comex when it is not backed by the ability to deliver?
    I would like the think no one, but I have my doubts that COMEX is not going to fail anytime soon, unfortunately. With a COMEX default, we run into consequences that could be far worse than what anyone ever imagined.

  10. #10
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    Default Qoute

    According to the December 3rd Comex delivery report, there are 11,759 notices
    to take delivery. This represents 1.1759 million ounces of gold, while the
    Comex-approved warehouses hold 2.9 million ounces. Thus 40% of the total
    amount will have to be delivered by December 31st. Since not all the gold in the
    warehouses is available for delivery, Comex supply of gold falls far short of the
    demand at present rates. Futures markets in gold are breaking down. Paper gold
    is progressively being discredited.
    Antal E. Fekete
    Gold Standard University Live

    I think this sheds some light on the situation.

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