CME announced numbers for contracts, standing for physical delivery of gold and silver in Dec 2010, very late yesterday – at 10:16pm EST (4:16am CET).
And numbers are stunning even for me – especially with big drop in prices of silver futures (-2.9%) on Friday, Nov 26th 2010 when it was the last day for this contracts owners to fund their trading accounts in order to be eligible for physical delivery in Dec 2010.
Already on Friday, Nov 26th 2010 it could be sensed, when price of gold futures dropped by only -0.65% that huge pain at Comex is in silver futures market.
Usually yield in price of silver futures versus yield in price of gold futures is 2:1 or max 3:1 but on Nov 26th 2010 this ratio was (-2.9%) vs (-0.65%) which is 4.5 vs 1.
Due to a low volume of trading with Dec 2010 silver and gold futures on Nov 26th 2010 (cause of a long weekend in US due to a Thanksgiving day a day earlier), it was much easier – not to mention CRUCIAL for Comex dealers, to suppress price of silver as much as possible to “persuade” Dec 2010 silver futures owners to settle in cash or at least roll over their contracts into a next delivery month for silver which is Mar 2011.
By numbers that we’re having today, we see that roll over of Dec 2010 silver futures contracts into Mar 2011 has indeed happened on Nov 26th 2010 but still, open interest numbers are more or less the same.
This means that buyers of silver futures are NOT selling contracts but are either standing for delivery of physical silver in Dec 2010 or waiting for delivery in Mar 2011.
Either way, Comex dealers failed to convince silver futures buyers to sell their silver futures contracts for cash.
How much silver and gold are in fact waiting for a physical delivery in Dec 2010?
If no owner of Dec 2010 Silver Futures change his mind and don’t settle contracts for cash by the end of Dec 2010, then 17,208 contracts have to be delivered.
As a comparison, in last delivery month for silver in Sep 2010, this figure on a day before First Notice Day on Aug 30th 2010, was 3,002 contracts.
Since each contract is for 5,000 ounces of silver this means that Comex dealers should deliver by the end of Dec 2010 exactly 86.04 million ounces of PHYSICAL silver (compared to 2,519 contracts = 12.595 million ounces of silver delivered in Sep 2010).
So, in Dec 2010 almost 600% more silver (compared to Sep 2010), should be delivered by Comex dealers to buyers of silver futures.
And next delivery month for silver Mar 2011, has currently open interest for potential delivery of another 350 million ounces of silver.
As long as their’s enough physical silver, this shouldn’t be a problem BUT this is a problem since Comex silver inventory from Sep 2010 to today actually dropped by 3.5 million ounces of silver and is standing at 107.2 million ounces of silver.
Comex inventory of ready available silver in this same time actually dropped by 6 million ounces of silver and is currently standing at 48.4 million ounces of silver.
Now, talk about pain for Comex dealers, having ready to deliver 48.4 million ounces of silver and obligation to deliver 86.04 million ounces by the end of Dec 2010.
And how to deliver in Mar 2010 silver if buyers also refuse to accept cash, when current numbers for deliveries in Mar 2011 stand at 350 million ounces of silver?!?
In gold, things also don’t look nice.
Comex dealers should deliver by the end of Dec 2010 around 5.9 million ounces of gold but their gold inventory is at 11.45 million ounces and actually ready to deliver gold only at 2.6 million ounces of gold.
Next delivery month for gold is Feb 2011 and currently open interest is at 31.6 million ounces of gold.
Just having to deliver this much gold and silver should cause price of gold and silver go up – without forcing regulatory institutions like CFTC to finally do their work and force this manipulators to cover their paper short positions in gold and silver.
Have you maybe also checked number of silver and gold that will be delivered on Dec 1st 2010?
Comex dealers will deliver on Dec 1st 2010 over 500,000 ounces of gold (around 10% of amount required to deliver in Dec 2010) BUT only 280,000 ounces (around 0.3%).
Around 60% of this first delivery of physical silver will go to…
…what a shocker JP Morgan – a bank that owns more than 40% of all paper silver shorts AND that also lose over $3 billion every time price of silver goes up by $1.
All this info are freely available – you just need to use a bit of your brains to analyze this info and come to logical conclusions for predicting where all this leads.
Ahhh, can’t stress enough importance of holding PHYSICAL silver and gold in current times.
Disclosure: Long the physical.