Did COMEX Counterparty Risk Just Reach A Record High?

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As shortly as a ‘active month’ of Aug was over during The Bucket Shop, JPM took a cube of bullion behind off a purebred for smoothness roster.   In a china marketplace JPM is gaining a repute for a vast earthy china hoard, and a purpose of a ‘fireman’ to contend a fortitude of precedence in supply and demand.

 

These spikes aloft in a ratio of open seductiveness to deliverable bullion during stream prices is not something that has happened in a past fifteen years during least.   And conjunction has a solid boost in a ratio that we have been saying in a past integrate of years.

 

 

The Financial Times has finally beheld that a cost for ‘borrowed’ bullion bullion that is taken to Switzerland for re-refining and afterwards final conveyance to Asia for squeeze and withdrawal is rising.

 

These are signs that one competence design to see in a late theatre bullion pool in that a strategy of a marketplace has left too distant for too long.   One thing we can contend about a financial speculators is that they never know when to quit.   Remember a London Whale?   He never stopped until a rest of a veteran participants lifted a bitch that he was disrupting a whole market!

 

The crafty quislings for a bullion banks will note that an tangible default on a Comex is unlikely, and they are right.  It is not unequivocally a ‘physical delivery’ exchange, though is now essentially a betting shop.  There is copiousness of bullion in a warehouses, if we do not regard yourself with a niceties of skill rights.  And claims can be force staid in money on a stipulation of force majeure. 

 

Heck, as we saw in a box of MFGlobal,  when JPM shoved to a front of a resources allocation line, even profits for tangible earthy bullion owned undisguised can be forced staid in cash.   If we reason bullion in a purebred room or an unallocated account,  then your tenure is philosophically ‘conceptual.’

 

The earthy smoothness exchanges are in other places, like a LBMA in London and generally a markets of Asia such as a Shanghai Gold Exchange.

 

And this is where we will see a initial signs of a relapse in a bullion cost strategy pool of a bullion banks, initial as signs of ‘tightness’ in a smoothness of metals, and afterwards in a initial ‘fails to deliver.’

 

Rising prices will yield relief.  But a pool operators are not bashful about dire and doubling down, in a informed settlement of overreach.  Remember a contingent passing of ‘the London Whale?’