JohnQPublic
28th April 2011, 12:15 PM
Comex Explains Large Adjustment in Silver & Gold Registered Inventories (http://blog.darienwealth.com/post/4994245394/comex-explains-large-adjustment-in-silver-gold)Last week, Comex’s report of a large adjustment in silver and gold registered inventories caused a major uproar from the gold and silver conspiracy nuts. The report showed a 5+ million ounce transfer of silver from registered to eligible and an approximately 100,000 ounce move of gold inventories from registered to eligible. Harvey Organ called it suspicious.
Now the fun begins: We had a massive 5,287,142 oz adjustment whereby the dealer repaid a customer for a prior commitment or a seller had cold feet and decided not to sell his silver and it returned to eligible silver (not for sale) or this is a settlement whereby silver is finally delivered to a patiently waiting long. Ladies and gentlemen..something is up!! The adjustment was in the Scotia vault. Let us see if this silver leaves the Scotia vault.
Zero Hedge thought it might be indicative of a run on silver.
Assuming one does not have full faith in the simple error story, does this mean that deliverable silver just dropped by 13% overnight (this event occurred yesterday, but was reported as usual with a 24 hour delay)? And if so, is this effective transformation of physical to semi-paper silver indicative of what we may expect from other depositories in the next few days as the delivery notices start coming in?
Unfortunately for the silver conspiracy nuts, the reclassification was not due to a run on supplies or indicative of fraud at Comex. It was due to a change in its reporting system to electronic warrants and the metals that had not fully converted from paper to electronic were moved to eligible. In an email sent out this evening, Comex explains:
A correction to the COMEX Metal Depository Statistics Stock Reports published on April 27, 2011, has been made to reflect a change in the reporting of metal from the Registered category to the Eligible category. This change reflects paper warrants that have yet to be converted to electronic form. The metal represented by these paper warrants, which will now be reported in the Eligible category, will continue to remain eligible for delivery against COMEX futures contracts provided holders of the paper warrants convert them to electronic form.
Exchange metal reported in the Registered category represents troy ounces of metal that meet the contract specifications as defined in the Exchange Rules for which an electronic warrant has been issued.
Exchange metal reported in the Eligible category represents troy ounces of metal that meet the contract specifications as defined in the Exchange Rules for which an electronic warrant has not been issued.
The COMEX Metal Depository Statistics Stock Reports reflect the following adjustments:
http://darienwealth.com/images/cmetable.png
*This adjustment was reflected on the COMEX Metal Depository Statistics Stock Reports as of April 20, 2011.
As background, the Exchange utilizes a paperless Electronic Delivery System for metals futures contracts. Delivery against the Exchanges’ metals futures contracts takes place by the electronic transfer of warrants between Clearing Members. In order to convert paper warrants to electronic warrants, the paper warrants must be endorsed by the Clearing Member to the appropriate Exchange Licensed Depository for conversion to electronic warrants.
If you have any questions regarding this matter, please contact Chris Reinhardt, Associate Director, Market Surveillance, at 212.299.2882 or Joann Arena, Manager, Research and Product Development at 212-299-2356
In other words, Comex has converted to an all-electronic delivery system. Holders that have not converted their paper warrants to electronic warrants had their metals reclassified from registered to eligible. As those holders properly convert their warrants, those metals will move back to registered. That’s it. No run. No Conspiracy. Move along folks.
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My comment:
JohnQPublic 1 comment
"As those holders properly convert their warrants, those metals will move back to registered."
If they convert their warrants. What if they do not? Then a huge transfer was made while trusting investors were sitting around waiting. Time will tell.
Now the fun begins: We had a massive 5,287,142 oz adjustment whereby the dealer repaid a customer for a prior commitment or a seller had cold feet and decided not to sell his silver and it returned to eligible silver (not for sale) or this is a settlement whereby silver is finally delivered to a patiently waiting long. Ladies and gentlemen..something is up!! The adjustment was in the Scotia vault. Let us see if this silver leaves the Scotia vault.
Zero Hedge thought it might be indicative of a run on silver.
Assuming one does not have full faith in the simple error story, does this mean that deliverable silver just dropped by 13% overnight (this event occurred yesterday, but was reported as usual with a 24 hour delay)? And if so, is this effective transformation of physical to semi-paper silver indicative of what we may expect from other depositories in the next few days as the delivery notices start coming in?
Unfortunately for the silver conspiracy nuts, the reclassification was not due to a run on supplies or indicative of fraud at Comex. It was due to a change in its reporting system to electronic warrants and the metals that had not fully converted from paper to electronic were moved to eligible. In an email sent out this evening, Comex explains:
A correction to the COMEX Metal Depository Statistics Stock Reports published on April 27, 2011, has been made to reflect a change in the reporting of metal from the Registered category to the Eligible category. This change reflects paper warrants that have yet to be converted to electronic form. The metal represented by these paper warrants, which will now be reported in the Eligible category, will continue to remain eligible for delivery against COMEX futures contracts provided holders of the paper warrants convert them to electronic form.
Exchange metal reported in the Registered category represents troy ounces of metal that meet the contract specifications as defined in the Exchange Rules for which an electronic warrant has been issued.
Exchange metal reported in the Eligible category represents troy ounces of metal that meet the contract specifications as defined in the Exchange Rules for which an electronic warrant has not been issued.
The COMEX Metal Depository Statistics Stock Reports reflect the following adjustments:
http://darienwealth.com/images/cmetable.png
*This adjustment was reflected on the COMEX Metal Depository Statistics Stock Reports as of April 20, 2011.
As background, the Exchange utilizes a paperless Electronic Delivery System for metals futures contracts. Delivery against the Exchanges’ metals futures contracts takes place by the electronic transfer of warrants between Clearing Members. In order to convert paper warrants to electronic warrants, the paper warrants must be endorsed by the Clearing Member to the appropriate Exchange Licensed Depository for conversion to electronic warrants.
If you have any questions regarding this matter, please contact Chris Reinhardt, Associate Director, Market Surveillance, at 212.299.2882 or Joann Arena, Manager, Research and Product Development at 212-299-2356
In other words, Comex has converted to an all-electronic delivery system. Holders that have not converted their paper warrants to electronic warrants had their metals reclassified from registered to eligible. As those holders properly convert their warrants, those metals will move back to registered. That’s it. No run. No Conspiracy. Move along folks.
=============================================
My comment:
JohnQPublic 1 comment
"As those holders properly convert their warrants, those metals will move back to registered."
If they convert their warrants. What if they do not? Then a huge transfer was made while trusting investors were sitting around waiting. Time will tell.