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Michael Lynch: How Much Metal Does the Comex Really Have

Tom welcomes Petroleum Engineer and Analyst Michael Lynch. Michael witnessed the 90% Indonesian currency collapse and that piqued his interest in the history of money.

He discusses the aberrations in deliveries data released by the Comex. The Comex can never default because they have plenty of legal methods of settling outside of the physical product. The rules are that they can change the rules as they see fit. A lot is going on behind the scenes and you can’t determine what just by looking at the price.

Michael explains how the monthly delivery cycles function.

He discusses an incident that occurred in July 2020 where the Comex instantly moved a large amount of metal from eligible to registered. This ended up being a big turning point for the market. Before this date they were suppressing the silver price but immediately after the price moved 60% higher.

He shows a probable relationship between the inflows into the PSLV and a decline in Comex Registered silver during the Silver Squeeze.

Michael discusses an anomaly that occurred in December of 2021 where there appeared to be off-books settling of paper silver. Bank Of America is seemingly a recent player in the silver contract market. There seems to be less metal available in these markets and a significant amount of ‘adjusting’ of these numbers.

JP Morgan appears to be the entity currently ‘managing’ these markets. It seems the days of having silver readily available in vaults are over. The maximum metal that JP Morgan could have in their vaults is 40 million ounces.

He plans on creating a SubStack so he can dive deeper into his economic-related analysis and models.

Time Stamp References:
0:00 – Introduction
3:00 – Market Overview
4:30 – Comex Definitions
10:10 – July 2020 – Anomaly
13:55 – Monkey Plot – PSLV
17:55 – Dec 2021 – Anomaly
23:06 – March 2022 – Anomaly
34:00 – Wait There’s More
42:48 – JP Morgan Metal?
49:56 – Concluding Thoughts

Talking Points From This Week’s Episode

  • How the Comex operates and why they can’t technically default.
  • Examining anomalies in the data with the Comex.
  • Relationship between inflows into PSLV and Comex registered metals.
  • JP Morgan’s role in ‘managing’ silver.

Guest Links:

Michael Lynch has a background as a Petroleum Engineer and developed a keen interest in the history of money as a result of witnessing the collapse of the Indonesian currency. This interest has brought him to study the behavior of the Comex, JP Morgan, and SLV paper contracts.

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