Reuters reports that physical gold stocks in COMEX warehouses are at the lowest levels since July 2008. Inventory has dropped almost 30% since February, and is down 7% in the last week, to around 8 million ounces.
Most of last week’s $620 million in gold that was removed from COMEX stocks came from a vault owned by JP Morgan. The outflow of this 420,000 ounces of gold bullion left JP Morgan will just 163,802 ounces of “eligible” COMEX gold. Eligible COMEX gold is physical gold held with no encumbrance, while “registered” bars have delivery receipts issued against them.
However, JP Morgan only holds 11% of COMEX gold. HSBC and Scotia Mocatta together hold 80% of COMEX’s gold. HSBC has 3.14 million oz of COMEX eligible gold, but this is down 200,000 oz in just two weeks.
While there are more investors in the U.S. taking physical possession in the wake of the seizure of deposits in the Cyprus bail-in, most of the COMEX gold outflows are being remelted into retail bars and resold in Asia.
Some analysts point to the massive central bank gold purchases in China as evidence that economic power is shifting to the East from the U.S. and Europe. China and the other BRICS nations are taking measures to reduce their exposure to the U.S. dollar.