{"id":15284,"date":"2015-12-15T08:28:12","date_gmt":"2015-12-15T13:28:12","guid":{"rendered":"http:\/\/olduvai.ca\/?p=15284"},"modified":"2015-12-15T08:28:12","modified_gmt":"2015-12-15T13:28:12","slug":"gold-analyst-warns-of-leverage-there-are-about-325-paper-ounces-for-every-physical-ounce-backing-it","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=15284","title":{"rendered":"Gold Analyst Warns of Leverage: \u201cThere Are About 325 Paper Ounces For Every Physical Ounce Backing It\u201d"},"content":{"rendered":"

Gold Analyst Warns of Leverage: \u201cThere Are About 325 Paper Ounces For Every Physical Ounce Backing It\u201d<\/a><\/h3>\n
\"paper-and-real-gold\"<\/a><\/div>\n
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Back in September\u00a0Zero Hedge<\/a>reported that\u00a0something snapped in the COMEX market and\u00a0all indicators suggest there was a relentless outflow in registered gold. At that time there were about 202,054 ounces of gold available for delivery. To put that into perspective,\u00a0Craig Hemke of\u00a0TF Metals Report<\/a>\u00a0points out\u00a0that just earlier this year there were nearly one\u00a0million registered ounces available.<\/p>\n

What this likely means is that someone, somewhere is requesting that their paper holdings be converted into deliverable\u00a0physical gold. All the while many a mainstream pundit has declared that gold is nothing but a relic of times past. Yet, despite its purported unpopularity, since the last time the COMEX snapped in September even more registered gold has disappeared.<\/p>\n

As of December, notes\u00a0Hemke in his latest interview with\u00a0Crush The Street<\/a>, we\u2019ve hit an all-time low in registered physical metal at the COMEX which has in turn led to a massive amount of leverage.<\/p>\n

We\u2019re at an all time low of about 120,000 [ounces of registered holdings].<\/p>\n

But yet the total open interest- the amount of paper contracts based upon that declining amount of physical metal \u2013 has stayed the same.<\/p>\n

Now, there\u2019s about 325 paper ounces for every one physical ounce backing it. In the past that number was always around\u00a010-to-1 or 20-to-1.<\/strong><\/p>\n

\u2026<\/p>\n

It\u2019s another one of these data points that we follow that seems to indicate a global physical tightness.<\/p><\/blockquote>\n

In the\u00a0full interview<\/a>\u00a0Hemke explains what\u00a0this means for the\u00a0gold market, as well as why the leverage in COMEX precious metals is significantly different than stock markets:<\/p>\n