It’s Silver’s Turn: Delivery Demand on the Comex Continues Higher
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 has seen unprecedented delivery volume in gold since the election as highlighted in previous articles. This was been 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
Consequentially, the massive delivery volume has finally subsided and returned to normal levels. That said, this June was still on the higher side.
Figure: 2 Recent like-month delivery volume
This June also saw quite a large number of net new contracts. These are contracts that open and settle for immediate delivery.
Figure: 3 Cumulative Net New Contracts
During the massive delivery surges, the Comex vaults were adding to their metal stock piles very quickly. However, since the volumes have come down, the metal available for delivery has been leaving Comex vaults.
Figure: 4 Inventory Data
Looking ahead to the July delivery, gold is looking strong coming into the close.
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 minor month in June. This June saw the second largest delivery volume going back to at least 2022.
Figure: 7 Recent like-month delivery volume
Net new contracts is the second highest it has been in recent years.
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 July (a major month), the silver contract is coming in well above trend.
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
Gold delivery volumes have finally come down some, but remain elevated compared to history. Silver now seems to be the one that is continuing to see increased physical demand. This is not surprising given the continued price rise. While gold has been consolidating some at the elevated prices, silver is finally making its move higher, crossing through $36 recently. This price surge is also showing up as physical demand on the Comex. This is a good sign that the current move has legs!
