LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

COT Gold, Silver and US Dollar Index Report - January 24, 2020
By: GoldSeek.com

Gold/Silver Ratio, SPX, Yield Curve and a Story to Tell
By: Gary Tanashian

Gold-Miner Valuations
By: Adam Hamilton, Zeal Research

Gold 2nd Leg Up Beginning (video update)
By: Gary Savage

“Cash Is Trash” In 2020, Hold Gold In a Diversified Portfolio – Dalio at Davos
By: Mark O'Byrne

Precious Metals Update Video: Good action in the gold market
By: Ira Epstein

The Seduction of Betting Against the Sure Thing
By: Rick Ackerman, Rick's Picks

The Next Catalyst for Gold
By: Jordan Roy-Byrne CMT, MFTA

The Us Dollar Index : The Most Important Chart on the Planet
By: Rambus

NOT-Predictions for 2020
By: Gary Christenson, Deviant Investor

 
Search

GoldSeek Web

 
Exchange For Physical?


 -- Published: Wednesday, 4 December 2019 | Print  | Disqus 

Craig Hemke, TF Metals Report

Two years ago, following a surge in the use of "Exchanges For Physical" by traders at the COMEX, Eric Sprott asked me to begin tracking and recording the daily totals for this practice as posted by the CME. It's time for an update.

First, let's attempt again to discern what the heck an "exchange for physical" really is, because the truth of the matter is, no one really knows. When we first wrote about EFPs back in April of 2018, this was the best summary explanation we could find:

So, these are "ex-pit transfers between two parties". OK. If that's the case, then EFPs are best categorized as a swapping of positions between two parties. Given the volume of these transfers each day, it's safe to assume that the two parties in question here are almost always Bullion Banks. And what are "Bullion Banks"? These are the banks that manage the physical delivery market in London...and they operate hand-in-glove with their trading desk operations on the COMEX in New York.

(By the way, the conspiracy to rig and manipulate prices between London and New York trading is precisely what the U.S. Department of Justice is currently investigating under the RICO statutes...an investigation that has already yielded six indictments, including the former head of JP Morgan's global precious metals desk, Michael Nowak. It's noteworthy that up until his indictment, Nowak also proudly served on the board of directors of the LBMA. Read more here: https://www.zerohedge.com/markets/abject-corruption-exposing-financial-political-complex-protecting-its-own-gold-manipulation)

Anyway, back to the EFPs. Though this practice of "ex-pit transfer" has been around for decades, the use of this scheme has increased dramatically in the past several years, possibly coinciding with a similarly dramatic increase in total contract issuance and open interest.

How does the CME itself define an EFP? Here's a link, an excerpt of which is pasted below: https://www.cmegroup.com/trading/metals/precious/g...

Note the last line above. "EFP is a key component in pricing OTC spot gold". Dutch money manager Gijsbert Groenewegen offered to provide his expertise and insights to this process back in 2018, and back then, he suggested that the dramatic surge in EFP use was also a tool for Banks to directly impact price. Groenewegen theorized that The Banks do, in fact, now use EFPs as a means to control prices off-exchange and through the deliberately-opaque OTC markets. This is worth considering, and you can read his article here: https://www.tfmetalsreport.com/blog/8942/guest-pos...

But let's get back to the sheer volume of EFPs at present, because in the end, I believe it helps to reveal again the utter scam, sham, and fraud of the current digital derivative and fractional reserve pricing scheme.

From the CME Group's own website, it is explained that futures contracts and EFPs are utilized by "gold traders" who "frequently trade OTC with Banks to hedge gold transactions". OK, that sounds legitimate. You've a big position and you'd like to hedge it? Go right ahead. In fact, the latest global hedge book update from the World Gold Council estimated the current demand for producer hedging to be about 266 metric tonnes: https://www.gold.org/goldhub/research/gold-demand-...

While 266 metric tonnes is a lot of gold, that only equates to about 85,000 COMEX contracts. Hmmm. There must be more to the story.

Well, maybe these ex-pit transfers are needed to help hedge the custodial gold stored in the Bank of England vaults in London? In 2017, Ronan Manly did some deciphering and concluded that there was only about 860 metric tonnes of this custodial gold held in the London vaults. That’s a lot of gold, too. Again, though, you could hedge every last ounce with about 277,000 contracts.

And what kind of total EFP volume are we talking about here? Again, I've kept track every single day since November 24, 2017, and the total amount of COMEX contracts—moved off exchange and "exchanged for physical"—is 4,444,344.

Yes, that's right. In just two calendar years, 4,444,344 contracts have been swapped off of COMEX and, in the CME’s own words, converted into "physical, unallocated accounts".

Now let's do some math.

At 100 ounces per COMEX contract, 4,444,344 contracts equates to 444,434,400 ounces. And 444,434,400 ounces is about 13,820 metric tonnes. Now that, my friend, truly is A LOT of gold. For the sake of comparison, that's more than the combined holdings of the Unites States, Germany, and Switzerland! It's also about five times the total annual global mine supply!

So, we're supposed to believe that "ex-pit transfers" executed by parties hoping to "hedge over- the-counter physical gold business" have totaled nearly 14,000 metric tonnes over just the past two years? And this is a legitimate component of the free, fair, and sacrosanct global pricing scheme for physical metal? Give me a break!

Again, if anything, my hope is that this information sheds more light upon the inherently-fraudulent pricing process that has been utilized by The Banks since 1975. (https://wikileaks.org/plusd/cables/1974LONDON16154_b.html) The price of physical metal is not determined by the exchange of physical metal for cash. Instead, it's largely determined through the exchange of unbacked and unallocated derivative contracts, the supply of which is ever increasing through the alchemic wizardry of The Bullion Banks.

However, a day is coming when these Banks will be faced with a margin call of true physical delivery for the unallocated and fantasy "gold exposure" that they have created over the past 45 years. Don't allow yourself to be a bag-holder. Take immediate physical delivery or move your metal to a trusted custodian outside of the banking system.

There are now multiple countries that have repatriated their physical gold from London and the other banking centers. If these countries don't trust the Bullion Banks, why should you? Heed their warning and repatriate your personal gold as soon as possible.

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.


| Digg This Article
 -- Published: Wednesday, 4 December 2019 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.