Gold and Silver Comex Vaults Both See 1% Fall in Total Inventory
This analysis focuses on gold and silver within the Comex/CME futures exchange. See the article What is the Comex? for more detail. The charts and tables below specifically analyze the physical stock data at the Comex to show the physical movement of metal into and out of Comex vaults.
Registered = Ready for Delivery, Eligible = Warrant assigned but can be made available for delivery
Another 500k ounces of gold left the Comex vaults since the start of September. Gold now has 7 out of 8 months with draining supplies.
Figure: 1 Recent Monthly Stock Change
Silver is a slightly different story. After the Reddit short squeeze, there was a large drainage earlier in the year. It took the Comex vaults a few months to restock, adding about 10m ounces in July and August. Since then the market has taken 4.5m ounces of physical silver back out of the vault.
Figure: 2 Recent Monthly Stock Change
The table below summarizes the movement activity over several time periods.
- In the last month, the Comex lost 335k ounces which is 1% of the total stock. This is below the previous trailing month which saw 1m ounces come out of the vault. Even though the total is lower, it is important the trend of falling stocks has continued.
- 140k ounces of gold have left the vault in the past week which is 42% of the trailing month total
- Silver saw a similar relative depletion in stock of 1.1% or 3.9m ounces. Both Eligible and Registered saw stocks fall.
- More impressive is the trailing week number which saw 2.3m ounces leave the Comex vaults. This is more than 50% of the monthly total.
Figure: 3 Stock Change Summary
The next table shows the activity by bank/Holder. It shows where the large supply came from in 2020 (see charts below) and also where the drainage has been coming from recently.
- Over the last month, 5 vaults saw a fall in total stock with only 1 vault increasing total supply (JP Morgan)
- In the last year, 9 of the 10 vaults have seen a fall in supply.
- Over the last month, 5 vaults saw a fall in total with 2 vaults increasing supply. JP Morgan is responsible for the big drop in supply representing more than 75% of the aggregate loss.
- In the last week, JP Morgan saw 1.6m ounces flow out of their vault. This is more than 50% of the total for the month which means the last week shows accelerating outflows.
Figure: 4 Stock Change Detail
Zooming out and looking at the inventory for gold and silver since 2016 shows the impact that Covid had on the Comex vaults. Gold had almost nothing in the Registered category before JP Morgan and Brinks added their London inventory with nearly 20m ounces. Prior to Covid, this meant that almost no gold was available to move from Registered into Eligible. That changed quickly but since the start of 2021 available inventory has been declining. It remains well above pre-Covid levels though.
Figure: 5 Historical Eligible and Registered
Silver also saw an increase in Registered around March 2020, but this has been draining much more steadily back to Pre-Covid levels. Interestingly the ratio of Registered to Eligible is the lowest it has been since Covid started and even sits below 2019 levels.
Figure: 6 Historical Eligible and Registered
Available supply for potential demand
Many critics point to the massive open interest compared to available inventory at the Comex. As can be seen in the chart below, the ratio of open interest to available stock has fallen from over 8 to 2.83. This value spiked up from the 2.7 ratio seen in September, but it still gives the Comex plenty of supply to meet physical demand for over 1/3 of total open interest (the vast majority of contracts will never stand for delivery).
Figure: 7 Open Interest/Stock Ratio
Coverage in silver is not nearly as strong with 7.3 open interest ounces to each available physical supply of registered. This was as low as 6.75 in July, so has been creeping up in recent weeks and spiked up in the most recent week.
Figure: 8 Open Interest/Stock Ratio
What it Means for Gold and Silver
While the monthly delivery of contracts certainly represents physical demand. Tracking the activity in the Comex vaults shows the actual movement of metal. In a true crisis, it’s very possible the vaults at the Comex could be drained rather quickly.
Data Source: https://www.cmegroup.com/
Data Updated: Daily around 3 PM Eastern
Last Updated: Oct 15, 2021
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