Comex Deliveries Return to Normal – For Now
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 collapsed back to normal levels as shown below.
Figure: 1 Spot vs Futures
Consequently, the massive delivery volume has subsided and returned to normal levels. That said, this July was still on the higher side for a minor month at 11,233 contracts delivered.
Figure: 2 Recent like-month delivery volume
This July saw a decent number of net new contracts, but nothing compared to the recent months. Net new contracts are contracts that open and settle for immediate delivery.
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 and then stabilized.
Figure: 4 Inventory Data
Looking ahead to the August delivery (a major delivery month), gold is looking middle of the range.
Figure: 5 Open Interest Countdown
With the massive surge in inventory, the open interest relative to physical stocks is not as strong as the raw number.
Figure: 6 Open Interest Countdown Percent
Silver
Silver is a major month in July. This July saw elevated volumes compared to history, but not compared to the most recent months.
Figure: 7 Recent like-month delivery volume
Net new contracts was a major driver, showing the most for any recent contract.
Figure: 8 Cumulative Net New Contracts
Silver eligible inventories have finally started to give back some recent gains.
Figure: 9 Inventory Data
However, that metal seems to have gone into Registered inventories.
Figure: 10 Inventory Data
As we approach August (a minor month), the silver contract has started to dip.
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 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. We learned that the smart people are watching and paying close attention to physical. During the next event like this one, it might become difficult to obtain physical. Best to stock up now!
