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Hong Kong Mercantile Exchange To Close

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Two years after opening, the Hong Kong Mercantile Exchange (HKMEX) is to cease trading on Monday and close out all open positions. Clearly physical gold will not be delivered and the the question to ask is will the LBMA or COMEX be shortly behind it.

When the Rothchild’s HKMEx was launched in 2011, much of the metals community assumed that the COMEX & LBMA, were they not to outright default, would fade into irrelevance with the advent of the new Asian metals exchange.
Two years to the day after the exchange’s launch however, in perhaps the most glaring evidence of physical gold & silver shortage to date, the HKMEx has announced it will voluntarily cease trading, and all open positions will be closed out and financially (cash) settled on Monday 5/20!

…….

We suspect that come Monday morning, more than one Chinese investor who believed he owned a gold position (and learns that in fact he held paper) will immediately attempt to source and take delivery of physical metal.  As the Shanghai Gold Exchange appears to have stopped delivering gold as well, we suspect that the LBMA may be in for a bit of a physical run.

The first domino appears to have fallen in the ponzi fractional gold system.

Source: Silver Doctors

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Was The Gold Smash Making Way For A COMEX Default ?

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The last time we saw a major takedown of gold was in 2008 just before the Lehman default. There is no doubt that the drop in gold price was orchestrated, combined with COMEX hiking its margin rate, but was this all in preparation for a COMEX default ? There seems to be logic in this theory.


Submitted By Bill Holter, Miles Franklin Ltd,:

Last week Barrick Resources announced the postponement of their giant Pascua Lama mine.  This was to be one of the worlds largest mines and is now tied up in litigation over true ownership as it appears to show that Barrick does not have clear title.  The probale reserves were nearly 18 million ounces of Gold and almost 700 million ounces of Silver.  Work on this mine was completely ceased last Wednesday.

“Last Wednesday” was also an important day for the Kennecott copper mine in Utah, the ground started to shift more rapidly prior to this weekend’s landslide.  They knew this was coming as they closed the visitor center on April 1st and had all equipment and personel out of harms way.  This mine produces some 400,000 ounces of Gold and over 3 million ounces of Silver as a by product of copper, this is the largest copper mine on the planet.  Have you heard even a peep out of the mainstream media on this on?  I didn’t think so.
Is it not strange that these two events came to a head last Wednesday?  The same day that out of nowhere Gold reversed from being up and give up $40?  And then of course there was Friday with $85 and another $75 this morning.  Gold is now down $200 per ounce in just over 3 trading days.  Between these two projects, one not coming online and the other going off line, a VERY significant amount of production is not going to happen.  Does this make sense?  Did you not learn in school that “less” supply meant higher prices?  In the real world?
We don’t live in “the real world”, we live in a world where everything financial is manipulated.  Here is what I see happening.  They knew that this mine was going to collapse and the production would stop.  Then the ruling on the Pascua Lama mine was sent down.  Last Thursday president Obama met with 15 heads of the biggest banks and brokers in the country, THIS was discussed as sure as the Sun came up this morning: we have hit the bottom of the barrel!  Reserves that could be fed into the market are and have dried up at the same time that production has dropped and future production delayed.  The paper game is blowing up …RIGHT NOW and the topic of discussion at the White House was about “how it would play out”.
The COMEX will default in the next week or several weeks and people will be “settled” with Dollars, no more metal will be delivered!  So, knowing that “game over” has arrived, they are dumping a massive volume of  paper contracts with impunity to push the metals prices as low as possible before the “default”.  This way the “shorts” do not have to and will not be “covered” when “supply” cannot be obtained because of “an act of God”.  They will be settled in cash (at a profit no less) because these “unforeseen” disruptions in supply.  “Who could have seen it coming?” will be the mantra.  I would suspect that banking stress and “bail ins” will also become prevalent globally.  The pricing structure” will now push any and all physical sellers away from the markets and the “door” to safety is effectively being shut.  Either you own metal or you don’t.
I tried to “be nice” in my piece from last night talking to those who worry about price.  What is now happening is exactly what I spoke of, you must count ounces because “availability” is going away right here and right now!  After the closure of the COMEX and LBMA doors there will be no availability and “price” will be meaningless.  Your ability to protect yourself is right now for all intents and purposes being eliminated. 
We received  a few (very few) angry letters from customers who say that Jim Sinclair, Mr. Sprott and Embry, James Turk and others including myself are and were wrong.  That we should hang our heads in shame and that we are nothing more than charlatans hawking Gold and Silver.  We will soon, very soon see just how right or wrong we really are.  What is happening right now is very clear to me, what I don’t understand is how anyone could miss this as it has all been laid out for you and dropped in your e-box to see (for years now), understand and prepare for.  Life, all of life as we knew it is about to change forever.  Hopefully you understood this and have already prepared for it!
Regards,  Bill H.

Gold Delivery For Feb Way Up

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Gold delivery for the 1st notice day in February was 43 tonnes, when compared to the normally busiest month of December was less than 10 tonnes.

Today was first notice day for February delivery in gold, and as usual, we had a waterfall raid in gold to $1655.  The cartel MO has long been to raid gold and silver on options expiration as well as first notice day, to help prevent longs from standing for delivery.

While the the cartel raid was successful based on the paper futures price, it was an epic fail based on physical gold delivery requests, as a monumental 1.391 million ounces, or 43.26 tonnes of gold stood for delivery today on first notice day. 

To put this number in perspective, December delivery in gold, which is traditionally the largest delivery month of the year, saw less than 10 tonnes stand for delivery.

Has the Buba’s gold repatriation request ignited a full-fledged run on the cartel gold bank?

 

From Harvey Organ’s COMEX update:

Today we had first day notice and what a surprise.  We had a massive 1,391,000 million oz of gold stand or 43.26 tonnes of gold.  I have been following the gold and silver comex data from the mid 1970′s and I have never seen anything like this before.  You will recall that this past December we had only 10 tonnes of gold delivered upon.  Generally December is the biggest delivery month of the year.  The comex is not a physical market.  If one needs physical they generally head over to London at the LBMA and purchase the metal over there.  The high amounts standing may mean that our gentlemen from Eastern persuasion are having difficulty finding metal and thus they are heading over to our neck of the woods to obtain this very valuable commodity.

The total comex gold open interest rose 425 contracts to settle at 431,137 from Wednesday’s level of 430,712.  We now have the number of contracts for gold standing as today is first day notice.  The total number of contracts standing for gold is a whopping 13,910 contracts or 1,310,900 oz of gold which translates to 43.26 tonnes of gold.  I am sure that Blythe will be one busy girl these next few weeks as she tries to entice some longs standing to accept paper instead of metal.  The next non active contract month is March and here the OI rose from 1087 up to 1211 for a gain of 124 contracts.  The estimated volume today at the gold comex was fair at 161,916.  The confirmed volume yesterday was quite good at 245,696.

 

In all the years that I have covered the comex I have never seen such a high amount of gold standing.  The comex is a paper market and too see such a high level of gold standing seems to suggest that the gold investor boys (and sovereigns) are crossing the pond because physical gold is scarce.  London must be out or close to it.

Source: SilverDoctors

Failure On COMEX Silver Likely

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We finished December with a large takedown of both gold and silver by the central banks cartel but already the COMEX is showing signs of strain in coping with demand in silver. Banks with short positions (used to suppress the price) are unlikely to be covered in 2013 and so there is likely to be a failure on the COMEX.

Matterhorn Asset Management’s Lars Schall has released an excellent interview with GoldMoney’s Alasdair Macleod, discussing the latest take-down of the metals post QE4, the outlook for gold and silver, and cartel manipulation of the metals.
Macleod states that massive amounts of physical gold and silver have been flowing to Asia, and that the latest bank participation report indicates massive problems are brewing for the banksters in the COMEX silver market.  With cartel shorts near a record at just under 300 million net ounces, yet with the silver price substantially lower than the 2011 high, Macleod believes that we are quite likely to have a failure on COMEX and in the silver market in particular.

Regarding the latest bank participation report, Macleod states that commercial shorts are at record highs, yet NO SILVER IS AVAILABLE!:

“Bank shorts are at or near record levels. And what is interesting is that with the prices of gold and silver well below the all-time highs there are no profit-takers in the market to sell contracts to close their shorts. And in silver it is very, very alarming. This leads me to think that we are quite likely to have a failure on COMEX and in the silver market in particular.

If you have a failure in silver on COMEX then that is going to affect the gold futures market as well. The West’s central and commercial banks have suppressed the price of both gold and silver by supplying central-bank gold and increased short positions, making prices far too cheap. The result has been a massive transfer of gold and silver to Asia. This is the relevance of the point that you have been raising about Central Banks gold holdings, and it is also going to bring into question the solvency of the bullion banks who are short.

So, I think that while it may not be obvious to many people at the moment, when we look back at the fourth quarter we will see that the conditions were in place for a huge bear squeeze, for silver in particular. I would assume that the short position in gold is more controllable so long as Western Central Banks continue to make bullion available to the bullion banks that are short either on COMEX or with LBMA. But silver is different, nobody has it for sale. There is no silver around.”

Macleod goes on to state that gold will be remonetized, and the process is already well underway:

“I suspect that the Chinese Yuan will play a big role in Asia. What they’re doing with Iran is interesting. They’re settling net balances in gold and gold is being re-monetized in that sense. And I think that China has accumulated a lot more gold than they officially tell us. So they have the potential to use gold as money. I can see gold being re-monetized in the loosest sense for the largest internal market the world has ever seen. Believe me, it’s happening now.”

Macleod also states that the upcoming physical silver crisis at the COMEX will result in a suspension of silver trading at the COMEX, and a reset massively upwards in the price of silver:

“You’ve got the banks’ short position on COMEX which cannot be covered. According to the most recent bank participation reports, the banks are short of nearly 300 million ounces of silver. When you bear in mind this is an industrial metal, the vast bulk of silver consumption from mining and recycling supply goes into biocides, solar panels, electronics, et cetera. You have only 100 million ounces annually left over for investors. The short position for the banks on COMEX is three times that 100 million ounces.

There’s no way this can be covered without a price rise sufficient to kill off significant industrial demand, because there are no strategic reserves to draw on. The only country which might have strategic reserves is China but otherwise there are no reserves. And I think that the only way in which the banks’ shorts could be closed out is after a price hike which would lead to billions of dollars of losses for these banks. There will be a market crisis, and I think that they will have to suspend trading in silver and agree a settlement procedure for long and short contracts. And if that happens, it will be well over $50 an ounce. But remember, other exchanges will continue to price silver if Comex suspends, which will not help Comex resolve the problem if the price continues to rise elsewhere.”

On another question, Macleod was asked about Yuan as the next reserve currency being backed by gold :

“We must also understand that the dollar is for security reasons not something they want to use for their international trade settlements. Remember that every dollar transaction done in the world is reflected in a bank account in New York. So, the Chinese want to get away from the potential control and the intelligence information that it gives America. They want to use a different settlement medium.

Now, they agreed about 10 years ago with the Russians to set up the Shanghai Cooperation Organisation (SCO), and the last unsatisfied objective of the SCO is to have a common trade settlement system between the members of the SCO, which at the moment are Russia, China, and the various “stans” in middle-Asia. But interestingly, the next wave of members who will join are India, Iran, Pakistan, Mongolia and Afghanistan (as soon as NATO has left). So you’ve really got the bulk of Asia’s four billion people and they’re going to be settling cross-border trade not with the dollar but with something else. They need to be gold-rich to give confidence to their currencies. I suspect that the Chinese Yuan will play a big role in Asia. What they’re doing with Iran is interesting. They’re settling net balances in gold and gold is being re-monetized in that sense. And I think that China has accumulated a lot more gold than they officially tell us. So they have the potential to use gold as money. I can see gold being re-monetized in the loosest sense for the largest internal market the world has ever seen. Believe me, it’s happening now.”

Source: SilverDoctors

 

17% Of Silver In Comex Gone In One Day

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Last friday a client of JPMorgan got tired of holding paper silver and asked for the delivery of 3.6 million ounces, which is 17% of all the registered inventory of silver. The full amount wasn’t met which begs the question what happens when others eventually follow suit and how long will it be before everyone panics and swaps paper for physical? Its long been know that paper silver out numbers physical, therefore someone is going to be disappointed when the paper is eventually traded for the real stuff.

This week’s interview with gold dealer Tom Cloud of National Numismatic Associates comes as precious metals are correcting and rumors are swirling around Comex silver.

Dollar Collapse: Hi Tom. It’s been an interesting couple of days for silver, with a big Comex draw-down being followed by a sizable price drop. If the silver market wasn’t so obviously free and honest, it might be tempting to suspect some kind of manipulation…

Tom Cloud: Late Friday afternoon a big client of JP Morgan requested delivery of 3.6 million ounces, which is 17% of all the registered inventory of silver (assuming it’s all really there). But only 1.6 million ounces were reported moved. A lot of people are asking where the rest of it is. If it wasn’t immediately available and the client allowed JP Morgan to move it in pieces, that’s another sign of very tight supply.

Ordinarily seeing that much silver inventory move would make the price go up, but at the same time they – probably the same people — were buying shorts to drive the market down late in the day when trading was slow.

DC: The size of the silver draw-down raises the question of what happens if a few more big players want to turn their futures contracts into physical metal. Would this cause a delivery disruption or outright default on the Comex?

TC: Somebody stepped up and said ‘no more paper for me; it’s time to get the real thing in my name.’ They’ve played the [paper silver] game and benefited from it and now they want their silver. But not everyone can do that. There is 100 times as much silver paper [in the form of futures contracts] as there is physical, which means a lot more people think they own silver than there is silver in the world. At some point someone will be left out. If 17% of Comex inventory is taken out in one move, then you don’t need that many more big players to take delivery to see this thing fall apart.

A lot of people were already worried about this, and what happened Friday certainly raises the odds that others with paper claims are going to ask for physical. This morning I’m seeing a lot of dealers buying a lot of silver for their own inventories. This is a very scary situation.

DC: Has an exchange ever defaulted on a commodity?

TC: I don’t know of one that has completely defaulted, where they drain their warehouses of product. So it would be a huge event. And the picture for gold, though not as urgent as silver, is also pretty tight, with futures contracts far exceeding available physical.

DC: So what does the prospect of a Comex default mean for precious metals investors? How can we play it?

TC: Only gold bars from major fabricators like ScotiaMocatta and Johnson Matthey can be used to settle a Comex futures contract. That is, they’re approved for future delivery. When the shortage hits, if you’re holding one of these bars the premium is going to shoot straight up, so in addition to a higher spot price you’ll make money on the wider premiums. Because of this, a lot of my larger investors buy Comex bars exclusively instead of coins.

There are now ten different mints producing Comex gold bars. Two years ago there were four. Comex is smart. They know it’s gonna hit the fan and are now willing to approve other brands in order to increase their sources of metal. I don’t think they’d be approving these other brands if they didn’t expect a default. It’s the same with silver. 24 months ago there were two approved fabricators, Johnson Matthey and Engelhard, making bars you could deliver on a futures contract. Today you’ve also got Ohio Precious Metals, Academy, and Royal Canadian mint.

But even in the absence of a Comex default, bars are cheaper than coins. They’re not made by a country, but by large refineries, and because of this their premiums are lower. One exciting thing that happened this year is the introduction of one-ounce Comex silver bars from Johnson Matthey. The premium is $2 an ounce, which is about $0.75 an ounce more than for a 100-ounce bar. But it’s a dollar an ounce cheaper than for a Silver Eagle coin, so they’re selling very well.

DC: How do you store Comex bars once you’ve bought them?

TC: Several ways. You can take delivery of them and arrange your own storage. The newest state-of-the-art depository is Diamond State in New Haven, Delaware. They’re tremendous. A buyer can arrange to have their bars shipped directly there, generally for free. They’ll handle the paperwork and charge an annual storage fee. If you buy through us, we have a warehouse where customers can store their bullion for three years for free. It’s allocated, so you own specific coins or bars, and it’s all insured.

Source: Dollar Collapse

Intense Demand For Gold In London – Nobody Trusts The Comex

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KingWorldNews conducted an interview with “LondonTrader” about the demand for gold in London which recently has gotten intensive.

The demand for euro gold here in London is so intense it’s shocking to some of the players.  This is what has left some market participants in the US wondering why the price of gold has risen along with the dollar.  It’s because demand in the eurozone is unimaginably strong.  The euro physical gold demand is off the charts and it is creating shortages for metal, in size, here in London.

The physical gold market is actually being drained by euro gold buyers.  People are converting their euros to gold and there is only a finite amount of physical gold available.  Again, that’s why you are seeing the dollar and gold rallying together.

In the case of silver, because of many short positions (to manipulate the price downwards) there has been much silver borrowed from SLV to cover these.

“We’ve still got a very, very compressed spring because the shorts are still trying to defend their positions, their naked short positions in both the gold and silver markets.  As an example, in the silver market, you saw that type of activity in the silver ETF (SLV).  Shorts borrowed another 3 million ounces to cover immediate delivery concerns.  There are 25 million ounces now borrowed from SLV.  It is getting worse and worse for them.”

“They are naked short on the COMEX and to meet immediate delivery demand they are having to borrow it from the SLV.  It is still unwinding and it’s still got a long way to go.

Silver is in backwardation (future price is high than spot price, implying investors demand for physical delivery is high)

There are huge premiums for size (large tonnage orders) in silver and you are going to wait 3, 4 or 5 weeks for delivery.  There is constant backwardation into the March futures contract.  For the most part, the bid on silver spot has been higher than the ask on March futures.

The most interesting thing that came out of the interview it that none of the international trading funds trust the Comex after MF Global fallout.

“You now have international funds, whose compliance departments are saying to them, ‘You can no longer trade on the Comex because the CME did not back client accounts.’  There are a tremendous number of international funds and hedge funds that can no longer trade on the COMEX as of the first of this year because of compliance reasons and no one is talking about this.  This is huge news.

Finally, these is still a massive demand from the Chineese people and Government as they push to be the worlds reserve currency.

The Chinese are long-term thinkers and they really don’t care whether they are paying $1,600 or $1,700 for gold.  What they do is get the best price they can.  When the new floor eventually becomes $1,700, they will buy everything available at that price.  When it becomes $1,800 they will buy at that price.  They are just looking to accumulate gold and they are never sellers, never.

There are two things here.  Yes, China wants a cheap gold price and they’ve been enjoying the fact the gold market was taken down.  They have recently taken another roughly 150 tons away from the Western central banks.  The Western central banks essentially donated that gold in an attempt to prop up their paper currencies.  Yet again these traitorous Western central bankers have given away more power. 

I see gold as power and once again they have given it away to the Eastern Hemisphere.  The Chinese continue to laugh.  As much as the Chinese would like to have a cheap gold price and have this manipulation keep going, they also want to bring the renminbi to the center stage.  

To them, it’s more important the Chinese currency becomes the world’s currency.  The dollar, despite the latest rally, is dying, we all know it’s dying.  So, the Chinese are moving to become the international currency of the world and the best way to do that is through gold.  It’s a very clever tactic.  Every time more gold arrives in China, the more their currency is backed, the closer they move technically to becoming the world’s reserve currency.”

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