Fed Must Bail Out $1 Trillion Basis Trade, Says Anil Kashyap

That's his name. I $#!+ you not. What else can I say?

97,386 Gold Contracts Open, 2 Days to Go

2 days to April gold delivery, nearly 100K contracts still open.

The active February contract that had a record 76,567 deliveries had just under 30,000 deliveries on day 1 (see below). Any number above that and we'll probably see still a new record for monthly deliveries.

As Eric Yeung, KingKong9888 on X, explained to me on the channel this week, these deliveries are mostly the bullion banks closing their short positions through deliveries, because otherwise they'd have to take a loss closing on a cash basis.

Platinum is also going to delivery in two days, 11,393 still open and only 8,510 contracts worth available for delivery. Platinum has to break out soon. It has never been cheaper relative to gold and silver.

Silver keeps flooding into New York non stop, another 3.5Moz yesterday. Silver deliveries this month are 1,347 contracts away from a new all time record. Interestingly, the micro silver contract deliveries are just now kicking up, with 1,410 contracts delivered over the past two days. The difference is that micro silver is 1,000 ounces rather than 5,000, so 1,410 is equivalent to 282.

Approaching Quarter End, Repo Crunch?

The repo rate is rising again, up to 4.35% from 4.29% last week. Reverse repos are doing their traditional spike now, and repo volume is still right below $2.5 trillion. We're going to see a spike in the repo rate, the question is how high. We'll probably get through it, but I don't think we will get through an end-of-month spike while the treasury is also sucking reserves out of the banks once the debt ceiling is raised.

Fed Mulling a Basis Trade Bailout

I believe the Fed must initiate its final round of printing once the debt ceiling is raised and the Treasury turns its vacuum cleaner back on. Otherwise, there's going to be a repo crunch and they'll have to do it anyway. Bloomberg is already putting out a trial balloon about a basis trade bailout (the basis trade is what uses most of the repo funds), in a proposal position paper by a guy named (I kid you not) Anil Kashyap.