Jan 062016

Focusing on registered stocks versus open interest is a favourite of many bloggers because it produces dramatic “Comex is about to fail” figures. I have written many times that one also needs to consider eligible stocks as eligible inventory can be converted to registered relatively quickly. Blogger Kid Dynamite noted in passing in an email that December was a textbook example of eligible being used by issuers to make deliveries to stoppers. Not one to take the words of a cartel apologist at face value, I contacted data wrangler Nick Laird for detailed Comex warehouse movements and issuer/stopper figures, to check the facts for myself (and you).

To set the scene, at the beginning of December total registered stocks in all Comex warehouses was 120,967.246 ounces of gold. In retrospect, we know that the total number of contracts that stood for delivery during December was 2033, or approximately 203,300 ounces. Since that number is larger than the total registered stocks, you may be surprised why you didn’t hear about the default of Comex. The reason is that gold was either deposited directly into registered stocks in a Comex warehouse or gold was transferred from eligible to registered.

The table below shows all the changes in registered and eligible stocks per day per warehouse. Note that every single registered change during December was positive. I have coloured them by whether they were directly deposited (yellow), a transfer from eligible to registered (gold), or unknown (blue). In the case of the unknown, these are most likely transfers in my opinion but it is hard to be clear about that as the eligible change is including other movements.


Note that the total increase in registered during December was 154,947.693 ounces – 76% of the contracts standing for delivery – and that 105,086.452 ounce were clearly eligible to registered transfers, given the exact ounces involved. However, what is interesting is how these deposits into registered stocks match up with contracts “issued”, which are listed in the table below.


In this table I have multiplied out the number of contracts by 100 to show them as ounces (and also combined customer and house so the table is easier to read). You will note that the numbers coloured match the amounts being delivered into registered on the same day. For example, on the 15th HSBC issued 223 contracts (22,300 ounces worth) and in the warehouse movements figures we can see a transfer from eligible to registered on the 15th of 22,301.706 ounces.

The warehouse movement ounces of course generally will not match exactly with number of contracts as 100oz bars are usually odd weight where the bar’s weight varies between each bar within a¬†specified tolerance, or where three kilobars are being delivered (which while being exact weight, are 32.15oz each so will rare exactly equal multiples of 100oz, see here for more info). Nevertheless, the repeated movement from eligible to registered matching issued amounts on the same day is proof that eligible stocks can be drawn upon by shorts to meet their obligations. Accordingly, solely looking at registered stocks to open interest is not a reliable indicator of the ability of shorts to make delivery.

For Trainspotters Only

In the table below I’ve done two things:

  1. Split Scotia Mocatta’s eligible warehouse movement figure from the first table above into an assumed eligible to registered transfer and the balance into an eligible other.
  2. Divided all ounce warehouse figures by 32.15. If the resulting amount is an integer (highlighted in purple) then it indicates the movement of kilobars.

I think the fact that the “eligible other” figures are kilobars strongly indicates that my blue “unknowns” were all eligible to registered transfers. It is also interesting that Scotia seems to deal a lot in kilobars in smallish quantities, at least during this snapshot on December. JP Morgan dealing in tonnes of kilobars is nothing new for my long-term readers.


  • JanNieuwenhuijs

    This helps.

  • Pingback: Issuers Can Make Deliveries Using Eligible « Financial Survival Network()

  • DiggerUK

    Am I right in assuming that you have found a flaw in Andrew Maguire’s assertion that COMEX, LBMA, Uncle Tom Cobbley ‘n all, are going to default on physical deliveries?

    • http://goldchat.blogspot.com/ Bron Suchecki

      To the extent people rely on registered only for that claim, then yes. But neither do we know how much of the eligible is owned by shorts or for shorts looking to buy metal, how much of it is willing to be sold.

      • Zhanglan

        There is indeed a missing link in the information:

        COT and Stops & Issues reports give a very high-level indication of who has been actively involved in the Market during any given period


        Stocks (Inventories) report gives a general overview of HOW MUCH metal there is in play (but not who it belongs to)

        There is no published information linking the two: at any given moment the Shorts listed in the COT report could in theory be entirely covered or entirely naked, but are inevitably somewhere in between

        Bron/Nick’s analysis proves conclusively that every last one of the deliveries recorded in the Stops & Issues report reflects a transfer of ownership of physical metal, and that there is no distinction in terms of “availability” between Registered and Eligible investors

        The balance of Open Interest – and hence the COT – is resolved either by the holder of a short closing out or rolling his position into the next contract, or via EFP (and the latter is reported in the daily “Volumes and Open Interest” report, and therefore does not generate a journal entry in the “Stops and Issues” report)

        In any case, two facts are now surely beyond doubt:

        1. It is the owner of the Short Futures who decides when and how to settle his position, not the Exchange or the “Stopper”

        2. If he doesn’t trade out or role his Short, then he can either deliver metal by Issuing, or an equivalent via a mutually negotiated EFP.

        What he can’t do is unilaterally cash-settle, and neither can the Exchange force a Stopper to acccept cash in lieu of metal, unless it formally declares a Settlement Default. If there were any such default, then Bron’s figures wouldn’t tally: they do, there is no default, there is no enforced cash settlement or delivery in “paper promises” – If it’s in the Stops & Issues report, it’s metal, and it really doesn’t matter whether it’s designated “Registered” or “Eligible”

        • JanNieuwenhuijs

          Yes, I’m still working out the details of EFP, from the leads you sent me. It’s taking such a long time coz I’m tangled up with a few other topics in life. BUT, I will def write a post post on EFP ASAP.
          I can tell you one thing right away, according to my findings thus far the EFP volume on the “Volume and Open Interest”-page is not what it seems.

  • http://goldchat.blogspot.com/ Bron Suchecki

    BTW, the reason I use Nick Laird’s figures is that his database records the warehouse stocks down to three decimal place accuracy. By comparison, the warehouse data in Reuters is for some unknown reason rounded to the nearest ounce.

  • Auldenemy

    I have never understood why some commentators bang on about the COMEX always on the verge of not being able to deliver physical gold. The COMEX is merely part of the on going Western banking-political alliance that exists to retain power and control over the masses while at the same time enriching themselves. We don’t need to indulge in conspiracy theories to come this conclusion, but rather monetary history. A system that ends up with Main St bailing out a handful of mega banks, that goes on to invent money via QE that results in ZIRP and even NIRP being introduced by some Central Banks, means it is a system that has become corrupted. That there is constant and proven manipulation of supposed Free Markets, (LIBOR, Forex, also gold and silver), is a natural consequence of a corrupt monetary system. Having been handed astronomical sums in bailouts post 2008 (the bill sent to Main St), the practices of these vast and out of control banks should have been thoroughly investigated and regulations introduced to stop them profiting by manipulating various markets. The reason that didn’t happen and in fact they have simply carried on committing frauds, is absolute proof of their political power. It is therefore nonsense to assume such entities would ever allow the COMEX to default on deliveries of physical gold. Nothing and no one will defeat this on-going crime because nothing and nobody is more powerful than it is. The bottom line is that both gold and silver have been hated by Western banks for well over a hundred years. Both these precious metals got in the way of their need to obtain political clout, which is why they dispensed of them both. Gold and silver kept them in check, paper money (now mostly digital), means they keep entire nations in check! The end to this corruption of money will only come about when the endless trillions of $ debt unleashed upon the world implodes (as it has started to).

  • Pingback: Issuers can make deliveries using eligible | Hard Asset Protection()

  • JerseyJoe

    If nothing else, something has changed about how registered ounces are managed…inventories are down 92% since 2008.


  • Pingback: The Comex Meme That Won't Die - Kid Dynamite's World()