Thursday, March 24, 2011

Silver Deliveries information - March now at a Premium to May

There were a total of 80 delivery intentions issued for tomorrow with the largest issuer being JP Morgan. I find it interesting that these intentions to deliver from Morgan are for the House and not for Customers. As has been the recent pattern, Barclays is the largest stopper and they are stopping for customers.

There are still 717 contracts open in the March contract.

Something does appear to have changed however - the March contract is now trading at a slight premium to the May. It is not much but it is at a premium. The spread now favors the March by one cent. This is the first time in some while that it has moved from a slight discount to a slight premium. I am going to keep a close eye on this especially with silver up more than 2% today.

Things are getting very interesting in here as we wind down towards the end of the delivery period for March.
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18 comments:

  1. G AMarch 24, 2011 at 9:59 AM

    Since JPM was recently able to establish a CRIMEX vault in record time, will that enable them to pretend to provide delivery while still playing the non-allocated game?

    ReplyDelete
  2. jake the snakeMarch 24, 2011 at 10:17 AM

    thanks Dan

    keenly interested in this as well, esp regarding CSF

    ReplyDelete
  3. Questioning AllMarch 24, 2011 at 10:29 AM

    My question is - even if they deliver to themselves all those shorts. There are still people waiting for delivery. If JPM says "we delivered all to our own vault". Doesn't the Comex still default because of all the longs that held and did not get delivery?

    So it is just giving JPM an out of billions it is not giving Comex an out.

    Am I right or wrong?

    ReplyDelete
  4. Spicy GuacamoleMarch 24, 2011 at 10:47 AM

    Sherrie, the view from the conspiracy theorists is that JPM will essentially deliver fake silver bars to their vault and issue warehouse receipts to the longs as delivery. Since longs rarely go to the warehouse and actually remove the silver, they believe such fraud would not be discovered. This also assumes that warehouse employees and inspectors are in on the scam.

    Does that sound like a reasonable theory to you?

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  5. silvergoldsilverMarch 24, 2011 at 10:48 AM

    $37.20 already here, that didn't take long...

    ReplyDelete
  6. Spicy GuacamoleMarch 24, 2011 at 10:52 AM

    Which would be a more plausible theory:

    (a) JPM delivers fake bars or fake warehouse receipts to longs to settle the contracts

    (b) JPM converts its shares of SLV to physical silver, withdraws that silver from its own London vaults, flies the silver to its NYC vault and delivers that silver to the longs to settle the contract.

    ReplyDelete
  7. JesusfreakinCOMarch 24, 2011 at 11:04 AM

    Has anyone considered that JPM may buy PSLV and then take delivery from Sprott? Haven't seen that theory mentioned anywhere and makes me a bit nervous about owning PSLV with the premium already existing.

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  8. Kid DynamiteMarch 24, 2011 at 11:10 AM

    JesusFreakinCo - well, JPM would do that before they settled in cash for an 80% premium (As others have alleged) - after all, PSLV is only at a 20-odd% premium.

    I think they'd buy SLV at a 0% premium and redeem the SLV shares before they bought PSLV at a 20% premium to redeem.

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  9. Spicy GuacamoleMarch 24, 2011 at 11:14 AM

    Actually, one other theory I forgot to mention regarding JPM's vault is:

    (c) they are actually massively net long OTC forward contracts and intend to stand for delivery and needed a place to put all the shiny stuff

    (hey Blythe, you owe me $0.25 for that one!)

    ReplyDelete
  10. JulianMarch 24, 2011 at 11:21 AM

    If a long is holding for physical delivery, that means actual possession doesn't it?

    If they are happy to be told by JPM that the physical has been delivered to their vaults, heres some paper to prove, surely that's bullshit and probably worse than rolling the contract.

    Or have I missed something here.

    ReplyDelete
  11. JesusfreakinCOMarch 24, 2011 at 11:29 AM

    KD

    You are presuming there is silver in SLV that can be delivered...

    ReplyDelete
  12. RobertMarch 24, 2011 at 11:30 AM

    @Julian:

    "If a long is holding for physical delivery, that means actual possession doesn't it?"

    - No, a long standing for delivery means trading the contract for a warehouse receipt. Said receipt has to be taken to a registered vault to be converted to bars.

    ReplyDelete
  13. JulianMarch 24, 2011 at 11:47 AM

    @ Robert

    Thanks Robert I didn't know the procedure.

    So the long will then request the bars from JPM's lush new vault and at that point either be told there's nothing there, given the bullion or what?

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  14. kliguy38March 24, 2011 at 11:57 AM

    Kid Numbnuts knows that SLV(JPM) is stock full of silver...his mummy told him so......ehheheheee

    ReplyDelete
  15. caramelMarch 24, 2011 at 12:21 PM

    Julian, in time we'll likely hear stories from longs and their experiences with JPM's lush new vault.

    ReplyDelete
  16. AnonymousMarch 24, 2011 at 12:40 PM

    How about this:

    They already have a lot of silver in the new vault. It has just not yet been checked in as COMEX silver.

    Either
    1) They own the silver and want to deliver it without trucking it around Manhattan, so they just declare their own vault to be a COMEX vault now
    or
    2) Some of their customers own the silver in allocated accounts, but they are just going to double-count the bars and have them recorded for COMEX delivery. In this case, only 3-4 people need to conspire, and the warehouse people will not notice anything.

    Victor

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  17. JulianMarch 24, 2011 at 12:46 PM

    Too true Caramel

    Interesting Victor, wouldn't put anything past them.

    ReplyDelete
  18. UnknownMarch 24, 2011 at 2:56 PM

    Here we go.

    http://www.cnbc.com/id/42256617

    Thanks for your input Lori.

    ReplyDelete

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