We have 3 more trading days in June to end up the first half of the year and also 3 more days until June 28th. This is the day that all June gold futures contracts must be settled (or at least issued). JP Morgan so far this month has issued 4,946 notices which amount to 494,600 ounces of gold. They claim to have 408,709,033 total gold ounces in their inventory as of last night, this leaves close to an 86,000 ounce deficit between what they have already “sold” (issued delivery notices) and what they claim to have on hand.
I might mention that Harvey Organ spent a couple of hours 2 weeks ago to go back to the beginning of the year to see if any gold was reported to have entered their dealer inventory. Offhand he thought that none had entered and upon checking he confirmed that not one day so far this year has Morgan claimed to have received gold for their dealer account. How can this be? We have 3 days left before deliveries are supposed to be made yet JP Morgan sits with a deficit in their vault. This really does not make sense because if you issue a notice you have every reason and incentive to get it done as soon as possible. You receive cash for the gold delivered and no longer have carrying costs so there is every reason to make the delivery as soon as possible because there is no gain whatsoever to waiting to make delivery.
Oh yeah, “here he goes again” I will hear, but for what possible reason do you not make a delivery on a contract that you have already issued a notice on? I don’t know of ANY reason, (maybe someone out there can help me) except for one. If you don’t have the gold…you cannot deliver it. They have not reported receiving any gold into the dealer inventory this year but they MUST receive at least 86,000 ounces…in the next 3 days or how else can they make full delivery? And if they don’t? Then what? Don’t worry about it…it’s a crappy investment anyway so here is some cash; don’t spend it all in one place?
I really cannot see them letting the game get away from them over less than a measly 3 tons of gold. GLD has bled some 25 tons over the last month or so, maybe they can get a hold of some of that metal? Who knows? One thing that we do know is that their “customer” inventory saw almost 70% drop in one single day leaving JP Morgan holding only 141,000 ounces of customer gold. Why the big withdrawal? Lots and lots of questions, very few answers…but we certainly should have some sort of answer in 3 more days. Let’s see?
P.S. As a brief addendum, Scotia and HSBC watched as customers withdrew 156,000 ounces from their vaults last night. This is nearly 5 tons and well more than 10% of what is held by the 4 big custodians. Customers seem to be pulling out while they have the chance. The first one out may be “paranoid” but the last one out is worse than a rotten egg…they are stuck?