A GOLD WHALE TAKES DELIVERY ON COMEX! / MACLEOD FINANCE

A gold whale takes delivery on Comex!

There was a panic with last Friday’s open interest revised up by 48,629 contracts over preliminary figures. Today, preliminary OI crashed by 68,196 contracts. What’s going on?

ALASDAIR MACLEOD

 

This is a quick note to try to make sense of the shenanigans in Comex’s gold futures contract. 

First, the ever-observant Ronan Manly posted on X the extraordinary stand-for-deliveries due tomorrow but notified today of 34,865 contracts. 

This is 108.44 tonnes — the highest ever recorded by a long way (the previous high was 29,621 contracts on 31 January). 

Then an observant paid follower of my Substack alerted me yesterday to an unprecedented jump in last Friday’s revised open interest.

This is what I think is happening.

Stand-for-deliveries tend not to get actual delivery easily. 

When Rafi Faber tried it some time ago all sorts of hurdles were placed in his way which he documented. 

It leads me to suppose that there is a backlog of undelivered stand-for-deliveries, which given the sheer quantity of them could be very large.

There is no doubt that over time these deliveries do take place. 

MacroMicro’s chart of Comex warehouse gold illustrates the point:

Following the crisis during and after covid, warehouse stocks soared to a record of just under 40 million in February 2021. 

Then stocks declined until the current hiatus, which will have included the drain of stand-for-deliveries, which between 2021—2024 exceeded 2000 tonnes.

So far, this year there have already been stand-for-deliveries for 15,014,400 ounces totalling 467 tonnes, which is an annualised rate of 1,880 tonnes. 

This matches the approximate 15 million ounces of the increase in Comex stocks since early December. 

With these obligations, no wonder the bullion establishment ran scared on Trump’s potential tariffs!

In that 467 tonne total, there are three large numbers which occurred on contract expiries: 40,649 between 31 January and 3 February; 9,711 contracts on 28 February (10,119 silver contracts on that date is still the largest silver number); and this one of 34,865 contracts. 

Clearly, along with the growing trend of stand-for-deliveries, there is a whale using Comex futures to clean markets out of liquidity by taking delivery. 

It would unlikely be able to source these quantities of physical gold this quickly elsewhere.

Summarising so far: as fast as liquidity has been drained out of London, Switzerland, and elsewhere stand-for-delivery obligations have been taking all of it.

While ownership changes, gold remains in the Hotel-California Comex vaults concealing a liquidity crisis.

Now who or what is the whale. 

It is no ordinary user of futures who are being routinely fobbed off by the establishment. 

My guess is that it is a foreign government or similar agency alarmed at the prospects for the dollar under the Trump administration with the legal, political, and economic clout to force actual delivery.

It has created significant problems for an unprepared bullion establishment — hence the open interest crisis revisions.

This sends us lesser mortals important messages about the way the paper gold system operates, its weaknesses built up by its controlling participants’ complacency over time, and the dollar’s prospects valued in gold. 

The whale is the ultimate insider, and we would love to know who it is.

Meanwhile, I’m with the whale getting out of dollar credit.