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Comex Potential Claims Per Deliverable Ounce 112 to 1 As Their Warehouses Show Thin Inventories

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Jesse
Le Cafe Americain
Published : January 25th, 2014
351 words - Reading time : 0 - 1 minutes
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Category : Market Analysis

As you know January is a non-active month for gold on the Comex, but February tends to be quite lively.

Here is the warehouse inventory picture for registered (deliverable) gold ounces. As you can see without exception the levels of bullion ready to be sold is quite low.

As a reminder, that is only one side of the picture. There is an additional category of gold held in these warehouses in 'eligible' bullion form that can be transferred to deliverable with the issuance of some fairly simply paperwork.

So I think that those who talk about a default on the Comex are probably missing the bigger picture. But I do think that some higher prices might be required to persuade profit maximizing bullion holders to make the switch.

But then again it is not bad to recall that not everyone who is trading bullion is making their profits on the Comex and actual bullion sales. The great bulk of trading traffic is what the FT calls 'pixelated' or paper gold.   

Therefore I have forecasted that if there is a break in the gold market, it will not be originating on the Comex, but rather in some physical delivery market most likely in Asia, and even perhaps at the LBMA in London.   Any failing at the Comex would most likely be collateral damage to a panic run on bullion, either in a fail to deliver or a massive up limits short squeeze.

The structure of the market looks a bit dicey, and JPM has the clear whip hand on the paper markets.  But Asia and the Mideast are dominating the physical delivery markets. 

India demand is being throttled by government sahibs that seem quite eager to accommodate the Anglo-American Banks, which is too bad for their people.   I doubt that posture will not be sustainable for long.

So let's see what happens.  But it looks like February could be interesting.  And if not, then the next active month is not far away.   The market structure must be allowed to reach its clearing prices.

As always, thanks to chartsmaster Nick Laird of sharelynx.com.
Data and Statistics for these countries : India | All
Gold and Silver Prices for these countries : India | All
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