JPM was the culprit again. Last week they took 140k oz. overnight. COMEX has 490k oz. left and the market is acting that either it doesn't matter. Maybe paper gold is crashing because there's no gold behind these contracts and they're worthless. It'll be an interesting few weeks as the inventory potentially is drained to zero.
Has anybody done an analysis on the pro forma free cash after the deal closes? Mgmt was guiding to $875-975 m before the deal. If you figure $150 million from T CT plus $125 million with cost synergies after tax, you get around $1050-1150 m. Midpoint is $1.1 billion.
I was called a "POS" by the person I was responding to. If that's what you call a friendly reception, I'd hate to see an unfriendly one. My initial question (and it was just a question -- I wasn't advocating a position) is still unanswered. I had thought default was impossible. But JPM took 140k ounces from inventory on Friday, or about 20% of the registered stock. If that can happen in a single day, I don't think it's unreasonable to wonder if a default is possible.
I raised an intelligent question and I haven't heard an intelligent response yet. Without any gold to meet demand for delivery, aren't they in effect short?
QEP just paid $35.6k per acre for Permian acreage in Martin and Andrews counties. Do they not understand valuation either, or maybe you know the oil and gas business better than they do?
It may be in the warehouse but it's not eligible to be used for delivery on contracts. I didn't think it was a problem either, but now I'm not so sure. I was looking for intelligent conversation on this topic, but I'll have to find it elsewhere.
COMEX has around 22 tons of gold going into December and after the longs take delivery, they'll have almost nothing. They'll literally be leveraged 500 or 1000:1. What happens in February when they have to deliver and there's no gold? Do they declare a default? Do they go bankrupt? Are they effectively short every gold contract they've sold? If someone with knowledge of the situation can explain it to me, I'd appreciate it very much. Thank you.
Exactly right. COMEX is not a physical market anymore. It is a paper/digital market promising to pay in cash at settlement. No more physical gold will be exchanged between longs/shorts, and guess what? The market is just fine with that. It doesn't care. NOBODY WANTS GOLD; THEY JUST WANT TO SPECULATE ON PRICE MOVES AND BE PAID IN CASH!