Meanwhile, the aggregate gold open interest remained largely unchanged, at just about 40 million ounces.
This means that the ratio which we have been carefully tracking since August 2015 when it first blew out, namely the “coverage ratio” that shows the total number of gold claims relative to the physical gold that “backs” such potential delivery requests, – or simply said physical-to-paper gold dilution – just exploded.
As the chart below shows – which is disturbing without any further context – the 40 million ounces of gold open interest and the record low 74 thousand ounces of registered gold imply that as of Monday’s close there was a whopping 542 ounces in potential paper claims to every ounces of physical gold. Call it a 0.2% dilution factor.
Why is this important? As anyone familiar with Atlas Shrugged, the looters raided every asset with impunity for two simple reasons: they knew the system was going to collapse and they knew they would be safe with their stolen assets when they went to the secured bunkers or villas. If you cannot see the looting at an unprecedented level, I have some paper gold to sell you.
The collapse is very close.