The CME Comex is the Exchange where futures are traded for gold, silver, and other commodities. The CME also allows futures buyers to turn their contracts into physical metal through delivery. You can find more detail on the CME here (e.g., vault types, major/minor months, delivery explanation, historical data, etc.).
The data below looks at contract delivery where the ownership of physical metal changes hands within CME vaults. It also shows data that details the movement of metal in and out of CME vaults. It is very possible that if there is a run on the dollar, and a flight into gold, this is the data that will show early warning signs.
Gold
The Comex saw unprecedented delivery volume in gold after the election as highlighted in previous articles. This was driven by an arbitrage between the spot and futures market. That arbitrage has now fallen back to normal, though did see a brief spike on August 7th.
Figure: 1 Spot vs Futures
Consequently, the massive delivery volume has subsided. However, the current delivery volume is still elevated when compared to history outside of the beginning of this year. August has seen 33k contracts stand for delivery (~$10B in gold deliveries),
Figure: 2 Recent like-month delivery volume
A major driver this August has been net new contracts. The number of contracts opened for immediate delivery trails only February of this year.
Figure: 3 Cumulative Net New Contracts
During the massive delivery surges, the Comex vaults added to their metal stockpiles very quickly. However, since the volumes have come down, the metal available for delivery saw a drop before seeing a minor uptick.
Figure: 4 Inventory Data
Looking ahead to the September delivery (a minor delivery month), gold is actually trending well below the average.
Figure: 5 Open Interest Countdown
With the massive surge in inventory, the open interest relative to physical stocks is even lower.
Figure: 6 Open Interest Countdown Percent
Despite this down trend heading into September, the story is not over. Gold prices remain elevated suggesting demand is still very high.
Silver
Silver is a minor month in August. Similar to gold, this August saw elevated volumes compared to history, but not compared to the most recent months.
Figure: 7 Recent like-month delivery volume
Net new contracts were not a major driver.
Figure: 8 Cumulative Net New Contracts
Silver eligible inventories gave back the gains from earlier this year, before seeing a mild rebound.
Figure: 9 Inventory Data
Registered stays elevated.
Figure: 10 Inventory Data
As we approach September (a major month), the silver contract has stayed in a tight range near the average.
Figure: 11 Open Interest Countdown
On a relative basis, open interest is actually quite low because of how much the Comex has restocked silver inventories.
Figure: 12 Open Interest Countdown Percent
Conclusion
The craziness we saw earlier this year has subsided. Due to arbitrage opportunities and tariff speculation, physical metal was being flown around the world as astute investors tried to capitalize on these opportunities. The effect was to drive up the price of gold; however, after the activity subsided, gold has held onto its price gains. Silver has continued to see price appreciation as it catches up to gold.
Earlier this year we saw a glimpse of what might happen if there were really a mad dash to hoard physical metal. This time, it looked controlled and was done specifically for arbitrage, not because people feared a collapse of the fiat currency.
That could change very soon. Trump is playing an extremely dangerous game with the Fed which is already a very dangerous institution. If Trump stacks the Fed and has them doing his bedding over the next 3.5 years, you can expect to see a huge fall in confidence in the dollar, higher inflation, and MUCH higher gold and silver prices. This bull market in precious metals is still unloved and has only just begun.
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!
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