-- Published: Tuesday, 27 November 2018 | Print | Disqus
By Craig Hemke
It has now been one full year since we began to monitor the daily totals of COMEX EFPs. The total amount of gold allegedly "exchanged for physical" over the past twelve months will astound you.
Again, at Eric Sprott's urging, last November 24 we began to tabulate the daily reported EFPs in COMEX gold. We've since written about this ongoing sham on three occasions, with all three links listed below:
Before we go further, it is important for you to understand what an EFP actually is. We found this explanation to be helpful:
This flow chart helps, too:
These exchanges are likely most often settled through London: https://www.bullionstar.com/blogs/koos-jansen/lond...
However, it's important to note that the CFTC ruled years ago that shares of the GLD can be also used to satisfy the "physical" part of the exchange: https://www.cftc.gov/sites/default/files/files/sub...
With all of this as background info, it's time to give you the 11/24/17 - 11/23/18 total. Again, we counted every single trading day. The highest total daily volume of EFPs was seen on June 15 at 27,009. The lowest daily volume was 1,998, just two weeks later on June 29.
And the total recorded volume for the entire twelve months was 2,392,649 contracts.
So, let's do some math, shall we?
Each COMEX contract that was allegedly "exchanged for physical" represents 100 troy ounces. Thus, 2,392,649 COMEX contracts "exchanged for physical" equates to 239,264,900 troy ounces. And just how much "gold" is that? Approximately 7,442 metric tonnes!
Now keep in mind a couple of things...
First, total global gold mine supply in 2017 (China which does not export domestically-mined gold) was about 2,850 metric tonnes. So this total EFP volume alone is about 260% of global annual mine supply. https://www.gold.org/goldhub/research/gold-demand-...
Next, as of November 23, the entire COMEX vault system in New York held just 249 metric tonnes, of which less than 4 metric tonnes were marked as "registered" and immediately available for delivery.
And finally, in their most recent update, the LBMA revealed their total amount of gold held in custody to be just 7,632 metric tonnes: http://www.lbma.org.uk/london-precious-metals-phys...
The gold stored by the LBMA was listed as follows:
• 5,185 metric tonnes for the Bank of England
• 1,549 metric tonnes for the various ETFs
• 898 metric tonnes held for other customers
So, the question ultimately becomes... How in the heck does the combination of COMEX and LBMA settle 7,442 metric tonnes of "exchanges for physical", when the combined COMEX/LBMA vaults only contain 7,881 metric tonnes?
Quite obviously, the answer is simple. There are no "exchanges for physical" taking place at all... at least not in the sense of actual, unencumbered and allocated physical metal. Instead, EFPs are just another part of the great scam known as The Fractional Reserve and Digital Derivative Pricing Scheme, where alchemized digital and unallocated gold is foisted upon the masses, who blindly accept "exposure to the gold price" as a substitute for the real thing.
This confidence scheme has prospered now for nearly 44 years, propped up by the Bullion Banks and a mainstream media concerned solely with profits and the maintenance of the status quo. But the demise of this system is most assuredly coming, just as all institutions built upon a foundation of lies and deceit ultimately fail. The ridiculous volume of EFPs is simply another illustration of the magnitude of the fraud.
Thus, any sensible person should continue to stack physical precious metal ahead of the next crisis, when the music will finally stop and all holders of unallocated metal will find their accounts empty—and their paper promises unfulfilled.
And owning real, physical gold and silver is easy! It can be held at a trusted gold bullion storage company or in your own, personal safe. You can hold it in gold bullion coins or silver bullion bars. Take your pick. Just be sure you own some before confidence collapses, defaults ensue, and this current, fraudulent system meets its inevitable demise.
Our Ask The Expert interviewer Craig Hemke began his career in financial services in 1990 but retired in 2008 to focus on family and entrepreneurial opportunities. Since 2010, he has been the editor and publisher of the TF Metals Report found at TFMetalsReport.com, an online community for precious metal investors.