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Posted on 03/11/2026 12:08:58 PM PDT by delta7
ICBC and Agricultural Bank of China have run out of investment gold bars. And silver premiums over London spot are 13%. Comex silver contract is sinking into irrelevance.
Last weekend, the US and Israel attacked Iran and the week’s news was dominated by another Middle East war. Markets’ gut reaction was to mark down investment assets and mark up dollars. Consequently, in the confusion gold and silver declined on the week as the dollar rallied. In European trade this morning gold was $5090, down $230 from last Friday’s close, and silver at $82.70 was down $11 over the same timescale. Turnover on Comex in both contracts remained very low.
Meanwhile, premiums for silver in Shanghai held in the 12%—14% band. Given that silver imported into China bears 13% VAT and the cost of delivering from London or New York adds an extra 2%, this price difference is not enough to trigger an arbitrage. Nonetheless, silver is still being drained from all vaults, China’s included.
The delivery situation on Comex is dire, with the equivalent of only 16,250 silver contracts registered for delivery. Compare this with the 6,466 contracts delivered in the March contract to date. The March contract is still being bought with the obvious intention of standing for delivery, as is the April contract which can be delivered from the last week in March onwards.
Comex silver is the most oversold it has been in over 20 years, with open interest on Wednesday at 112,794 contracts. This means that speculative activity is the lowest it’s ever been, discouraged by shorts not willing to sell any more contracts by widening their spreads. This is reflected in the next chart:
image.png
With over nine times paper liabilities compared with deliverable silver which is also rapidly declining, this Comex contract is heading for trouble. Registered for delivery silver is being withdrawn along with eligible. Since the silver crisis in London on 9th October last, 175 million ounces have gone from Comex vaults, presumably to London where lease rates have remained elevated.
To summarise the position, paper silver in all markets is being encashed for physical, despite the fall in prices since 29th January when silver peaked at over $120. And with China being more of a physical delivery market, Comex and London paper contracts are declining into irrelevance.
Meanwhile, gold marches on with demand ranging from central banks to retail buyers and remaining strong despite the volatility. Yesterday, it transpired that two of China’s largest banks, ICBC and the Agricultural Bank have run out of investment bars. Additionally, we can assume that there is strong demand for gold accumulation accounts at all Chinese retail banks with household savings running at an additional annual $5—$6 trillion equivalent and mirroring public demand for investment bars.
As with silver, there is minimal speculative interest in gold, with Comex’s open interest at the lowest levels since the covid pandemic:
image.png
It is remarkable that despite gold being in a strong bull market that speculative interest is so low, particularly when most of the major banks expect higher prices by the yearend. For now, hedge funds pair trading would sell paper gold short to buy dollars, which will lead to a short squeeze later.
The logarithmic chart demonstrates the underlying strength of gold’s uptrend despite short-term dollar demand: ......
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Paging Todd Hoffman............
The Chinese middle and upper middle classes do not trust their government controlled banks or have real faith in the paper value of “privately” held real estate. Any surplus savings they accumulate is often in the form of privately held goldand silver bunion. People in India have a similar approach.
Did they eat it ? LOL
You open the vaults and see piles of gold bars.
How do they determine if there is a shortage?
When’s silver going to 300 oz? A FReeper on here said load up at 120 because it’s going to 300. The last time I’m taking financial advice here.
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Never listen to delta7.
You’d be better off taking advice from joe biden on financial matters.
For the right price you can buy all you want. Offer ten grand per oz and I’ll bet you can get all you want.
“...silver bunion...”
Are those painful?
Difficult to remove/get rid of?
Always go small on free advice [and paid advice...].
Then wait some and observe.
Some of us loaded up @ $4-$7. It’s been a life-changing event, with more upside to come!
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