30 Million
oz Silver Buried
Along with 380,000 oz of Gold
Editor's Note: The CPM Group which specializes in research of precious metals and commodities released the following special Market Alert following the tragic events of September 11th. Since then, Scotia Mocatta's gold has been recovered from the collapsed World Trade Center.
An
untold amount of precious metals has been buried, temporarily,
in the bank vaults of Scotia Mocatta. Scotia moved its precious
metals vaults from 26 Broadway to the World Trade Center last
year, only to have these vaults now buried by debris. Ultimately,
the metal will be retrieved. The event is unlikely to have a
major effect on gold, since the amount of gold involved is small
and the gold market is quite liquid. It could have an effect
on silver, since the physical flows of silver are tighter and
some of this metal represented metal en route to industrial users.
The Scotia vaults held
379,036 ounces of gold that met Comex delivery standards, as
well as some smaller, unreported amounts of gold coins, grain,
and 400-ounce bars that did not qualify for reporting to the
Comex. Of the total, 300,806 ounces were registered against Comex
positions, representing trade-held metal. The other 78,230 ounces
were eligible) they met Comex specifications) but not registered;
those most likely were investor-held stocks.
Scotia also held (holds)
30,780,780 ounces of silver. Of this, 19,225,335 ounces were
registered metal. This represents trade inventories, much of
it covering short positions. Some of it was en route to industrial
users. Insofar as this metal may be needed, it could already
be a factor pushing silver prices higher. Prices could rise further
as dealers scramble to cover these needs. The other 11,555,445
ounces were eligible but not registered. That represented long
term investor holdings. Unreported amounts were held in coin
and non-Comex deliverable forms.
Scotia had 2,650 ounces
of platinum registered or eligible for Nymex delivery, and no
reported palladium. There probably was some sponge of both metals
there, in transit to users; the unavailability of this metal
may be reflected in the stronger increase in platinum and palladium
prices over the past few days.
Implications for Precious metals
Precious
metals markets probably have seen their lows for this cycle now.
Prices have risen for most metals in the days following the bombing,
reflecting short covering by shorts in Europe and the United
States and small-scale retail purchases from individual investors
in the United States, Japan, China, Hong Kong, and other parts
of Asia. At some point, this period of initial buying will subside,
and prices may come back down with reduction in immediate physical
demand.
That said, prices may
remain higher than they were. There is a risk of premium on other
investments which did not apply prior to 11 September, and part
of that premium is payable in gold and precious metals. Thus,
precious metals may remain higher than recent lows. Gold prices
may remain above $270-$272, and silver above $4.20. Prices may
be expected to form bases around these levels, and move higher
later.
