Does the COMEX Have a December Silver Delivery Problem?

Except for a brief dip to its low of the day [around $1,363 spot] during the Hong Kong lunch hour, gold moved mostly higher in early Tuesday morning trading... with an interim top at the London a.m. gold fix at 10:30 a.m. local time... 5:30 a.m. Eastern. From that point, the gold price slid a little into the Comex open.

The moment that trading began in New York, the gold price rocketed $14 higher to $1,386 spot during the following fifteen minutes. And, except for a brief excursion to its high of the day [$1,391.00 spot] around 12:15 a.m. Eastern, gold basically traded sideways for the rest of the New York session.

Silver traded mostly between $27.00 and $27.25 spot right up until the Comex open at 8:20 a.m. yesterday morning. Then away went the silver price to the upside with the top [$28.36 spot] coming around 12:20 p.m. in New York. Silver then gave back about 15 cents of those gains going into the close of electronic trading at 5:15 p.m. Eastern.

It was a terrific day all around. But, having said that, I wonder how high the prices of both metals would have gone if there hadn't been a not-for-profit seller show up shortly after the lunch hour began in New York. Not that I wish to sound ungrateful... nor do I want to look a gift horse in the mouth... but this is still not a free market in either commodity. However, we are headed in the right direction.

The almighty U.S. dollar began a rally at precisely 3:00 a.m. New York time [8:00 a.m. in London] for the second day running. What are the chances that that was a market coincidence, you may ask? None at all, is the answer. Two hours later, the dollar was up to 81.35 cents... and it basically didn't move much from that for the rest of Tuesday's trading session.

As for any co-relation to the gold price... most of gold's $20 move and $1 plus move in silver happened during a drop of about 35 basis points in the dollar between 8:30 a.m. and 11:30 a.m. Eastern time. Not a lot of movement to hang one's hat on. I'd say there was no co-relation at all.

The gold stocks topped out about an hour after both gold and silver hit their zenith on Tuesday... then gave back some of those gains going into the New York close. The HUI finished up 1.36% on the day. But, once again, it was the silver stocks that were on fire. And the gains were across the board, in both majors and the juniors... but the junior silver producers were the big stars of the day. My own personal portfolio [60/40 silver/gold] was up more than double the HUI yesterday.

Well, the CME Delivery Report showed a lot of activity once again. In gold, there were 1,098 contracts posted for delivery on December 2nd. All the big issuers on First Day Notice were stoppers this time... and everyone else was an issuer. Goldman Sachs and Deutsche Bank [both trading for their proprietary {house} accounts] were the big issuers and stoppers of note.

But, after yesterday's big surprise in silver, I didn't know what to expect when I opened the CME Delivery Report a few minutes ago. Well, it was another big surprise, as only 34 silver contracts were posted for delivery tomorrow. That's 90 contracts month-to-date in total... and December is one of the biggest delivery months of the year. This is unprecedented! I don't think its too much of a stretch to speculate that the reason that there have been no big deliveries so far in December, is that there is no silver available to deliver. But is the Comex in default? Was the big withdrawal from SLV about ten days ago, Comex bound for the December delivery schedule? These are very important questions that scream for answers. So far neither the Comex nor the CME have said a word about it... so we must await developments.

Needless to say, this CME report is also well worth spending time on... and the link is here.

There were no reported changes over at the GLD ETF for the last day of November. But a smallish amount of silver was taken in by the SLV ETF on Tuesday. That amount totaled 537,647 troy ounces.

Over at that the Zürcher Kantonalbank in Switzerland last week, their ETFs reported a small drop of 1,218 ounces of gold... and a decline of 45,090 ounces of silver. As always, I thank Carl Loeb for these numbers.

Well, the last sales report from the U.S. Mint in November pushed silver eagles sales over the 4 million mark for the first time in history. The exact total for November was 4,260,000 silver eagles. And that, dear reader, is a phenomenal amount. There were some whole years of silver eagle production in the past that barely exceeded that number... and a few years that didn't. Year-to-date silver eagle production is 32,890,500. Wow... and we still have one month to go! One has to wonder how long the U.S. Mint can [or will] keep this up. I hope that you are getting your share.

Gold eagle sales added another 11,500 ounces for the month... bringing the month-end total for November up 112,000 ounces of gold minted into gold eagles. That is not a record month for 2010 by any stretch of the imagination. For the month of November, silver eagles outsold gold eagles by 38 ounces to 1. Year-to-date that number is 28 ounces to 1. What that means is that silver bullion sales are increasing at the expense of gold bullion sales. My bullion dealer here in town is selling about 200 ounces of silver for every ounce of gold. The short squeeze in silver is definitely on at the retail level.

It appears that the plan to bury JPMorgan et al by buying up as much physical silver as possible is already well under way. I plan to add to their litany of woes on Thursday.

It was a busy day over at the Comex-approved depositories on Monday. All four depositories were very active... and by the time the smoke cleared, they had added a net 743,072 ounces of silver to their inventories. The link to that action is here.

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