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In
a surprising update, there were two large gold withdrawals from the Comex on
Friday. Not only were these large withdrawals, they came from Brinks
and Scotia Mocatta’s Registered inventories. Even though the Comex
holds a total of 7.7 million ounces of gold, only 10% of this amount is
stored in the registered category.
On
Thursday, Brinks held 257,290 oz of gold and Scotia held 339.993 oz in their
registered inventories. Then on Friday,
when CME Group released an update on its Comex gold warehouse stocks, Brinks
registered inventories declined 62,259 oz and Scotia Mocatta fell 87,849 oz.
 
In one day, Brinks registered gold inventories fell 24% and
Scotia Mocatta’s dropped 26%. While both of these depositories experienced a
large percentage decline of their registered gold inventories, it impacted
Brinks a great deal more than Scotia. If we look at the table below, we
can see that Brinks only has a total of 300,571 oz of gold remaining in its
inventory:
So, not only did Brinks registered gold inventory fall 24% in
one day, its total stocks including its Eligible, fell 17%. On the other hand,
Scotia Mocatta has more than 2.7 million oz of gold in its warehouse.
However, Scotia’s registered gold inventories (252,144 oz) are now less than
10% of its overall warehouse stocks (2,756.816 oz).
Total
Comex registered gold inventories are now at 721,123 oz compared to the
7,006,497 oz in the Eligible category. To understand the difference
between the “Registered” and “Eligible” gold inventories, here is a good
description from Jesse Cafe Americain Blog (Note: I substituted
gold for silver):
“Comex
has two categories of silver in its warehouse.
The
eligible category means that
the gold is in a condition that conforms to the standards of delivery. Size
and quality of the bar in other words. It is being stored at the Comex
warehouse, but is not offered for delivery into contracts.
Registered means that the gold is available for delivery to those
who demand bullion by being registered as such with a bullion dealer, in
addition to being in a fit condition to satisfy the contract.
Eligible
gold can become registered and deliverable if the owner of the gold declares
it saleable at some price. And of course if it is there, and otherwise
unemcumbered by senior obligations or conspicuous absence.”
Thus,
the five Comex bank depositories only hold 721,123 oz of registered gold
bullion that is available for delivery. Again this is less than
10% of the total gold inventory held at the Comex.
Of
course, we could see future transfers of gold from Eligible to the Registered
category, but I would imagine investors who are
storing their gold at the Comex, may be less inclined to give up their
physical gold for a paper receipt when conditions in the financial markets
deteriorate.
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