COMEX deliveries and registered gold (silver too)

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What the heck are those mysterious "exchange for physicals," the mechanisms by which contracts to buy gold on the New York Commodities Exchange are neither fulfilled by delivery on the Comex nor settled for cash there but transported for supposed delivery elsewhere?

The mechanism long has been incorporated by the Comex trading system but was described as an "emergency" procedure undertaken upon agreement by buyer and seller -- except that the use of this "emergency" procedure has exploded in the last year, involving tens of thousands of contracts and, nominally, hundreds of tonnes of gold.

In one respect this is not so surprising, since there never has been much tonnage in Comex gold vaults, with nearly all Comex contracts settled for cash. But apparently physical demand over the last year has risen enough to cause sellers to need to source gold elsewhere.

The presumption is that the EFPs shift a seller's delivery obligations off the Comex to bullion banks in London. But this raises another issue, since so many EFPs have been issued in the last year that if delivery really was being claimed for them, unallocated metal in London -- metal available for sale, rather than metal being vaulted for exchange-traded funds and other institutions -- would be wiped out. In January Bullion Star researcher Ronan Manly calculated that fewer than 1,200 tonnes of gold in London were really available for trade:

Indeed, sources in the London gold market say that few EFPs ever claim delivery. Rather, these sources say, EFPs are usually cash-settled in London with their claimants paid cash bonuses that are never reflected in the gold price, which would be much higher if the bonuses were reflected.

But as the tightness of gold supply in London increasingly has been recognized in recent months, EFP claimants are said to have been demanding larger bonuses against the risk that the gold will run out, making their EFPs worthless.

Despite the "physicals" in their name, the vast increase in their use suggests that most EFPs have not been resolved by any delivery of metal. So those using and sustaining the mechanism must have other purposes -- like sustaining the increasingly creaky fractional-reserve gold banking system.

Whatever is happening with the EFPs, their enormous use in the last year is new and indicates some big change in the gold market, and it must be an especially sensitive change because Comex operator CME Group, the U.S. Commodity Futures Trading Commission, and the U.S. Office of the Comptroller of the Currency -- nominal regulators of the gold market and its bullion banks -- refuse to explain what it means.
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The COMEX gold story has gotten some attention in mainstream news circles...
At the center of it all are a small band of traders who for years had cashed in on what had always been a sure-fire bet: shorting gold futures in New York against being long physical gold in London.. Usually, they’d ride the trade out till the end of the contract when they’d have a couple of options to get out without marking much, if any, loss.

But the virus, and the global economic collapse that it’s sparking, have created such extreme price distortions that those easy-exit options disappeared on them. Which means that they suddenly faced the threat of having to deliver actual gold bars to the buyers of the contract upon maturity.

It’s at this point that things get really bad for the short-sellers.

To make good on maturing contracts, they’d have to move actual gold from various locations. But with the virus shutting down air travel across the globe, procuring a flight to transport the metal became nearly impossible.

If they somehow managed to get a flight, there was another major problem. Futures contracts in New York are based on 100-ounce bullion bars. The gold that’s rushed in from abroad is almost always a different size.

The short-seller needs to pay a refiner to re-melt the gold and re-pour it into the required bar shape in order for it to be delivered to the contract buyer. But once again, the virus intervenes: Several refiners, including three of the world’s biggest in Switzerland, have shut down operations.

Signs of distress picked up on Friday, March 20, when the cost to swap New York futures and spot physical gold in London -- the world’s biggest market -- rose to about $2. Typically, this trade cost almost nothing. After the close of the next session on Monday, that premium had jumped further to $6.75.

When traders in Asia entered Tuesday morning, there weren’t many sellers or offers, and suddenly they were scrambling to buy whatever gold they could get their hands on. By the time London came in, most of the market was squeezed and nobody wanted to sell.

“I realized it was going to be an extremely volatile day,” Tai Wong, the head of metals derivatives trading at BMO Capital Markets in New York, said of Tuesday. “We watched this panic develop literally over the course of 12 hours. Having seen enough market dislocations, you recognize that the frenzy wasn’t likely to last, but at the same time you also don’t know how long it would extend.”

By the time the panic finally subsided Tuesday night, major investors and decades-old veterans were reeling. At the peak of the carnage, potential total losses were estimated at as much as $1 billion, according to market participants. That’s even though the people involved in the trade represented less than 4% of total open interest -- or the amount of outstanding contracts.

Traders in need of physical metal went as far as to cold-call holders of gold bars in hopes that they’re in possession of exchange-approved metal. Some investors paid massive fees to have the remaining operating refineries to mint new gold bars, according to people with knowledge of the matter.
The spread between gold futures contracts swung wildly on market uncertainty

The spread between April and June futures contracts on Tuesday jumped to $20 an ounce, meaning it cost that much more to buy metal for April than it did for two months later. That signaled more near-term demand for bullion and the need to soon have physical supply in hand.

The five banks that clear gold trades in the London market are considering expanding their network of storage locations to other countries if it becomes impossible to fly enough gold in and out of London, said two sources involved in the discussions.

The move would be aimed at reducing the risk of disruption if metal cannot reach London, the world’s most important physical gold trading hub, where trades are underpinned by metal held in high-security vaults.
The London Bullion Market Association, which oversees the London trade hub, on Friday said that it was looking with clearing banks and other market participants at “the feasibility of global delivery outside of London”.

The clearing banks are preparing to accept gold at vaults in Switzerland and elsewhere, the two sources said, adding that a final decision had not yet been taken.

The plans could include vaults that the banks operate as well as storage run by other companies, including refineries and logistics businesses, one of the sources said.

I wonder if they are talking to the Texas Bullion Depository.

Coronavirus Sparks a Global Gold Rush

By Liz Hoffman, Amrith Ramkumar, and Joe Wallace
The Wall Street Journal
Friday, March 27, 2020

As the coronavirus pandemic takes hold, investors and bankers are encountering severe shortages of gold bars and coins. Dealers are sold out or closed for the duration. Credit Suisse Group AG, which has minted its own bars since 1856, told clients this week not to bother asking. In London, bankers are chartering private jets and trying to finagle military cargo planes to get their bullion to New York exchanges.

It's getting so bad that Wall Street bankers are asking Canada for help. The Royal Canadian Mint has been swamped with requests to ramp up production of gold bars that could be taken down to New York.

With staff reduced at the Royal Canadian Mint because of the virus, the government-owned company is only producing one variation of bullion bars, according to Amanda Bernier, a senior sales manager. She said the mint has received "unprecedented levels of demand," largely from U.S. banks and brokers.

The price of gold futures rose about 9% to roughly $1,620 a troy ounce this week—that is 31.1034768 grams, per the U.K. Royal Mint—and neared a seven-year high. Only on a handful of occasions since 2000 have gold prices risen more in a single week, including immediately after Lehman Brothers filed for bankruptcy in September 2008.
There are two ways to own gold: in bars or coins or jewelry stored in bank vaults, or in futures contracts traded on an exchange, which guarantee the holder a certain amount of gold at a certain price on a certain date.

Those contracts trade on CME Group Inc.'s Comex division of the New York Mercantile Exchange. The problem? Much of the world's gold is in London and has been since the 17th century, when the Bank of England set up a vault.

Today, the Bank of England says it has the second-largest collection of gold in its vault, behind only the New York Fed.

The disruptions this week pushed the gold futures price, on the New York exchange, as much as $70 an ounce above the price of physical gold in London. Typically, the two trade within a few dollars of each other.

That gulf sparked a high-stakes game of chicken in the New York futures market this week. Sharp-eyed traders started snapping up physical delivery contracts, figuring banks would have trouble finding enough gold to make good and they would be able to squeeze them for cash. That set off a scramble by banks.

Goldmoney's Mr. Sebag said bankers were offering him $100 or more per ounce over the London price to get their hands on some of his New York gold.
For those able to deliver, though, there is big money to be made. In normal times, it costs around 20 cents to fly an ounce of gold, just under 20 cents to melt the bars down and refabricate them to match New York's delivery standards, and another 10 cents or so in financing costs, according to a retired senior gold trader. (London bars are heavier than those in demand in New York.)

So if New York prices are $1 an ounce higher than in London, a bank can make $80,000 moving five metric tons of gold—almost risk-free.

At Tuesday's prices, the same load would net $11 million in profit, minus the cost of chartering the jet.
COMEX can't deliver 100oz gold. I wonder how much peeps are gouging them for settling delivery contracts they can't fulfill.

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Follow up article by Roman Manly:

Conclusion: Today's atmosphere has eerie parallels to 1968 when the London Gold Pool lost control of the paper price of gold after trying to keep it locked down at $35/oz since 1962.
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London gold market sources are now even saying (more on that this month) that the real LBMA bullion bank float in London is less than 500 tonnes and maybe as low as 200 – 300 tonnes.

Looking at the COMEX data and vaults, COMEX, as always, has very low gold holdings. The 9.2 million ozs number which CME refers to in the above statement (actually 9.245 million ozs) is only 287 tonnes of gold. Of that figure (which refers to Tuesday 31 March), 114 tonnes is in the Registered category, meaning that there are already vault warrants issued against that gold. ...

Seems like it might not be enough so satisfy demand for physical as central banks make money printers go brrr.
I seem to remember a movement some years ago to get every person to buy physical silver, even just an ounce, on a certain day. The promoters hoped the Comex would be thereby exposed for price manipulation. I guess the organizers weren't very successful.

Now many people are just worried about getting some government cheese or cash. There is great demand for silver, but those seeking are probably looking for tens of ounces or hundreds of ounces and there is still not a universal desire to own real money.
I seem to remember a movement some years ago to get every person to buy physical silver, even just an ounce, on a certain day. The promoters hoped the Comex would be thereby exposed for price manipulation. I guess the organizers weren't very successful.

I seem to recall that Max Keiser was driving that campaign. Silver shot up to ~$49/toz before getting smashed. It was a huge run, but it didn't ultimately cause any significant breakdowns in the physical silver supply chain or the physical redemptions from the paper markets (COMEX).
I seem to recall that Max Keiser was driving that campaign. Silver shot up to ~$49/toz before getting smashed. It was a huge run, but it didn't ultimately cause any significant breakdowns in the physical silver supply chain or the physical redemptions from the paper markets (COMEX).

That's right. Good ol' Max.

I'm still exchanging my Federal Reserve Hiney Wipes for shiny. I hope all y'all are doing the same.
Yeah good ole Max ........ 'Crash the Morgue' was the catchphrase

I did my bit, bought a good barrowload and am still 45% down
and Ive been paying bullionvault for storage and insurance ever since )-:

It probably did cause a few breakdowns

But dont worry they all said, silver will rocket ahead of gold cos there is none and it all gets used in circuits and socks and when the demand exposes the paper game it will be more valuable than gold, which is useless by comparison .......

I forgive but I dont forget (-:
Yeah good ole Max ........ 'Crash the Morgue' was the catchphrase

I did my bit, bought a good barrowload and am still 45% down
and Ive been paying bullionvault for storage and insurance ever since )-:

It probably did cause a few breakdowns

But dont worry they all said, silver will rocket ahead of gold cos there is none and it all gets used in circuits and socks and when the demand exposes the paper game it will be more valuable than gold, which is useless by comparison .......

I forgive but I dont forget (-:

I'm rooting for you rblong, along with the rest of us....
An ounce of bullion sold in New York was as much as $50 more expensive than in London Tuesday, compared with just a few dollars in normal times. The price spread is seen as a measure of the cost to swap futures contracts into gold in its physical form.

The spread blew out to similar levels about two weeks ago, as the coronavirus crisis disrupted supply chains and caused flight cancellations, leading to worries over a gold-bar shortage in New York just before April futures contracts became deliverable.

In the end, banks including JPMorgan Chase & Co. made more gold available and exchange inventories swelled to levels that were more than enough to cover any demands for delivery.

The resumption in price divergence shows, however, that investors are still worried about supply disruptions even though delivery for the current most-active futures contract -- June -- isn’t due anytime soon.
Total deliverable stockpiles in Comex warehouses were 4.1 million ounces on Monday, compared with 1.8 million toward the end of March.

What’s more, overall total stockpiles on the Comex were at a record 16 million ounces, according to bourse data. That includes bars of different sizes eligible for a new contract launched this week. Almost 12 million of those inventories meet exchange requirements to potentially become deliverable.

Still, traders say there’s too much risk and they’d rather stay away from the market altogether at the moment, which is also exacerbating the price divergence.
Shell-Shocked Traders

“You have a bunch of shell-shocked market makers who are literally hiding under their desks and do not and possibly can not make markets in any size, shape or form,” said David Govett, head of precious metals trading at Marex Spectron. “Hence we have the lack of liquidity, the small volumes and the wide spreads.”

Last week, Comex volume in the most-active contract was 80.6 million ounces. That’s a 72% drop from the end of February. Meanwhile, volume tracked by the London Bullion Market Association’s LBMA-i service was about 165.1 million ounces last week, over half the late-February level.

No word on who owned the gold that JPM gave the Comex....
... the spot-futures spread blow out has been running into its third week now ...

Its instructive to review a short timeline of some of the events which have contributed to this ongoing saga over the last three weeks, because it shows that no matter what the LBMA and CME do, the spread between London and COMEX continues to stay out there.
As another aside, where did the JP Morgan New York vault suddenly get 126.8 tonnes of gold suddenly to add to Eligible category for the COMEX 4 GC contract? Was this 126.8 tonnes of gold suddenly shipped in to the JP Morgan vault from London? Hardly. Were 126.8 of London Good Delivery gold bars already sitting in its New York vault. Probably not as its London and not New York which is the center of 400 oz gold bar storage. Was there some type of gold swap involved between London and New York. Possibly.

Another intriguing possibility is that now that former LBMA Good Delivery List gold bars are eligible for the new 400 oz contract, that JP Morgan borrowed Old US Assay Office gold bars from the New York Fed (their two gold vaults are beside each other), and then added these to the Eligible category for the new 4GC gold contract.

Root Cause of Spot vs Futures Gold Price Discrepancy

So what is the cause of this dislocation in pricing between the lower ‘spot’ price and the higher ‘futures’ price, i.e. between the London LBMA gold spot market and the New York COMEX gold futures market? The answer in general is that the problem is with the spot price. And where is the spot price? London.

Ironically, the LBMA bullion banks are trying to shift the attention away from London, when London is exactly where the problem is. The spot price problem appears to be due to liquidity problems of the LBMA market makers in London where they are suspicious of trading with each other. This is despite the fact that these LBMA market makers are obligated to constantly make a market and offer two way price quotations to each other. These market makers are BNP Paribas, Citibank, Goldman Sachs, HSBC, ICBC Standard, JP Morgan Chase, Merrill Lynch, Morgan Stanley, Standard Chartered, Bank of Nova Scotia, Toronto-Dominion and UBS.

The spot price problem has nothing to do with air travel cancellations or shipments of 100 oz gold bars from London to New York. These market makers do not make markets in physical gold. The unit of trading in London is not real gold anyway, its unallocated gold or gold credit which is issued by a bullion bank and which has counterparty risk.

Something has spooked these market makers and caused a drop in liquidity in the London market. These banks, which normally trade with each other, now do not want to trade with each other due to heightened counterparty risk. Unallocated trading volumes in the London gold market have fallen over the last three weeks. See chart below.

Likewise, according to Bloomberg, COMEX gold futures trading volume last week was, at 80.6 million ounces, 72% less than the end of February. From the same Bloomberg article, there is an intriguing quote from commodities broker Marex Spectron, saying:
“You have a bunch of shell-shocked market makers who are literally hiding under their desks and do not and possibly can not make markets in any size, shape or form,” said David Govett, head of precious metals trading at Marex Spectron. “Hence we have the lack of liquidity, the small volumes and the wide spreads.”

Since Marex is a broker for EFPs, maybe they would know. But why would market makers not want to trade? Because banks suffered EFP problems and then the EFP spread between London and New York became too large for them to make a market in spot? But that’s just circular logic. What causes LBMA market makers to become shell shocked and literally hide under their desks?

Could it be that the gold trading activities of some of these LBMA bullion banks have blown up and they have ceased their market making activities, but have not publicly stated this? Stranger things have happened.

More (incl. details and charts):
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I'm seeing right this minute gold futures at $1,750 and gold spot at $1,680. That's a $70 spread. Seems to be blowing out again. It was in the $30-$50 range the last few days.
... we can see from the above CME stops and issues report data for the 5,000 ounce silver futures contract, that the month of April has gotten off to a disastrous start for the bullion banks, as they were a net positive in silver supply of a few hundred thousand ounces for the four months prior to April. However, during just the first nine days of April, the bullion banks were already on the hook for 1.43 Mozs of physical silver, a figured that dwarfed the demands of COMEX warehoused physical silver for the prior four months.

It will be interesting to see if this rate of physical silver loss continues for the rest of April. One month of physical silver loss at this pace will likely not be disastrous, but a few consecutive months at this pace will likely place extreme stress on the ability of COMEX to back their silver futures trading with real physical silver, especially since two of the world’s leading silver producers, Ecuador and Peru, ordered nationwide suspensions of all silver production recently in response to the coronavirus pandemic and the total registered silver backing COMEX silver futures trading was listed at slightly more than 82Mozs as of the fourteenth of this month. Ever since the demise of Lehman Brothers during the 2008 global financial crisis, JP Morgan has become the de facto bank of the US Central Bank for warehousing the majority of physical silver and gold that underlies COMEX silver and gold futures trading. ...

"Break the Morgue" might still be in play...
... private COMEX correspondence to COMEX regulator Commodities Futures Trading Commission (CFTC), dated 9 April 2020 (the same day that LBMA claimed very healthy gold stocks in New York), that covers a detailed discussion about deliverable gold supply from the COMEX (the Exchange), and most importantly that:
“The Exchange recognizes that gold is used as an investment vehicle and as such some gold stock may be held as a long-term investment.“

Because of this, the letter continues:
“the Exchange, in an effort to represent a conservative deliverable supply that may be readily available for delivery, made a determination at this time to discount from its estimate of deliverable supply 50% of its reported eligible gold at this time."

Not only that, but the CME concedes that:
“surveys conducted indicated no clear consensus as to how much gold is dedicated to long term investments.“

Said another way, no clear consensus means they don’t know. So the CME does not even know how much of the eligible gold in the COMEX approved vaults is held as long term-investments. Why then even assume 50% of the eligible gold is part of deliverable supply? Why not choose 30%, or 20%? Why even include any eligible gold at all as deliverable supply? With this new bombshell, in one foul swoop, the CME admission now casts doubt on the entire ‘Eligible gold’ category.

Why should any of this matter, you may ask? Because simply put, ‘gold price’ discovery is jointly driven by bullion bank trading of COMEX gold futures and London unallocated spot, with the two venues accounting for the majority of global ‘gold’ trading volume, but with synthetic and cash-settled positions having almost nothing to do with physical gold inventories, while dominating the formation of the ‘international gold price’. But when physical gold demand in an environment of constrained supply starts to make its influence felt, as is happening right now, the paper gold markets that run on fumes operated by the bullion bank cartel and fronted by the LBMA and COMEX, need to do all that they can to prevent the paper gold markets from imploding.

The importance of this CME admission cannot be overstated. What the COMEX has now revealed to the CFTC is that there is far less physical gold available in the New York vaults that can be used for gold futures contract deliveries, because the CME, in its own estimate revision, has just slashed the largest deliverable supply category by half.

But it’s even more serious, since the CME goes even further, telling the CFTC that it may in the future increase the discount/haircut level above “50% of reported eligible gold when calculating deliverable supply estimates“, bringing implied deliverable supply to less than 50% of eligible gold inventories.

And just like that, with this bombshell, there is a new market reality. ...
But wait. There’s an even bigger bombshell buried in the CME’s letter to the CFTC. For in what can only be described as outright panic about the precarious levels of gold inventories in the COMEX approved gold vaults in New York City and Delaware (which are the vaults of HSBC, JP Morgan, Scotia, Brinks, Lommis, Malca-Amit, MTB, IDS Delaware, and Delaware Depository), the COMEX has also signaled to the CFTC of a plan to count gold stored in unapproved vaults (i.e. outside the entire COMEX gold vault system) as part of deliverable supply. For the same letter says that:
“The Exchange does not currently account for Exchange grade gold stock stored at un-approved depositories that can be moved economically into Exchange-approved facilities. The Exchange may, at a later date, determine to account for such stock when calculating deliverable supply estimates."

Yes, you read that correctly, Such is the level of panic in the paper gold market that COMEX is considering claiming to have access to gold that is not even in the COMEX vaults network. Such a move would crystalize the growing belief that COMEX is running on gold fumes, and bring LBMA – COMEX panic stations to the proverbial ‘Code Red’ status.

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I guess I'm not the only one who has witnessed the collapse of oil futures, read all those comments about the 'paper' markets not helping the market at all and wondered if confidence might wane in the concept of futures ..........

And along comes Turd with similar thoughts -

After watching front month NYMEX crude oil futures collapse into negative pricing on Monday, you should be sure to consider the possibility of an exact opposite scenario playing out one day soon in COMEX gold futures.
Back in March and April, a chasm opened between the dollar price of spot gold (XAU) and the front month COMEX futures contract. So-called experts reassured us that this was simply due to "logistics" and "gold being in the wrong place". ...

... As with gold, silver has its own spot pair quoted as XAG/USD. It also has its own COMEX front and delivery month, which at present is the July contract.

... So the spread in COMEX gold has returned to "normal", allegedly because supply strains have eased and confidence in delivery has returned. OK. But how does that explain the ongoing and widening spread in COMEX silver? ...

... a deep-pocketed party should be able to buy 5,000 ounces at spot and concurrently sell a COMEX contract to deliver those 5,000 ounces in July. It's an easy, risk-free trade and with a 50¢ spread, just one contract would net you $2,500. Do this 100 times and you profit $250,000 in about six weeks. Do this at the COMEX position limit of 1,500 times and you pocket $3,750,000—again, RISK FREE—in about six weeks.

Now of course, you and I don't have the $135,000,000 needed to put on this trade just lying around. But banks do. Large hedge funds too. So why don't they? A $3,750,000 six-week profit on $135,000,000 is 2.78%. Where on earth at this moment in 2020 are you guaranteed to profit 2.78% in the next six weeks? NOWHERE! What would that be? About 30% annualized??

And yet NO ONE is doing it. How do we know? Because the spread remains and continues to widen.
If you are in the club and getting 'looked after' you probably dont want to bet against those looking after you

Remember Bear Stearns last time around ?
Apparently they were betting the price of gold would rise and needed to be punished .....
The New York gold market has been flipped on its head in just a couple of months, with a scramble for the metal turning into a glut.
Since the end of March, 16.8 million ounces have flowed into Comex. That’s more than the total increase in ETF holdings last year, and almost equivalent to India’s annual jewelery demand. Inventories stand at a record 26 million ounces as of Tuesday, dwarfing the 9.6 million ounces worth of June contracts still open.

To be sure, the imbalance in the New York market is a localized phenomenon: gold remains in high demand around the world among investors concerned about the state of the global economy.

... Key refining hub Switzerland shipped a record amount of gold to the U.S. in April, according to figures dating back to 2012. Australia’s Perth mint also ramped up production last month and shipped bars to the Comex.

I'm thinking the COMEX is going to be needing every bit of that "glut" once the markets start waking up to the reality of the economic damage that's been done.

Edit: Related note:
The U.S. and Germany accounted for most of the gold exports out of Switzerland last month, as Swiss trade data showed a marked change from the norm as key Asian gold-consuming nations imported almost none, said Metals Focus. Gold-market participants closely monitor the Swiss data since the country is a key hub for refining of precious metals. April exports from Switzerland rose for the second straight month in April even though major refineries were fully or partially shut down form several weeks starting in late March. April exports to the U.S. hit a record high of 43 metric tons (in fine-weight terms) in March, then soared to 111 tons in April. “Such a notable surge also saw the U.S. overtake Greater China to become the largest destination for Swiss gold bullion exports for 2020 to date,” Metals Focus said. “To put this into perspective, at an average of less than 2t per month, the U.S. accounted for only 1% of Swiss exports over 2014-2019. Growing concerns about a shortage of physical gold deliveries on Comex (as a result of coronavirus lockdowns) was the key driver behind this surge.” Germany imported eight tons of gold from Switzerland in April, half the record level of March but still historically high, the consultancy said. Excluding the U.S. and Germany, Swiss gold exports were only seven tons in April, compared to a monthly average of 121 from 2014 to 2019, Metals Focus noted. Many nations had their lowest Swiss imports ever in April, with mainland China importing none, while Hong Kong and India slumped to just one and 500 kilograms, respectively. This was due to retailers being closed because of the COVID-19 pandemic and consumers shying away from discretionary purchases such as jewelry, Metals Focus said.
An extreme dislocation in the global gold market earlier this year spurred banks to shift some positions out of New York futures and into the London over-the-counter market, according to a leading figure in the industry.

Market participants’ changing behavior is reflected in gold trading volumes in the two hubs, said London Bullion Market Association Chief Executive Officer Ruth Crowell. The amount of gold traded in the U.K.’s capital surpassed the U.S. futures market in recent months, she said.
“The scale of the dislocation has really made everyone ask questions in terms of the ongoing approach of hedging long London, short Comex,” Crowell said in a phone interview. “Certainly in the short to medium future, it’s not an even hedge. So they’re having to either go OTC, or they’re reducing their trading appetite.”

The London market, which the LBMA represents, has historically been the main hub for trading in spot gold. But volumes of swaps and forwards, which traders can use as a hedging mechanism instead of Comex futures, have increased recently, according to LBMA data. While the volumes remain below those in the futures market, they have risen to the highest relative level in records going back to November 2018.

Crowell pointed to a day of record trading volume in the London market on May 26 -- when 67 million ounces of gold, worth $115 billion, changed hands -- as evidence of some traders shifting positions into the London market.

If it is sustained, the shift risks undermining the popularity of the gold contract on New York’s Comex, which is owned by CME Group Inc. and is the world’s leading venue for trading precious-metals futures and options.

In an open and transparent market where full gold trade data including Exchange for Physical (EFP) and gold allocation trades were published in real time, all market participants would instantly assimilate and understand the late March event and its aftermath, and with those full facts the market would instantly and accurately be able to predict and monitor the succeeding chain of events – which by the way – are still in motion, a case in point being at the COMEX, where right now unprecedented numbers of COMEX gold futures contracts are moving into delivery.
Central to the delivery process of COMEX gold warrants between shorts (the gold sellers) to longs (gold buyers) is a CME report called the COMEX Metals Delivery Notices report, also known as the Metals Issues And Stops report. This report is published in daily, monthly and year-to-date versions and can be accessed . Now more than ever, this report is worth looking into since COMEX “delivery" numbers have literally ‘gone off the charts".
On 31 March, a week after the 23/24 March spot – futures blowups and the first notice day for the then active April gold futures, COMEX watchers were stunned when a huge 17,302 contracts representing (1,730,200 ozs or 53.81 tonnes) of gold appeared on the Delivery Notice report, which was 56% of registered stocks on that day or 67% when of registered stocks excluding pledged gold.

Over subsequent days in April, this number expanded to a massive 31,666 contracts (98.5 tonnes), a record at the time. To put this into perspective, for the 3 preceding months January to March, a combined total of only 13,864 contracts had gone to delivery, an average of 4,621 per month. Now April’s report was showing nearly 7 times that amount.
While the April deliveries of 31,666 contracts were unprecedented, that was just a warm up, something which became apparent when the intent for deliveries notices for the June contract started showing up from late May onwards. On 29 May, first notice day for June deliveries, COMEX released a report showing that short holders had indicated that they were moving an incredible 28,375 contracts for delivery on the first day, which was nearly as many contracts as went through in the whole of April, itself a previous record month. From there the contracts intending to deliver just piled, over 7,000 the next day, 6,000 the day after that, to a situation where there are now 52,010 June contracts lined up for delivery. That’s 5,201,000 ozs of gold or 161.7 tonnes. With June Open Interest now at tiny levels, it looks like 5.2 million ozs is now more or less the amounts of gold warrants which will be delivered for June. ...
With 5,201,000 ozs of gold (161.7 tonnes) involved in these delivery notices, this is interestingly just a few tonnes more than all the gold that was exported from Switzerland to the New York during March and April, i.e. 42.7 tonnes in March and 110.6 tonnes in April, for a combined 153.3 tonnes.

I don't pretend to understand the full implications of this, but it's clear that some deep pockets are wanting physical gold and the COMEX is straining to accommodate the demand. The dollar price of gold has traded more or less sideways in recent days. If this demand for physical maintains pace on the COMEX, I would think it's going to put upwards pressure on the gold price.
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The chaos that engulfed the gold market in March as the global pandemic choked off physical trading routes is rippling through other precious metals, resulting in price dislocations and a surge in exchange inventories for silver and platinum.
On Monday, first-notice data for the July silver contract on the Comex in New York showed the largest single day of deliveries in almost 25 years. Deliveries for platinum on the New York Mercantile Exchange were more than five times the next largest month this year.
... The spread between silver futures and spot prices ended the second quarter at the highest in nearly four decades. Platinum’s EFP spiked to the highest since early 2008. And palladium had the largest spread on record, dating back to late 1993.

The turmoil caused stockpiles to jump amid efforts to meet the apparent shortages. On-exchange inventories for silver and platinum surged to a record and remain close to those levels.

Meanwhile, futures positions have been shrinking in the wake of the pandemic-induced dislocations, creating a glut of metal akin to gold’s stockpiles. Platinum open interest, a tally of outstanding futures contracts, is near the lowest in eight years and is down more than 56% from a peak in January. Open interest in silver futures is down nearly a third from a February high. ...

So back in May (see post #180 in this thread), it was reported that the Swiss were diverting most of their gold exports to the USA to help out the COMEX. Looks like they got everything back under control...

Swiss exports of gold to the United States all but halted in August while shipments to China and India rose, customs data showed on Thursday, suggesting a big transfer of bullion to New York that followed the coronavirus outbreak has run its course.
Switzerland, the world’s biggest gold refining and transit centre, shipped 412.9 tonnes of gold worth $22 billion to the United States between March and July but just 23.7 tonnes to China, Hong Kong and India combined, Swiss customs data shows.

In August, however, U.S. shipments fell to 28.5 tonnes and were almost offset by 26.8 tonnes of gold coming into Switzerland from the United States.

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