Silver and Gold Long Positions on Comex
Long silver positions on Comex among the largest traders would require 95 days worth of global silver production to satisfy delivery requirements.
The Comex doesn’t keep 200-300 million ounce of silver in its vault to satisfy 100% of potential delivery requests
Fractional Reserve Silver
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.
With annual mining production of about 750-800 million ounces the silver short positions as of October 28, 2014 on Comex would require about 250-300 million ounces to cover.
The long positions are equally bloated compared to the amount of physical silver available to meet delivery requirements.
Because the long positions, like the short positions, are so large it calls into question what happens if there is not enough silver or gold to cover or meet the delivery requirement.
Yesterday we noted:
Many have been predicting for the better part of a decade that a Comex default was inevitable and in many cases imminent.
While a default is certainly possible, its not likely because Comex is not a place where people come to buy and sell silver and gold. Rather it’s a place to buy and sell silver and gold long and short contracts.
Comex is a place where people sell silver and gold they don’t have to people who don’t want to buy it.
The trading in precious metals on Comex does not represent actual trades of physical metal but contracts to buy and sell physical metal well in excess of the available amount to trade. Delivery rarely occurs.
According to the chart below, the number of days of global silver mining production required to satisfy the delivery requirements of the aggregate silver long positions of the eight largest traders on COMEX is 95 days (large, but less than the 135 days of global silver mining production that would be required to cover the short positions).
The chart shows that the other precious metals (gold, platinum and palladium) have similarly large open long positions.
Days of World Production Required To Cover Long Contract Deliveries – October 28, 2014
It would take 95 days of the annual global silver production to satisfy delivery demands of the largest long silver position holders.