In last 2 days smart buyer(s) are jumping the lines and are requesting additional 289 contracts equaling 1,445,000 ounces of physical silver!!!
How did I come to this number?
Simply looking at CME Delivery Notices Reports.
On Sep 8th 2010 there were 1,621 OI contracts left with 148 contracts standing for delivery (and 218 contracts standing for delivery on Sep 9th 2010).
In 2 days these meant 366 contracts ready to be delivered.
This would mean that on Sep 10th 2010 there should be 1,621 – 366 = 1,255 open interest (NYSE:OI) contracts left but there are 1,544!
Simple calculation tels us there were additional 289 contracts added to be delivered by the end of this month.
This is first clear sign of panic between Comex buyers to dump their paper silver contracts for physical silver.
Next sign is Comex customers inventory where their physical silver is stored (if there’s really silver in the amount they claim!).
In this same last 2 days (Sep 8th and Sep 9th 2010) there were 690,770 ounces of physical silver withdrawn from Comex customers warehouse.
This means in last 2 days Comex dealers were hit with additional 1,445,000 ounces of physical silver that they have to deliver by the end of Sep 2010 plus 690,770 ounces of physical silver withdrawn from Comex customers warehouse.
Plus on Sep 7th 2010 Comex dealers took a lease from Comex customers for 2.3 million ounces of physical silver.
So, in 3 days Comex dealers “lost” 2,135,770 ounces of physical silver plus having leased 2.3 million ounces that they’ll have to return eventually.
But on paper, Comex dealer’s physical silver inventory is still around 54 million ounces (and even showing as increase of over 2 million ounces compared to 4 days ago).
Paper can handle everything if people are stupid enough to believe anything written on a paper.
On Sep 14th 2010, Comex dealers will have delivered 1,564 contracts.
Left to deliver by the end of this month 1,544 contracts = 7.72 million ounces of PHYSICAL silver.
If in half of the month they only managed to deliver half of the required amount of physical silver, then it will be interesting seeing how will they manage to scrap for this remaining 7.72 million ounces.
Especially, if new smart buyers show requesting more physical and/or standing buyers don’t accept paper money with added premiums.
Disclosure: Long the physical.