NYSE Out of Kilo Gold Bars!!
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NYSE Out of Gold!
For those who don't know, in gold futures trading, there is a mini contract (33.2oz or 1Kg) and a full contract (100oz). The NYSE is officially out of Kilo gold bars for physical delivery on mini contracts.
I think the writing is on the wall. How long until they default on full contracts?
Absent legal action, clearing members are now being allowed to hand out little slips of paper, called “warehouse depository receipts” (WDR). These are being substituted for “vault receipts” (VR). The WDRs, in contrast to the VRs, merely promise the customer that he owns a 1/3 interest in a 100 ounce bar. The customer is not allowed to take delivery, unless he can accumulate 3 WDRs, which equals 1 VR. NYSE-Liffe shares its warehouses with COMEX. The warehouse is predominantly stocked with 100 ounce bars.
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There has been a lot of talk, over the past year, by bearish gold commentators, claiming that the shortage of gold and silver is merely a fluke of the retail market. However, 1 kg. bars of gold are NOT a retail denomination.
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All that said, however, given that the Fed printing press is running overtime, things are going to get tighter. It will take only a few months of delivery percentages similar to those seen in December, 2008, before all the 100 ounce gold bars are gone.
For those who don't know, in gold futures trading, there is a mini contract (33.2oz or 1Kg) and a full contract (100oz). The NYSE is officially out of Kilo gold bars for physical delivery on mini contracts.
I think the writing is on the wall. How long until they default on full contracts?
Absent legal action, clearing members are now being allowed to hand out little slips of paper, called “warehouse depository receipts” (WDR). These are being substituted for “vault receipts” (VR). The WDRs, in contrast to the VRs, merely promise the customer that he owns a 1/3 interest in a 100 ounce bar. The customer is not allowed to take delivery, unless he can accumulate 3 WDRs, which equals 1 VR. NYSE-Liffe shares its warehouses with COMEX. The warehouse is predominantly stocked with 100 ounce bars.
....
There has been a lot of talk, over the past year, by bearish gold commentators, claiming that the shortage of gold and silver is merely a fluke of the retail market. However, 1 kg. bars of gold are NOT a retail denomination.
---
All that said, however, given that the Fed printing press is running overtime, things are going to get tighter. It will take only a few months of delivery percentages similar to those seen in December, 2008, before all the 100 ounce gold bars are gone.
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https://www.pcgs.com/setregistry/gold/liberty-head-2-1-gold-major-sets/liberty-head-2-1-gold-basic-set-circulation-strikes-1840-1907-cac/alltimeset/268163
Like any commodities run, I suspect the pattern is always the same. Small sizes are consumed first, and then larger sizes start to disappear before there is a complete shortage. This demonstrates progress down that path.
This should affect prices of physical gold even more than it has already been affected, because futures contract delivery is the link between physical and paper prices.
The difference in physical vs paper price in this economic environment is a risk premium. I expect that risk premium to continue to increase on news like this.
<< <i>I really don't know, but I'll toss out a few thoughts.
Like any commodities run, I suspect the pattern is always the same. Small sizes are consumed first, and then larger sizes start to disappear before there is a complete shortage. This demonstrates progress down that path.
This should affect prices of physical gold even more than it has already been affected, because futures contract delivery is the link between physical and paper prices.
The difference in physical vs paper price in this economic environment is a risk premium. I expect that risk premium to continue to increase on news like this. >>
Thank you for connecting the dots for me.
https://www.pcgs.com/setregistry/gold/liberty-head-2-1-gold-major-sets/liberty-head-2-1-gold-basic-set-circulation-strikes-1840-1907-cac/alltimeset/268163
Hummmmmmmmmm...must be time for the IMF to announce selling that 403 tons again.
If a bunch of people wanted to withdraw all of their checking account balances in nickels on a particular day, but your branch bank had bags and bags of dimes and quarters, you wouldn't say the bank was out of money.
Apmex, Tulving, Kitco, and Gainesville all have kilo bars for sale, in stock and ready to go.
It's a plumbing problem being made out to be something more than it is.
--Severian the Lame
Your banking analogy doesn't quite illustrate the point. It might be more accurate if you assumed that $1000 bills existed, and that if you wanted to withdraw money from the bank, you had to withdraw at least $1000 in $1000 increments. Is the bank out of money? No. But you should probably be really concerned about this limitation.
--Severian the Lame