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Old 06-01-2013, 01:25 AM   #1
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A COMEX Challenge!

...

I am strongly considering (and will likely do this if I get enough support/egging-on/cheerleading) going through the process of getting a 100 oz gold bar via the COMEX futures process (with a commodity broker I imagine). To save me a bit of time, I re-post the below that I put up at Zero Hedge (lightly edited to reflect I am putting this up here) a little while ago:


I have a project that I will undertake with sufficient "moral support". It will take some time, but I think this would be very educational and probably of great interest to the Zero Hedge [pmbug.com] community.

I am going to start researching what it would take for me to get delivery of a COMEX 100 oz gold bar via the futures process (via a commodity broker). I would be starting at "Ground Zero" (knowing almost nothing), so this will take some time for me to set up.

I will only do this if I get a lot of "moral support" (comments at [pmbug] do not count -- too easy), these would be by email or better by comment at my blog. I can do this with my own money, although it would require substantial shuffling around of assets (including selling some of my physical gold now). I do not ask or want anyone else's money! Only your encouragement as well as suggestions and recommendations (a cooperative commodity broker for example).

If I do NOT get support for this effort, I will likely NOT do this.

Parallel (independent and separate) efforts are encouraged! If any of you have the means and desire to test COMEX, please do get in touch. I especially ask any of my "virtual friends" (anyone who has been decent to me) to get in touch with me, particularly if you know something of the process or would to undertake a similar action!

Gold, bitchez! Real gold!

Join me! Or egg me on!


http://tinyurl.com/ll6xvhw
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Old 06-01-2013, 01:29 PM   #2
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Can you get one for me as well, Bearing ?

I would be really interested to know the truth here and we know you well enough to know you will be honest with us.

Although there might be a price they could pay to cash settle, that would buy your silence
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Old 06-01-2013, 04:50 PM   #3
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This is an interesting project, I wish you good luck.

I think the hard part is going to be finding a broker who has any interest in helping you. The firm I work for trades tens of millions of CME contracts a year and we still get phone calls from our clearing firm if any of our contacts get to close to expiration. I guess the settlement process is a pain for them.
Your broker gets paid on your volume. If you say your only going to trade one contract, and you are going to take settlement on it, I have a hard time imagining a broker wanting to take you on. Do you have a line on somebody? Maybe someone wants to help you but it is a pretty short list of approved brokers.

I am really interested to see if this will work.

ID
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Old 06-01-2013, 07:35 PM   #4
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You can buy a 100 oz. gold bar on APMEX right now if you really want one. I would think you are going to need to buy many more from Comex to get the answer you are looking for because I don't think they would play fair over a single bar, but I would love to read the story if you are willing to try, but only if it has a happy ending (i.e. don't go broke over this by over-extending yourself financially because it is important to stay diversified to protect your assets in my opinion).
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Old 06-01-2013, 10:03 PM   #5
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...

It looks like I was straightened-out over there at Zero Hedge. It looks like the CME (COMEX) "rulebook" allows settlement in CASH rather than the commodity itself (is so desired by the seller).

So, I will not pursue this any further other than to check with a futures broker to see if this is so. Probably.

And I was sooooooooo looking forward to either extracting a bar like pulling teeth, or taking the mythical 120% to settle in cash. It looks like that reports of Asian buyers having to pay $500 over spot for kilo bars is not correct (I think Jim Willie wrote something like that).

After all, if you or I could get 120% for cash, would we not do it? Then I would take the 100%, buy gold from APMEX (as Aubuy suggested) and enjoy the other 20%...

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Old 06-01-2013, 10:52 PM   #6
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Just buy gold and take it out of circulation. Doesn't matter the denomination or who you buy it from. It's zero sum
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Old 06-03-2013, 09:12 AM   #7
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Number 6: What do you want?
Number 2: We want information.
Number 6: Whose side are you on?
Number 2: That would be telling.

~~~

I would have enjoyed reading your expose' had you followed through, but I think it likely that at the end, you would only get back paper and a cold shoulder - not the information/result that you were seeking.
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Old 06-04-2013, 09:19 PM   #8
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...

From the COMEX rulebook (sorry for bad formatting, just a "cut & paste"):

7B14. FAILURE TO DELIVER

In the event a clearing member fails to fulfill its specific delivery obligations pursuant to Exchange rules, in connection with a product listed for trading and clearing or for clearing-only by the NYMEX Division or the COMEX Division, the sole obligation of the Clearing House is to pay reasonable damages approximately caused by such delivery obligation failure, in an amount which shall not exceed the difference between the delivery price of the specific commodity and the reasonable market price of such commodity at the time delivery is required according to the rules of the Exchange. The Clearing House shall not be obligated to: (1) make or accept delivery of the actual commodity; or (2) pay any damages relating to the accuracy, genuineness, completeness, or acceptableness of certificates, instruments, warehouse receipts, shipping certificates, or other similar documents; or (3) pay any damages relating to the failure or insolvency of banks, depositories, warehouses, shipping stations, or similar organizations or entities that may be involved with a delivery.

Notwithstanding any provision of the rules, with respect to products where delivery obligations are fulfilled directly between clearing members, the Clearing House has no obligation or liability to any clearing member or any other person relating to a failure to fulfill a delivery obligation unless it is notified by the clearing member that did perform, or was in a position to perform its delivery obligations, that a failure occurred, as soon as possible, but in no event later than sixty minutes after the time the delivery obligation was to have been fulfilled according to the rules of the Exchange.

If a clearing member does not fulfill its delivery obligations to another clearing member, it shall be responsible to the Clearing House for any damages incurred by the Clearing House as a result of such delivery obligation failure.

A failure by a clearing member carrying a short futures position to notify the Clearing House on or before the time specified by, and in the manner prescribed by, the Clearing House on the last day on which such notice is permitted shall be deemed a violation of this rule, except that the President of the Clearing House may, for good cause, extend the time to present such notice.


***

THAT look like lots of wiggle room...

Link:

http://www.cmegroup.com/rulebook/NYMEX/1/7B.pdf

Last edited by PMBug; 06-05-2013 at 08:27 AM. Reason: fix formatting
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