something does not add up, page-23

Hi sergeant

"how much of the 770 tonnes do you think actually gets delivered?"

That is a really good question.

As you know, only about 6,000 contracts (18 tonnes) is delivered in each major trading month on Comex-CME. Most of that is retail.

For bullion banks, it is cheaper to settle futures related physical deliveries off the exchange on an EFP (exchange for physical) basis.

EFPs are bilateral arrangements, where holders of bought contracts, who want to take delivery and holders of sold contracts, who want to deliver, make arrangements to settle directly and avoid paying CME delivery fees. They crossed the trade on the exchange, and close them out, and then execute a physical transaction at the average price of the crossings.

The problem with these off market deals is transparency. How do we know how much gold is changing hand? I have a feel for it based deals I saw ten years ago. My estimate is that EFP settlements are 10 times exchange based settlements (180 tonnes every two months or so).

These are "normal" flows. I wouldn't read to much into this when considering movements in the price of gold.

Cheers