Comex Silver Long Positions Would Require 95 Days of Global Mining Production To Fill

[Smaulgld]

Yesterday we reported on the silver and gold short positions on Comex. We showed that 135 days of global silver production would be required to cover the short open positions of the eight largest traders.
Today we report that the long silver open positions are also very large, highlighting that the amount of paper silver contracts bought and sold far exceeds
physical supply.
Here is a chart:
https://smaulgld.com/silver-gold-long-positions-comex/

 

[Dr.3D]

Imagine what would happen if everybody decided to take delivery.

 

[TheCount]

Are you proposing that the only physical supply of silver is silver not yet mined?

 

[Smaulgld]

Are you proposing that the only physical supply of silver is silver not yet mined?

Nope, there is also above ground scrap silver which is part of the supply https://smaulgld.com/silver-supply-demand/
The only conclusion is that more paper silver is traded than available to deliver

 

[DFF]

Imagine what would happen if everybody decided to take delivery.

It's the same with the banks if everyone decided to withdraw their cash simultaneously. Banks would fail, and in the case of silver, the silver futures market would blow up.

 

[Smaulgld]

It's the same with the banks if everyone decided to withdraw their cash simultaneously. Banks would fail, and in the case of silver, the silver futures market would blow up.

Yep, like fractional reserve banking only worse as there is no central bank or FDIC

 

[cbc58]

I don't know. Everyone keeps posting these reports about how much demand there is or could be, but the price keeps going down and there is tons of it for sale.

What would people pay for gold and silver if there was not a benchmark price reported in real time?

My bet is that once I start seeing the "cash for gold" commercials back in force, that will be the time to buy.

 

[Smaulgld]

I don't know. Everyone keeps posting these reports about how much demand there is or could be, but the price keeps going down and there is tons of it for sale.

What would people pay for gold and silver if there was not a benchmark price reported in real time?

My bet is that once I start seeing the "cash for gold" commercials back in force, that will be the time to buy.

Yep there is no shortage at the moment just bargain buying

 

[ILUVRP]

i would not pay much atten to the open interest ( long and short positions ) as 99% of the are rolled over to another month or the long and short contracts even out .

 

[Smaulgld]

i would not pay much atten to the open interest ( long and short positions ) as 99% of the are rolled over to another month or the long and short contracts even out .

Yep which highlight that they are trading imaginary silver

 

[TheCount]

Nope, there is also above ground scrap silver which is part of the supply https://smaulgld.com/silver-supply-demand/
The only conclusion is that more paper silver is traded than available to deliver

That's all the silver? There is no other silver which could be bought to cover?

 

[Smaulgld]

That's all the silver? There is no other silver which could be bought to cover?

Certainly the silver exists in the world to cover short positions and to satisfy delivery requirements. The issue is that its not in the Comex vaults and the short sellers don't have it. The amounts that are traded are not readily available at the current price. In order to find 200-300 million ounces, the price would certainly rise.

 

[Smaulgld]

That's all the silver? There is no other silver which could be bought to cover?

Certainly the silver exists in the world to cover short positions and to satisfy delivery requirements. The issue is that its not in the Comex vaults and the short sellers don't have it. The amounts that are traded are not readily available at the current price. In order to find 200-300 million ounces, the price would certainly rise.

 

[Dr.3D]

Certainly the silver exists in the world to cover short positions and to satisfy delivery requirements. The issue is that its not in the Comex vaults and the short sellers don't have it. The amounts that are traded are not readily available at the current price. In order to find 200-300 million ounces, the price would certainly rise.

That's probably why they don't deal in physical silver. They want to control the price of paper silver so they only deal in paper. Should there suddenly be a law that says they have to have the real thing in their vault, the price would go up accordingly.

 

[cubical]

Yeah the shorts don't have the physical to deliver, but the longs to have the cash to buy. No one ever wants to talk about the second part, only about the "naked shorts".

Futures markets are filled with longs who can't afford to buy and shorts who can't deliver.

 

[ILUVRP]

the definition of commodity trading is ---someone that does not have the commodity selling to someone that don't want the commodity --.

 

[Smaulgld]

Yeah the shorts don't have the physical to deliver, but the longs to have the cash to buy. No one ever wants to talk about the second part, only about the "naked shorts".

Futures markets are filled with longs who can't afford to buy and shorts who can't deliver.

true, that was the point of the follow up to the short post, that longs also are buying what can't be bought just as seller are selling what they don't have

 

[Smaulgld]

That's probably why they don't deal in physical silver. They want to control the price of paper silver so they only deal in paper. Should there suddenly be a law that says they have to have the real thing in their vault, the price would go up accordingly.

Correct and it won' happen as ILURVP states above that is not how commodity trading exchanges work

 

[ILUVRP]

You may wonder what happens if a trader forgets to close out a long position. If he bought live hog futures, will someone deliver 40,000 pounds worth of squealing porkers to his back door the morning after his contract expires?

Sorry, but no.

Brokerage firms watch their open accounts and know who has long or short positions in contracts nearing maturity. Prior to delivery day, they inform customers who have open long positions that they must either close out the position or prepare to take delivery and pay the full value of the underlying contract. By the same token traders with short positions are informed that they must close out their trades or prepare to deliver the underlying commodity. In this case, they must have the required quantity and quality of the deliverable commodity on hand.

On the few occasions that a buyer accepts delivery against his futures contract, he is usually not given the underlying commodity itself (except in the case of financials), but rather a receipt entitling him to fetch the hogs, wheat, or corn from warehouses or distribution points.

Food processors or manufacturers who use futures to hedge rarely take delivery because the deliverable grade on the contract may not be exactly what they need. Hence, they will close out their futures position before delivery and buy in the cash market instead.

Sometimes merchants and dealers accept delivery because they can find buyers for many grades and types of the underlying commodity.

 

[Smaulgld]

You may wonder what happens if a trader forgets to close out a long position. If he bought live hog futures, will someone deliver 40,000 pounds worth of squealing porkers to his back door the morning after his contract expires?

Sorry, but no.

Brokerage firms watch their open accounts and know who has long or short positions in contracts nearing maturity. Prior to delivery day, they inform customers who have open long positions that they must either close out the position or prepare to take delivery and pay the full value of the underlying contract. By the same token traders with short positions are informed that they must close out their trades or prepare to deliver the underlying commodity. In this case, they must have the required quantity and quality of the deliverable commodity on hand.

On the few occasions that a buyer accepts delivery against his futures contract, he is usually not given the underlying commodity itself (except in the case of financials), but rather a receipt entitling him to fetch the hogs, wheat, or corn from warehouses or distribution points.

Food processors or manufacturers who use futures to hedge rarely take delivery because the deliverable grade on the contract may not be exactly what they need. Hence, they will close out their futures position before delivery and buy in the cash market instead.

Sometimes merchants and dealers accept delivery because they can find buyers for many grades and types of the underlying commodity.

Correct but the open position for precious metals are far greater in term of available supply for delivery than for those of other commodities