COMEX Warehouse Stocks Aug 31, 2010

SILVER

ZERO ozs withdrawn from the dealer’s (registered) inventory
6,708 ozs deposited in the customer (eligible) inventory
Total dealer inventory 51.81 Mozs
Total customer inventory 58.95 Mozs
Combined Total 110.76 Mozs

GOLD

ZERO ozs withdrawn from the dealers (registered) category
ZERO ozs withdrawn from the customer (eligible) category
Total dealer inventory 2.24 Mozs
Total customer inventory 8.57 Mozs
Combined Total 10.81 Mozs

There were no movements in gold today into or out of the Comex warehouse. There was only a paltry deposit of silver into the customer inventory of 7Kozs. 96Kozs of silver were transferred to the customer inventory from the dealer inventory by way of an internal “adjustment”. These movements are pathetically small considering 15 Mozs of silver are standing for delivery in SEP.

There were 180 delivery notices issued in the SEP gold contract. The SEP gold delivery notice total for the month is 180 notices or 18,000 ozs.

JPM issued none and stopped 145, and BNS issued 178 and stopped none.

There were 292 delivery notices issued in the SEP silver contract. The total delivery notices for the month in silver stand at 292 or 1.46 Mozs.

HSBC issued 109 and stopped 0, JPM issued none and stopped 197, and BNS issued 139 and stopped none. There were 3,002 contracts of Open Interest at the close yesterday so these must be standing for delivery as they had to be fully paid by the close yesterday. Just 292 delivery notices is exceptionally low for the first notice day when the OI is 3,002. Typically the shorts want to issue as fast as possible so they can deliver metal and stop paying storage and insurance. Considering there are supposedly 51 Mozs of registered silver why weren’t more delivery notices issued?….it doesn’t smell right!

The SEP silver contract Open Interest stood at 3,002 contracts which is 15 Mozs or 29% of the dealer inventory. This will put even more stress on a market that is already stretched as tight as a drum. The contango in silver continues to contract. The DEC 2013 contract trades for only 2.3% more than spot. This means there are growing premiums for front month contracts which serves to reduce contango indicating a growing shortage. If premiums rise enough it will cause the silver to enter into backwardation. Such a condition is rare but shrinking contango is a telltale sign of physical market stress.
Cheers
Adrian