Inventory continues to be depleted from the two western exchanges at an alarming rate:
1. The COMEX inventory dipped below 8 million ounces to 7.97 million two days ago (250 tons). Deliverable gold is a mere 1,858.000 ounces (57.16 tons), down from 92 tons just two months ago.
2. The London Bourse is reporting 3-5 tons of gold leaving its depositories per day, (yesterdays depletion was 4.51 tons).
The COMEX is expected to deliver 5.87 tons this month and June is a huge delivery month with 244,231 contracts on the board. First day/delivery notice is only three weeks away. That equates to 24,231,000 ounces or 14 times the COMEX's deliverable inventory and three times the total inventory.
The norm is that most of those contracts will be rolled into following months and, there will be physical deliveries to the COMEX in the intervening period. But if the trend of a higher percentage of contracts standing for delivery occurs, there could be a serious shortage developing at the COMEX.
I am also mindful that inventories are depleted and will have to be re-stocked after the recent buying opportunity.
The London Bourse is the settlement agent for GLD which has responsibility for delivery of GLD's contracts and I do not have the recent numbers for their physical inventory.
London had 6.32 tons of metal removed from the GLD fund today.
China announced that it imported 223 tons of gold last month. World production outside of China and Russia is only 183 tons.
Open interest rose by 8,844 contracts so that is 884,400 oz's across the strip.
Another customer removed their gold (57,863 oz's) from JPMorgans customer account and JPMorgan now has only 137,377 ounces left in their customer account. This makes me think that JPM's customers do not want their gold confiscated or re-hypothicated by JPM. Gold owners are more than aware of what happened to gold inventory held by MFGlobal when it turned up insolvent...
Junes contracts declined by 4,963 so they are rolling out leaving 239,268 contracts or 23,926,000 ounces hanging over the COMEX's head for June delivery.
As a teaser I remind everyone that our national debt is about to hit $16,8 Trillion...
The knife cuts both ways. As the supply of paper gold lowered the price for a period of many years, unwinding that supply of paper will magnify the increase in price as it is unwound. The wildcards are: How much paper gold will the Banking Cartel be willing to write? and, When does the physical supply run out triggering the rout of the paper sellers?