Crimex open interest in gold rose 8,907 contracts and in silver 3,067. If the recent pattern holds up this suggests even more spec short selling. Friday we get the banker’s participation report along with the shocking new CoT. Must have been a busy month for banksters as they have clearly taken a very bullish position.

We are past first notice and Monday saw 25,600 oz of gold delivered at the Crimex. There are still 6,885 (688,500 oz, on a cash basis, no margin) contracts hanging around, not inconsequential given the pattern seen last month for queue jumping. At the moment 351,720 oz of registered gold are on hand at the Crimex to accommodate this.

In the last two run offs after expiration about a third of still standing gold was delivered. There was 8,295 gold contracts left on first notice day this month. But in silver the total amount of July 15 contracts still open at first notice day on June 30 was 2,077. In the end 3,637 was delivered. That’s what I mean by queue jumping. It is perfectly legal and must make the Crimex nervous.

An important event to cue on is a South African gold mine strike. The sides aren’t even close to agreement and the miners can’t possibly offer more and have any hope of buying time for their cash bleeding operations. That would take 450,000 ounces a month off line or 7% of global production. It would be hard to envision a reopening without a large POG recovery.

Bloomberg as is it’s want, reminds us that China has more Keynesian policy options remaining. One is currency depreciation or inflation which may explain the huge surge in SGE gold withdrawals lately.

Besides the usual Ponzi lending schemes there is fiscal spend, specifically infrastructure spending on everything from underground urban pipes to new ports and roads. Bloomberg states, “The Communist Party’s Politburo pledged last week to make “pre-emptive” policy adjustments in the second half.”

Here I am assuming they will galvanize the steel used with zinc. In the real world the late spring supply hiccup is absorbed and zinc inventory is now running off at about 2000 tonnes per day. Shanghai zinc inventory is scant. At 85 cents/lb about one-third of global zinc production is money losing.

As silver inventories also deplete, I will remind readers that China has already announced a plan to put 300 million homes on solar power. That is an installation of 100 gigawatts of solar by 2020, an extraordinary project. Approximately 236 metric tonnes of silver is required per gigawatt of solar energy. We can extrapolate that 100 gigawatts during the next five years would require approximately 26,300 metric tonnes, which equates to 731.6 million ounces of silver. That’s about a fifth of global silver production for that five year period.

The plan seems to be ramping up, as the energy administration set a solar installation goal for 2015 at 17.8 gigawatts.  The nation added 7.7 gigawatts of the renewable energy in the first half of this year, government data showed last week. This was spun as disappointing. But by my math 10.1 gigawatts in 2H is 10.1 tonnes or 75 million ounces of silver demand. That’s 20% of global production right when byproduct output is declining.

No wonder the US and Perth Mints can’t locate silver. Par for the course this week the US Mint is still playing hand to mouth and only managed to round up 1.18 million coins to offer. 810,500 sold the first day.