Strange things are happening at the Comex. Once a powerhouse for gold and silver, now only a shadow of existence. The gold vaults are running empty for a while with a major bang yesterday. Even silver is fleeing Comex vaults like a rabbit from a bear.

In 2008 Comex stored more than 5 million ounces gold in its Registered Gold inventories. But the trend has been lower for years with a cliff-like decline at the beginning of 2013 when gold crashed $500 in a few weeks.

Comex Registered Gold inventory

But yesterday Registered Gold inventories crashed again … 73% in one day! A stunning 201,345 ounces (73%) of the total 275,325 ounces of Registered Gold was transferred to the Eligible Category by 3 banks.

There is only 73,980 ounces Registered Gold inventories left, the lowest level in more than 20 years. This accounts for 2,3 tons of gold, something the Chinese eat for breakfast. This has to be one of the most surprising movements of Comex Registered Gold inventories ever.

Comex default at hand?

Thus when the registered number of ounces dropped overnight from 275,325 ounces down to 73,980 ounces, it suddenly made the number of paper claims against each ounce of gold now a stunning  542 to 1.

The 40 million ounces of gold open interest and the record low 73,980 ounces of registered gold imply that a whopping 542 ounces in potential paper claims to every ounces of physical gold. Call it a 0.18% dilution factor.

Comex Gold Cover Ratio

The two biggest fears for the paper based U.S. gold markets are now:

As a reminder:

The Registered category represents the total amount of vaulted gold that is supposedly stored for use in the Comex, and which was purchased from duly registered producers.

The Eligible category, that of registered gold, represents the actual number of physical ounces deemed available for purchase and delivery to customers.