I'd like to draw to your attention today to something that relates to the recent stories of "silver supply tightness". As you know, there is all sorts of anecdotal evidence being reported of retail physical silver supply tightness. I'd like to show you something extremely unusual that may be the first sign of a wholesale supply tightness.

Recall that there are "delivery" months on the Comex and, in silver, these months are March, May, July, September and December. It is during these calendar months that the futures contract for the month gets delivered to anyone seeking to take physical delivery of 5,000 ounces of silver per contract. At present, the Comex is allegedly making deliveries for the July 2015 silver contract. This contract expired back on June 29 and began trading "first notice" the next day. This means that anyone still holding a July silver contract as of June 30 needed to have 100% margin in their account, expressing their intent and capability of either taking or making delivery of 5,000 ounces of silver per contract.

Usually, over the course of a delivery month, we see deliveries made against the outstanding contracts. Almost without exception, the total number of deliveries comes in below the total number of contracts outstanding at expiration as contracts are closed by:

• Entities that were long and had no desire to take delivery
• Entities that were long but didn't have the requisite margin on deposit to remain long. Their positions were then summarily sold and closed by their firm's margin department

OK. Are you with me so far? Good.

Here's a typical month for you...December 2014.

Upon contract expiration at the Comex close on Wednesday November 26, 2014, there were still 3,950 contracts still open, according to the daily CME open interest reports.

The next business day, Friday November 28, 2014 was First Notice Day. By the close that day, after the first round of deliveries and the closing of contracts by those unwilling or unable to stand for delivery, the total Dec14 open interest was shown to be 1,735 contracts.

By the end of the month of December, a total of 2,975 deliveries were made or 75.3% of the original total left open at expiration. See here: http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsYTDReport.pdf

And, again, this is exactly how it always works. There are contracts still open at expiration. Some of these close on First Notice Day. The remaining deliveries are made over the course of the month but the total never matches or exceeds the amount originally standing at expiration. Here are more examples from earlier this year:

MARCH 2015: 3,142 still open at expiration. 1,539 still open after FND. 2,583 total deliveries. 82.2% of the total from expiration.

MAY 2015: 3,371 still open at expiration. 1,727 still open after FND. 2,840 total deliveries. 84.2% of the total from expiration.

Again, do you see how this works? And let me assure you, this is how it has always worked for as long as I have followed the Comex delivery numbers.

OK. Now let's look at what is taking place here in July.

The total amount of July15 contracts still open at contract expiration on June 29 was 2,699.

The total amount of July15 contracts still open at the close on First Notice Day June 30 was 2,077.

Using history and experience as our guides, we should expect about 2,250 total deliveries over the course of this month. Ready for the surprise/anomaly?

So far in July, through last evening, the CME shows that a total of 3,267 total deliveries have been made. What's more, the CME also shows that there are still 117 contracts left open. If all of these remaining contracts stand for delivery...and provided no one else shows up wanting some immediate silver...the total number of deliveries this month will be 3,384.

Now wait a second. Hold on just a minute. There were only 2,699 contracts still open at expiration two weeks ago yet the Comex is on pace to deliver an additional 700+ over the course of the month? At 5,000 ounces/contract, that means someone or something has ponied up about $50,000,000 in order to "jump the queue" and take immediate delivery of 3,500,000 ounces of silver this month. Isn't that interesting and let me remind you that there are still two weeks to go in the delivery month and just about anyone can still plop down 100% margin, buy a July contract and get their silver. Total deliveries might actually exceed 3,500 or 4,000 contracts by the time the month is finished! But even if this doesn't happen and total deliveries come in near the 3,400 number instead, the total amount of deliveries versus the total number of contracts standing at expiration will be near 126%. Compare that to Dec14, Mar15, May 15 and every month as far back as you can find the data!

So, does this mean anything? Maybe. Perhaps it's another anecdotal signal of physical tightness? Perhaps it's just ole Turd chasing ghosts again? I'll leave you to decide that for yourself.

TF