Today whistleblower and London metals trader Andrew Maguire told King World News that Western bullion banks are now close to panic as they take unprecedented action in paper gold and silver markets.
Strongest Physical Market Since $700 Gold
November 24 (King World News) – Andrew Maguire: “Eric, recently we have evidenced a slew of bearish commentary from respected analysts (I know many of them), calling for a gold and silver price crash into the end of the year. However, these bearish calls are reliant upon history repeating itself, while completely blinkered to the strongest physical market we have evidenced since November of 2008 when the price of gold was roughly $700…
Andrew Maguire continues: “As a wholesaler, I am absolutely certain the physical markets are collectively soaking up all of the ‘at the margin’ physical supply at current prices. It is this tightening physical supply that constrains the efforts of central planners wanting to continue capping the gold price.
Unprecedented Volume Of EFP’s
Recently, sovereign buyers have been waiting for the centrally planned pullback, at which point we immediately evidence strong spot index buying — locking in spot prices for delivery — as well as an unprecedented volume of Exchange of Futures for Physical (EFP) outflows related to undeliverable Comex short positions.
In simple terms, an EFP transaction constitutes the simultaneous execution of a Comex futures contract for an offsetting corresponding physical transaction or a forward contract on a physical transaction. What does that really mean? It provides a back door with which to move an undeliverable ‘reportable’ December Comex position into an opaque, unregulated over-the-counter marketplace where futures deals are settled off the books bilaterally.
Note the massive EFP Gold demand over the last month has now exceeded an unprecedented 650 tonnes of December gold futures outflows. To give an idea of just how much of a scramble there is to cover undeliverable shorts as we move into the largest delivery month of the year, since last Wednesday alone we have evidenced 73,205 Comex lots, (230 tonnes of contracts), exchanged or swapped for a ‘deliverable’ OTC London contract.
Banks Near Panic As Paper Leverage Skyrockets
During this same 6-day period, where over 73,000 gold futures contracts were swapped for so-called ‘physical’ over-the-counter positions, Comex Open Interest only fell by around 1,000 lots. What does this tell us? It tells us paper gold positions are being ‘hedged’ with paper gold over-the-counter positions. Given we have evidence from the Reserve Bank of India that the over-the-counter gold market in London trades at least 92 ounces of paper gold for every one ounce of physical gold held by the LBMA banks, this is clearly no hedge at all. It is a deliberate attempt to try to obscure brazen naked short undeliverable positions, which is not going unnoticed by the wholesale market participants. Deep backwardations between December gold and the cash spot market are bifurcating the paper vs. physical markets and accelerating these defensive flows.
Same Thing Taking Place In The Silver Market
During the same 6-day period leading into December expiry next week, silver also evidenced a ludicrous 1,375 tonnes of outflows, while during the same period Comex Open Interest barely moved. Given there is only around 700 tonnes of known silver (wholesale 1,000 ounce bars) collectively held by the LBMA banks, these EFP outflows scream tight supply and a desperate attempt to contain the price of silver in paper shackles. However, never before have we evidenced such enormous EFP volumes escalate into a delivery month. I expect these EFP outflows to increase all the way into December expiry and rollover next Thursday.
These EFP flows are all paper Comex lots draining out from a non-delivery market because increased reporting requirements forces CME members to prove gold and silver short positions are backed by physical. Deep backwardations between December gold and the cash spot market are bifurcating the paper vs. physical markets and accelerating these defensive flows. This unprecedented EFP action is all smoke and mirrors, fly-wheeled into unregulated paper gold and silver markets with Comex specs blinkered and wrong-footed into to a very strong physical market.
An Extraordinary Situation
I have been questioning the unprecedented escalation of these EFP flows with the CFTC. The recent escalation in these paper short outflows should raise a number of areas of concern for them. I believe these back door EFP flows are deliberately obscuring insiders’ footprints, and that it is obscuring a very tight physical market. This is the development of an extraordinary condition and clearly telegraphs a very tight physical market where conditions are so tight that insiders are forced…KWN has now released the powerful audio interview with London whistleblower and metals trader Andrew Maguire and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: Dollar Reversing As Gold Surges Toward $1,300, Plus The Key Level For The Big Move CLICK HERE.
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