The COMEX vs. Private Gold & Silver Eagle Stocks

Investors need to realize that at some point, the highly leveraged Comex gold and silver paper trading exchange will no longer matter.  Why, because future physical demand will totally overwhelm the paltry Comex precious metal inventories.  This is not a question of “IF”, it’s only a question of “WHEN”.

Right now, most mainstream investors still have their eyes glued to CNBC hoping and praying that their retirement accounts and paper investments don’t get flushed down the toilet.  Unfortunately for these investors, man must still abide by the fundamental laws of nature, even though we can cheat the system for many years.

And… we are already seeing plenty of signs that the real fundamentals are finally kicking into high gear.  According to the Zerohedge article, 400,000 Americans In Jeopardy As Giant Pension Fund Plans 50% Benefit Cuts:

After working 33 years, he’s facing a 55% cut to his pension benefits, a blow which he says will “cripple” his family and imperil the livelihood of his two children, one of whom is in the fourth grade and one of whom is just entering high school.

Dorsey attended a town hall meeting in Kansas City on Tuesday where retirees turned out for a discussion on “massive” pension cuts proposed by the Central States Pension Fund, which covers 400,000 participants, and which will almost certainly go broke within the next decade.

While this is only one small part of the United States, there are many pension plans across the country that are seriously underfunded.  Regrettably, it will only get much worse going forward.

You see, these investors entrusted their retirements to a system run by some of the most corrupt crooks and swindlers on Wall Street.  Instead of receiving a hefty monthly check when they retire, they will likely receive very little, if any funds at all.

Now, if these investors acquired physical gold and silver over the past 20-25 years, then they would have built up a real store of wealth nest-egg, rather than a PAPER IOU.  Fortunately, for some investors…. that is exactly what they have done.

COMEX Inventories vs Private Gold & Silver Eagle Stocks

The chart below shows the total U.S. Gold & Silver Eagle sales since 1986. Total Silver Eagle sales to date are 448.6 million while Gold Eagle sales surpassed 21.4 million oz (Moz).

Total-US-Gold-Silver-Eagle-Sales-1986-2015-NEW

There are several interesting trends and factors to focus on in this chart:

  1. Sales of both Gold and (especially) Silver Eagles surged after the collapse of the U.S. Investment Banking Industry in 2008.
  2. Sales of Gold Eagles peaked and declined after 2009, whereas Silver Eagle sales continued into record territory reaching 47 Moz in 2015.
  3. While the long-term 1986-2015 Silver-Gold Eagle sales ratio is 21/1, this increased to 59/1 in 2015

Not only do we see increased physical gold and silver buying after 2007, but the demand for Silver Eagles continue to increase while Gold Eagle sales declined. Some believe that JP Morgan has been acquiring the majority of Silver Eagle and Maple Leaf sales…. I don’t.  It just doesn’t make sense for JP Morgan to purchase high premium Silver Eagles when the bank can acquire 1,000 oz bars for very little over spot.

Furthermore, I have had exchanges with many of the precious metals dealers and they tell me that they have conversations with the wholesalers and none of them made any reference to selling large volume orders to JP Morgan.  I believe wealthy investors and institutions are buying Silver Eagles, not JP Morgan.

If we compare total U.S. Gold and Silver Eagle sales to the inventories on the Comex, we have the following:

COMEX-vs-Private-Gold-Ealge-Stocks

Total gold inventories at the Comex are currently 6.8 Moz versus 21.4 Moz of privately held Gold Eagles and silver stocks at the Comex are 153 Moz compared to 448.6 Moz of Silver Eagles. As we can see, private Gold and Silver Eagle stocks surpass total Comex gold and silver inventories by a factor of three.

However, this is based on Comex total inventories which contain both Registered and Eligible categories.  If we compare private Gold & Silver Eagle stocks to Comex Registered inventories only, we have the following graph:

REG-COMEX-vs-Private-Gold-Silver-Stocks

What a difference….. aye? There are only a measly 278,290 oz of gold sitting at the Comex Registered inventories compared to the 21.4 Moz of privately held Gold Eagles.  Furthermore, there are only 24.8 Moz of Registered Silver at the Comex versus 448.6 Moz of privately Silver Eagle stocks.

Okay… I get it.  How can I compare Comex inventories to privately held Gold and Silver Eagle stocks?  Yes, it’s true, Comex gold and silver are in bar form that meet certain requirements for wholesale trade and investment.  Furthermore, a percentage of Comex gold and silver inventories (mostly Registered) are ready to be settled for delivery into the market whereas private Gold and Silver Eagles do not meet this requirement… unless we consider a certain annual volume of these coins that are resold into the market.

And then we have this recent article by Koos Jansen, COMEX Gold Futures Can Be Settled Directly With Eligible Inventory, stating that:

there are some circumstances in which a privately negotiated or ‘‘ex-pit’’ trade may be warranted. The term ex-pit trade refers to any transaction that is executed on a noncompetitive basis and outside of a traditional open outcry or electronic trading environment.

What Koos is trying to say is that under certain circumstances, Eligible gold stocks can be settled for delivery not just the Registered inventories.

The important factor to understand here, is how much of the Eligible Gold would be delivered this way?  I would imagine only a small percentage of the total Eligible Gold inventories would be delivered in this fashion.  Why?  Because the Registered Gold inventories were drawn down first.  Moreover, I highly doubt wealthy or institutional investors would want to pawn their gold via an “ex-pit trade at a pathetically low price while the future of the financial and economic system are in dire straights.

In addition, it is probably true that not all of the Gold and Silver Eagle sold since 1986 may still be around.  However, I believe 95-99% of total Gold and Silver Eagle sales are likely still around, held tightly in the public’s hand. The reason I believe this is due to the fact that Gold or Silver Eagles sold back into the market are not melted for scrap, but rather are resold to new owners. It just doesn’t make sense for a retailer or wholesaler to sell high premium Gold or Silver Eagles as scrap.  They make more money reselling them.

I decided to take this exercise just to show investors there’s a heck of a lot more physical gold and silver held in private hands via these official coins compared to the pathetically small Registered inventories at the Comex.

Lastly, insane trading days like today when the Dow Jones surges nearly 350 points on the worst economic data in four years won’t last forever.  Either will Greatest Paper Ponzi Scheme in history.

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charles
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charles

If Dorsey worked 33 years and he has a kid in 4th grade, well, how old is Dorsey? If he fathered a child who is 9, then was Dorsey 44 at the time? What? And if he was 20 years old when he started working then he “retired” at age 53. What? Get your butt back to work at some other job. He is not alone. Sheesh. A lot of 60-somethings and 70-somethings are now back at work. While I am not happy about my eventual 55% cut to my already meager pension, I kept on working after that job… Read more »

charles
Guest
charles

Steve, regarding the percentage of silver eagles that are “still around” … There is some percentage, which is impossible to determine but I am going to guess at 10% to 30% of the total produced over the years, that has gone to foreign countries and will likely never come back to the U.S. And no matter if it does come back. It would not come back because of low prices. And if prices go higher, as most of us think will be the case, there will be many Americans buying Maple Leafs and Brittanias and others. I think that except… Read more »

Craig
Guest
Craig

The more we learn about COMEX the more curious it gets. I read that article by Koos Jansen, it hurt my head, but another interesting tidbit was this: But, as we just learned GC can also be settled through EFP. The punch line of EFP is that the related position (the spot leg) can be anything that resembles 100 ounces of gold. Through EFP “the quantity of the related position component … must be approximately equivalent to the quantity of the Exchange component”. Therefore, the related position is allowed to be gold recorded as eligible inventory in New York, but… Read more »

d
Guest
d

Koos Jansen’s writing style makes my head hurt too. He takes a complete
paragraph to say what can be said in a few simple words. I guess it makes
him sound more important.

Joe Lindell
Guest
Joe Lindell

Is April the month that the Shanghai Exchange will trade physical silver?

petedivine
Guest
petedivine

From the Shanghai Gold Exchange website.

Bullions listed on the Exchange include gold (Au), silver (Ag), platinum (Pt), and other precious metals as approved by the PBC.

I believe you are referring to the start of the Gold price fix in Yuan. It is suppose to start in April.
http://anonhq.com/game-changer-china-set-start-yuan-based-gold-price-fix-april-2016/

AK
Guest
AK

Steve,

Ted Butler keeps pounding the table that not a single analyst besides himself ever mentions the enormous turn over of silver inventory on the Comex. It appears that as much as 50% of total global silver production is shipped in and out of the Comex every week. This amounts to millions of ounces every week that are going somewhere. I would agree that this would indicate that this silver is needed or hoarded by someone and speaks to the tightness of the silver market. I’d be interested to hear your view on this.

Ken
Guest
Ken

I just stacked some more silver eagles….

Thank You Steve!

Cheers
Ken

Silver Fox
Guest
Silver Fox

This comex game is getting so old and tiresome let it all collapse so we can move forward. This reset is so way over due!!!

Junty
Guest
Junty

A very interesting chart depicting the huge increase in sales of ASE starting 2008. This was the bail out era of Wall st. JPM is the front man for the FED. Here is what I believe: JPM is the mystery buyer of the bulk of ASE coins No one is buying these tens of millions of ounces How can any of this be? JPM has a deal to buy as many coins that can be produced at a price similar to COMEX. JPM doesn’t need to buy from ANY intermediary. JPM extinguishes their silver shorts. How about there are millions… Read more »

David
Guest
David
houtskool
Guest
houtskool

I’m still waiting for the next drop in GLD inventory.

http://www.freegoldclock.org

1000 Bagger
Guest
1000 Bagger

When people realize that there is no silver, Goldstock Mania begins. Then an ounce in the ground could be valuated like a ounce in the hand. http://gebert-trade.weebly.com/1000-bagger-potential.html

Silvrwillwin
Guest
Silvrwillwin

There clearly appears to be a heck of allot of formulations going on in this comment section. I’m sure that most of it is legit and it is impressive. But there’s one point that this reader came across recently from another source which was cause for alarm…over 1/2 of Americans right now have less then $ 1000.00 in savings.Why aren’t Americans more savvy in this area !!?? What a tragedy that is unfolding before us.

David
Guest
David

Many are struggling despite not having an expensive lifestyle; it isn’t just over-consumption.

David
Guest
David

BTW–I’m not the David I’m responding to! 🙂
Yes, many ARE struggling. But as I drive my ’98 Chev s10 to work each day, I see hundreds and thousands of $20-60k cars on the freeway, most of which, I presume, are not paid off. The owners are in hock up to their eyeballs. And that doesn’t count all the other consumer debt they’ve got, PLUS their mortgage payments which in this area probably average $2k/month. So much debt, so little equity.

Silvrwillwin
Guest
Silvrwillwin

Agreed , yet if physical silver was respected for what it really is , future security and savings more local to the holder , many could have started and maintained an accumulating routine.
A 1 oz. round has kept a pretty steady price of approx. $ 17 to $ 18 ea. . Something very attainable for say 1 oz. stacking per week.

OutLookingIn
Guest
OutLookingIn

The New Zealand (IRD) tax authority is at present “floating” a proposal to tax gold bullion in any form (ex jewelry ) along with any “other” precious metals. At present the purchase and or sale of these items is tax free.
You can rest assured that after these “public inputs” are completed, the government will institute a precious metals bullion tax. Just another form of “legal” wealth confiscation by the elites. The IRD have dismissed the “gold is money” argument, refuting thousands of years of historic use as such!

Read about it at: SLG Gold News.

David
Guest
David

Sounds to me like the “public” isn’t being asked for any “inputs” on this matter at all.

Robert
Guest
Robert

this all ,presumes the criminals won’t pass a law and come steal the silver or gold you acquired

David
Guest
David

And we haven’t even mentioned all the other gold and silver coins/rounds/bars in circulation, which have got to be a large number of ounces, perhaps larger, even much larger, than the number of ounces represented by the eagles. Just taking silver, for example, what about the Britannias, the Maple Leafs, the Philharmonics, etc.? And rounds–all the privately minted rounds from Sunshine, RMC, Silvertowne, OPM, etc., etc., etc.? Think about it. How much silver does that represent? The Comex and the London bullion bank are toast.

Hope
Guest
Hope

MHO: Assuming these articles are accurate, “cash” savings in the bank or in the mattress don’t seem to mean a whole lot in terms of what can be bought with that money, i.e. don’t have a lot of “value”. I have seen invested savings wiped out in a matter of minutes. Where is the incentive to “save”? And having gold/silver coin doesn’t mean much to a bank in terms of closing on a mortgage either for example. Again, not a whole lot of incentive there.