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John Embry was recently on Canadian national television discussing the potential of a failure of delivery for the COMEX contract in December. The COMEX market has been instrumental in perpetuating the gold price suppression scheme. Should a failure to delivery happen in December it would be a ‘seminal event’ in the gold market. The $80 per ounce move in the last two trading days may be a portent of what is to come. The gold price determinant would shift to some other location, probably in Asia, with greater integrity.
If December Gold or December Silver will fail to deliver it should happen between Nov 28 and Dec 29. Here are some dates to keep in mind:
Nov. 20 Comex December gold options expire
Nov. 20 Comex December silver options expire
Nov. 24 Comex December miNY gold futures last trading day
Nov. 24 Comex December miNY silver futures last trading day
Nov. 28 Comex December gold futures first notice day **1st day to take delivery**
Nov. 28 Comex December silver futures first notice day **1st day to take delivery**
Dec. 29 Comex December gold futures last trading day **Last day to take delivery**
Dec. 29 Comex December silver futures last trading day **Last day to take delivery**
Failure to deliver is not unheard of in the commodities markets. In 2006 the London Metal Exchange imposed a $300 per ton penalty when nickel went into backwardation. The LME CEO said, “Nickel stocks are at historically low levels and we now have a genuine material shortage. Our first priority is to ensure that trading remains orderly and to prevent the risk of settlement defaults.”
The great thing about commodities is that they are either in your possession or not. What good is a penalty assessed to a bankrupt counter-party? When major financial institutions like Bear Stearns, Lehman Brothers, Wachovia, Washington Mutual, etc. can be vaporized overnight why be content with accepting their counter-party risk through a penalty assessed for backwardation? If you purchase bullion then demand delivery to yourself or a trusted third-party vaulting service like GoldMoney. As mentioned in September on the Daily Source Code and also observed by Boom2Bust the retail coin and bar market is getting extremely tight. Those who fail to take possession of the bullion and instead hold paper claims such as COMEX contracts, ETFs like GLD, SLV, etc. and a myriad of other forms of ‘paper gold‘ will receive just that ‘paper’. That paper can become worthless.
The financial markets, particularly the gold and silver markets, could be in for some very interesting events in the not to distant future. Be prepared.
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{ 4 comments… read them below or add one }
With the bail-out insanity growing daily, what do you think the odds are that the Fed or Treasury will bail out a Comex default? Why should we stop at 8 trillion dollars in bail-out, why not 100 trillion?
I don’t think the Money is the important issue. It is the default itself that will make investors realize the shortage of physical PM versus paper PMetals. The default of Comex will produce an avalanche of buyers in the phsical market that will then propell the price of Gold and Silver
This situation makes GDX a very good value right now.
Interesting observation, but who is John Galt?
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