COMEX Warehouses in Trouble?

Since I started tracking COMEX gold and silver warehouse levels last November I’ve grown to be very suspicious of the numbers COMEX reports each day. In spite of increased physical deliveries in both metals, “registered” inventory levels remain more or less stable. This is why I gave up daily updates in favor of weekly ones; I just don’t have all that much faith in COMEX reporting.

Jim SinclairHero and venerable gold guru Jim Sinclair has experience in all things gold going back to the 1970s. Things happening NOW at COMEX gold warehouses are reminding him of severe delivery problems that bankrupted brokers BACK THEN.

Will Increased Delivery Demand Break The Gold Warehouses?

Dear Friends,

I have been speaking with many people this evening who have taken gold delivery.

What I am hearing is not impressive.

For decades warehouses have held, but rarely delivered as compared to store.

When examined closely it is a paper system that may have fallen badly behind as gold moved ahead since 2001.

There is a possibility the system is antiquated and more FUBAR than anyone, even the warehouses themselves, realize.

I have been told that bars delivered do not correspond with the receipts from exchanges.

I have been told that bars of slightly different weight (higher) have been received.

COMEX floor tradingThis may well be a system that has never been asked to handle volumes as are now taking place. This may well be like the old hand clearing equity systems that broke down as volume of trading increased in the early 70s.

F.I. Dupont went out of business because their back office could not meet the growing clearing and trading at that firm.

Pershing, and Vilas & Hickey were the two largest equity clearing firms.

Vilas & Hickey, a NYSE firm of which I was a general partner (at 27 years old) recognized the growing problem and transferred our clearing business to Pershing and merged our activities into another firm, Muller & Company, in order to avoid the impending problem.

I was the sole general partner of the merged NYSE firm so I know what I talk about. We preserved our capital and side stepped a problem that busted many firms.

I smell exactly the same thing in the precious metals warehouse business. How pervasive it is we all will soon find out.

Regards,
Jim

And Jim’s friend J.B. Slear, who helps people out with getting physical delivery from COMEX, is reporting:

1) “We’re finding out that some brokerages will not help with the delivery process or refuse to help even after the commissions are paid.”

2) “Calls today are reflecting concerns about accounting practices in Canada and other G7 countries.”

3) “…We have witnessed cost increases in just about everything “Comex”, from Prudential’s verification process (which is matching buyers monies and sellers bars) all the way down the line to the delivery itself.”

Read more at Assistance Getting Delivery from COMEX Warehouses.

Advertisements

12 Responses

  1. If silver goes to $600 oz., will a loaf of Wonder Bread cost $50?

  2. I think it is going to be quite difficult to prove these claims because of so many different parties being involved, it is tough to gather enough evidence. But either way I think the gold price is set to move up again soon based on the Fed’s attempts to avoid deflation at all costs. This should lead to a lower dollar and higher gold price, as further discussed here – http://www.goldalert.com – based on the inflationary consequences of all the money printing.

  3. July 2009 web bot prediction is for 600 FRN silver in 2010.

    The reality is that gold and silver bullion do not change, only the currencies by which they are measured. As all fiat paper/electron currencies follow the death march of history, they will no longer be relevant measures of the value of real metals.

    For examples of what happens when currencies collapse, research the “price” of gold and silver measured in gazillions of Weimar marks or Zimbabwe dollars.

  4. I stopped reading Nadler a long time ago. He’s soo toned down that I get the sense he’s working for someone in disinformation. (@ Kitco?) I would like to see the Kitco “pool” holders make a run on the physical side instead, see what happens then. Some of the (Kitco) commentors are great! : Mogambo Guru, Howard Ruff, Schiff, and many more, but Nadler as the house spokes hole is a joke. And he sips tea with Bernake and Cramer types………….

  5. As the card carrying CEO of “JASON NOEL NYBERG TM” I would just like to point out that Gold and silver come from the beatiful mountains and valleys of our queen Gaia… Rivers and lakes are destroyed for its extraction and countless “persons(great and small)” are afflicted and affected. The raven or Deer or Fox cannot buy its food or water with gold or silver so why should we? Learn to fish, learn to love, learn to listen to the voice within.
    Peace and light,
    Paladin of Gaia

  6. Folks the Comex went default on gold and were bailed out by the Royal Canadian Mint. If you want to know where the “unreconciled” gold from the Canadian Mint is, look know further than the Comex warehouse. If you don’t
    believe me, take delivery from the Comex and you’ll be happy to receive your gold stamped Royal Canadian Mint. I’m not kidding you!

  7. Huffington Post too reports that COMEX has trouble to deliver gold:
    http://www.huffingtonpost.com/nathan-lewis/wheres-the-gold_b_216896.html

  8. we need insurance of course for various reason, although gold itself is “the ultimate insurance” its when you store it with a third party that you need to be careful. Banks, politicians, priests, doctors,lawyers, in fact anyone in a position of authority over the last decade have all been found wanting in many respects. So in the real world we have finally realised an ultimate truth. Human beings can not be trusted. Not one, when was the last time you looked at your swelled waistline and promised yourself you were not going to go into the kitchen and eat that last piece of chocolate cake for the hundreth time. Folks we cant trust ourselves with a little bit of chocolate cake, how about a central banker mmm the golden pie looks really tasty when our gold is stored by a third party we need to insure it against major wall street(no matter who owns the gold) greed and corruption(these people have their fingers on all governments world-wide). Both of which have happened to the Canadian Mint. Someone has stolen the gold to cover shorts by greedy bankers some-were(we dont need to look far). The reason they have gotten away with this is the scandal this would cause(and the huge rise in the price of gold this would cause and the cost which they will have to buy it back ). A run on all mints could take place and mark my words it will and probably is happening right now, you can only fool the people for so long.Gold in your personal possession is a must. Politicians are out there conspiring to rob the world blind of its gold. Insurance is fine if you don’t mind being paid in paper money. but then with the gold gone so is your your ultimate insurance, in effect paper insurance against gold is no insurance at all(unless they are going to replace it with real gold bars which i doubt).
    CONCLUSION
    if you can’t touch it you don’t own it. do not trust anyone take possession because the banking system may break at any time, do you trust a third party to have your best interest at heart in a major moetary crises. If your gold owned by third parties if it goes missing(just like in the Canadian mint cover-up) your compensation will be toilet paper. I know were my gold is do you.

    • Liam,

      Your “conclusion” is a *classic*. Everyone who’s gambling with ETFs, mint certificates, gold IRAs, etc should read it again!

      “If you can’t touch it you don’t own it.

      “Do not trust anyone take possession because the banking system may break at any time, do you trust a third party to have your best interest at heart in a major monetary crises.

      “If your gold owned by third parties if it goes missing (just like in the Canadian mint cover-up) your compensation will be toilet paper. I know were my gold is, do you?”

      There’s an excellent chance the US banking system will be taken down with an engineered “holiday” this Sept. All accounts frozen, including ATMs, debit cards & online banking. Web bot guys are looking for massive FTD (failure-to-deliver) in COMEX gold/silver November this year. Jim Sinclair expects gold to begin a vigorous move upwards through $1,000 on its way to $3,500 within weeks. Web Bot guys are seeing indications of the gold/silver ratio dropping dramatically (from 65:1 to 12:1) at least temporarily. If gold becomes a rocket then silver will be FTL (faster-than-light).

      • Scott, where do you get the information that the engineered “holiday” will happen in Sept.? I have to know because I have some time-sensitive projects that I need nailed down before that happens.

        Thanks!

        • Stephanie,

          The predicted “bank holidays” set for this fall are sourced from:

          -FEMA briefs local police on “temp vouchers” to be issued during upcoming bank shutdown. link: http://tinyurl.com/lhkhp2

          -Gerald Celente, trends forecaster predicts bank closings fall 2009. link: http://tinyurl.com/lrwces

          -Bob Chapman (claims inside contacts tell him
          1) “U.S. embassies around the world are selling dollars and stockpiling money from respective countries where they operate.”
          2) “Global elite are in the process of engineering an FDR-style “bank holiday” of undetermined length in order to “sort-out the bank mess” and impose new bank rules.” link: http://tinyurl.com/lsm26n

          I’m working up a more comprehensive post for the main page of this site that will dove-tail info from half a dozen sources pointing to major events planned for sept-nov time frame.

  9. Here’s what that idiot Jon Nadler said Friday:

    “A brief but important Friday footnote. A lot of ill-informed noise has been generated by the Royal Canadian Mint’s gold reconciliation story, seen in the Canadian press of late. Some ‘market advisors’ found an opportunity in this story, to try to instigate some kind of a “run” of the custodial accounts of that, and other mints around the world. How pathetic. We need very few words to emphatically tell you that Kitco reaffirms its 100% degree of confidence in the RCMs ability to keep the customers’ metals free of any material losses, no matter what the ultimate tally will turn out to be.

    “The RCM has issued a letter on the subject matter, and it has assured everyone that customer metal accounts are unaffected by the reconciliation problem. We expect a complete report on the findings of an on-going investigation and continue to remain at ease with the status of both our own as well as our customers’ balances at the Mint. As well as those at any other mints around the world. Some over-zealous alarmists need to get a grip and learn how vaults, insurance policies, and such operate in the real world. Until then, we can only call them saboteurs. And anyone who listens to them, sadly misinformed.”

    Learn how vaults and insurance works? Why do you need insurance if the bullion is really there?????

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: