The invisible gold trade (comex efp)

[pmbug]

Summarizing from the article - COMEX Exchange For Physical (EFP) trades allow two (or more?) actors to exchange physical gold for cash and/or comex shares without price discovery.

... Again, since November 24, 2017, we've been monitoring the daily totals of EFPs as reported by the CME on this website

In that time, there have been 136 trading days, and the COMEX has lodged a total of 1,457,469 Exchanges For Physical in COMEX gold.

That's a staggering amount! Why?

Because each COMEX contract is alleged to represent 100 ounces of gold for future delivery. Thus, 1,457,469 COMEX contracts represent 145,746,900 ounces of "gold". At 32,150 troy ounces per metric ton, the sum total of metric tonnes "exchanged" through this opaque COMEX process since November 24 of last year is about 4,533.

Again, in less than seven months, the total amount of gold "exchanged for physical" through this process is 145,746,900 ounces or 4,533 metric tonnes!

Let's put that into context...

The entire COMEX vaulting system only holds a total of 9,014,904 troy ounces as of June 8, 2018.

The GLD ETF allegedly held in its "inventory" a total of 26,645,428 troy ounces as of June 11, 2018.

Excluding China, which by law is not allowed to export gold, the entire world mined about 92,000,000 ounces in 2017.

When last audited, the entire LBMA vaulting system reported just 28,000,000 ounces once you exclude the gold earmarked as the holdings of the Bank of England and various ETFs.

So, do you begin to see where perhaps there's something noteworthy going on here?
...

https://www.sprottmoney.com/Blog/comex-efp-use-continues-to-surge-craig-hemke-gold-and-silver.html

Not mentioned in the article, but I think perhaps worth investigating, is if there is a similar explosion in the number of COMEX short future contracts (which might indicate if these EFP trades are employing COMEX futures, or are mostly cash).

Either way, I'm wondering if this might be an indication of some nations (perhaps ones trying to bypass economic sanctions) settling trade in gold. I have a hard time wrapping my head around the possibility of individuals trading so much gold in this manner.

 

[rblong2us]

Discussions around the COMEX 'exchange for physical' have referenced London as the place you are sent to collect your physical.

https://news.goldcore.com/us/gold-blog/gold-exports-to-london-from-u-s-surge-152-in-2018/

Is this the reason for the surge ?

 

[pmbug]

Wish I had more time to really dig into this issue and learn more about it. Seems like something pretty significant is happening here.

 

[11C1P]

Could it have anything to do with Brexit? Maybe after they've left the EU the taxes will be higher on gold & other PM's? Maybe it's like rats leaving a sinking ship, knowing something others have only speculated might happen, or as many on this site have thought, should have happened already.

 

[rblong2us]

Ok heres a question that has occurred to me -

If Russia has pretty much sold its US$ holdings and invested it in gold, why is Russia complaining about the devaluation of its currency versus US$ ?

Why not crash the paper gold market by buying bigly through the COMEX and insisting on delivery ?

This would surely put things in perspective for all the gold holding CB's, especially those with limited US$ holdings .......

 

[pmbug]

... why is Russia complaining about the devaluation of its currency versus US$ ? ...

Perhaps this...

...
“When the ruble weakens, locals traditionally start to get scared and companies as well as individuals buy dollars,” said Murat Temirkhanov, an Almaty-based analyst at Halyk Finance. “If the ruble weakens further, the rush to the exit will remain here as well.”

The tenge has plunged 7.2 percent in the past three months, the most among former-Soviet peers, compared with a 4.7 percent retreat for the ruble. The drop can largely be attributed to foreign investors exiting amid an emerging-market sell-off this year after building big positions in 2017, according to Gabriele Foa, an analyst at Bank of America Merrill Lynch.
...

https://www.bloomberg.com/news/arti...to-intervene-as-currency-rocked-by-ruble-rout

Capital flight
Diminishing foreign investment capital
Presumably also - higher borrowing costs in the global marketplace