Comex Silver Delivery Volume Stays Strong as it Approaches a New All Time High | SchiffGold

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 29th. 

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. September has seen over 8k contracts stand for delivery (+$3B in gold deliveries), 

Figure: 2 Recent like-month delivery volume 

Net new contracts (contracts that open and settle for immediate delivery) has fallen back in line with recent trends. 

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 another uptick. 

Figure: 4 Inventory Data 

Looking ahead to the October delivery, gold is actually trending above last October. October is a very odd month because it is neither a true major month (contracts exceeding 300k) or minor month (contracts under 20k). It currently has 39k contracts outstanding with 2 days left for delivery. What makes this interesting is that last October saw 19k contracts open with 2 days remaining. This means that this October is seeing double the open interest compared to a similar time last year. 

Figure: 5 Open Interest Countdown 

With the massive surge in inventory, the open interest relative to physical stocks is actually lower. This shows how much metal has been added to Comex vaults this year. 

Figure: 6 Open Interest Countdown Percent 

Bottom line, gold prices remain strong along with delivery volume. 

Silver 

Silver is a major month in September. While delivery volume was below March and May, it is well above the volume in July. 

Figure: 7 Recent like-month delivery volume 

Net new contracts have been a large driver, exceeding recent trends by a wide margin. 

Figure: 8 Cumulative Net New Contracts 

Silver eligible inventories are rebounding to the levels seen earlier this year as delivery volume stays elevated. 

Figure: 9 Inventory Data 

Registered stays elevated. 

Figure: 10 Inventory Data 

As we approach October (a minor month), the silver contract has popped as the delivery period approaches. 

Figure: 11 Open Interest Countdown 

On a relative basis, open interest is in a normal range, but that is only because of the elevated inventory levels. 

Figure: 12 Open Interest Countdown Percent 

Conclusion 

The craziness we saw earlier this year in gold 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. 

Even as those arbitrage opportunities have dissipated, the delivery volume has remained strong as has the price. 

Both gold and silver are climbing higher day after day, but the technical analysis is not showing a frothy or over-bought market. This is a stealth bull market which implies it still has room to run. If silver slices through its all-time high of $50 then it could see another major leg higher. That high has stood since 1980, was challenged for a single day in 2011 before facing a vicious bear market. If it breaks through and holds, it could commence an entirely new paradigm in silver. Watching the physical market will provide key insights, so stay tuned! 

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