Posted on 12/13/2008 7:18:14 AM PST by djf
From "Midas" Commentary by Bill Murphy LeMetropoleCafe.com Friday, December 12, 2008
I received a call this morning from a commodities broker who told me that 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. As I understand the situation, that represents about 40 percent of the gold available at the Comex, and of course someone could enter the scene late, buy February gold, and then spread into December, which would stun the shorts.
My broker friend said his back office said this sort of alert is highly unusual and that the concern is real, not only for gold, but for other commodities too, like copper and palladium, as there is a good deal of talk of taking deliveries there too. But gold is the one for which the advice to cover went out.
This is an extremely productive development and could spur the price of gold up quickly as word spreads. As we all know, buying Comex gold and silver (the cheapest way to buy precious metals) makes all the sense in the world in this financial environment.
A dime a dozen!
Another great explanation PAR35. Thanks.
Thanks for the Bancroft link. A very educational read!
Want to bet that the world goes crazy when they learn that there isn’t anywhere near the gold quantities available that they have been selling? Another Enron - Madoff crisis where people got greedy.
Actually, some of this pipe (especially the 3/4" which is not popularly used) was probably in stock before the prices ran up, judging from the looks of it.
Anyway, it seems to be the nature of retail - prices can climb quickly in reaction to cost, but they are much slower to decline when costs fall. It is somewhat dependent on demand and competitive forces. Gasoline is the obvious example here, and that is a competitive market with fairly inelastic demand, even if there are only few major players.
I wouldn't expect that copper pipe would drop even as fast as gas has (and that has been deemed slow compared to the price drop in crude oil) since Home Depot, Lowe's, and Ace Hardware don't post their competitive pipe prices out on a sign in front of the store. And really, people don't go from store to store checking prices on this type of thing if they're only going to buy 30 or 40 feet of pipe for a home plumbing project. Even at the high material prices, it's still a lot cheaper sweating your own pipe instead of hiring a plumber.
Another expert:
“No! No! No!
Bear Stearns is fine!!!”
Jim Cramer
Mar 2008
the money going to the banks is nowhere near to being inflationary,nevermind hyper. That money is being poured into a massive hole and will take some time yet to fill up.
A prior FR posting on the COMEX contracts and delivery calls is saying just the opposite result. IF delivery is demanded the COMEX cannot meet the physical delivery demand. The “price” might go up on paper, but the actual value of that paper would crash. If you can’t deliver the physical there is no price that one could ask that people will pay. The market will collapse. If you hold physical gold now, hang onto it. About which see: Vietnam post US pullout.
“No! No! No!
Bear Stearns is fine!!!”
Jim Cramer
Mar 2008
Beware of false prophets......
What you think of Cramer ain't my problem and has nothing to do with my point.
Here's a fact:
Open interest at the Comex as of 12/12 for Dec gold: 811 contracts.
Here's another fact:
Delivery notices at the Comex as of 12/12 for Dec gold: 37 contracts.
Here's another fact:
Total deliverable gold in Comex warehouses: 8,553,831 ounces.
Enough to deliver 85,538 contracts.
So, what do we have?
Open December gold contracts that amount to 1% of Comex stocks.
Most of which will be closed without making or taking delivery. Just as usually happens, month after month, Sinclair or any other rabble-rouser notwithstanding. This entire pile of baloney has been propagated and repeated for the last 30 years, ad nauseam.
We may now safely conclude that you are, in fact a tool who will believe anything. It must be true! I saw it on the internet!
Might want to read the deliveries report again. The 37 deliverable contracts you mention are only from the list of the top 19 brokerages/banks. Total deliver notices for DEC 08 is 12,673 (cumulative).
COMEX can cover this, if the ounces in the deliverable stocks are actually there. It may or may not be physical. Some of it may be paper gold only.
BTW, if there are specific words that baffle you with regards to the financial market, then this site has been of assistance to me: http://www.investopedia.com/?viewed=1
Yup.
And open contracts for February of 165,595 which represents sixteen and a half million ounces. Twice what COMEX has, even if you count in the registered stuff, not just the eligible stuff.
I talked to a dealer last week. He flat out said COMEX is busted, there is no way they can keep it going, unless the price of gold totally collapses.
Why would I want to do that? I read it right the first time. Cumulative notices have nothing to do with it.
Thanks for demonstrating that you are yet another who has no clue about that of which they speak, a characteristic of many who post here.
LOL.
I see we have yet another dufus who has no clue. That goes for your "dealer" buddy, too.
You conspiracy clowns are rich.
If you want to come on these threads and make comments, possibly educate people if they are rookies, or whatever then feel free.
If you want to come here just because you get your jollies and feel superior by acting all snarky, then you’re an asswipe.
Personally, I trust a dealer at an outfit that is processing 40,000 ounces of silver a week a bit more than some nobody like you.
/rant/
Cumulative notices are the total number of orgs/individuals who have filed to have their contracts converted to physical.
You have absolutely no clue as to how this works, and you are using bluster/insults to cover for your initial mistake. Grow up.
LOL.
It's neither.
It's the number of contracts upon which delivery notices have been issued by the holders thereof. Since you have obviously never made or taken delivery on a Comex contract and wouldn't even know what tendered or retendered means, I'm going to ignore you and the rest of the ignoramuses on this thread.
It must be true! I heard it on the internets!
Is that supposed to impress someone?
I trade more silver than that on a daily basis and have for about 30 years. Same thing goes for about 10 other markets. My single biggest daily contribution to Comex volume was something a little over 3,000 contracts of gold back in 1980.
You (and your "dealer") don't know what you're talking about.
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