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/inventory data at the Comex to show the physical movement of metal into and out of Comex vaults.
Registered = Warrant assigned and can be used for Comex delivery, Eligible = No warrant attached – owner has not made it available for delivery.
The outflows in gold have continued. Stocks decreased 505k ounces in January, 735k since Feb 1, and a total of 1m ounces since the last stock report. Gold outflows have now occurred in 10 months over the last year. At the current pace, February could be the biggest month of outflows since last April.
Deliveries have been strong of late, and the March gold contract has been flashing warning signs. With metal exiting the vaults as shown below, the data continues to show a market with strong physical demand.
Figure: 1 Recent Monthly Stock Change
The chart below shows the daily activity since the last report. Both Eligible and Registered are seeing outflows. Eligible is seeing greater outflows which means that owners who have been sitting on their metal are now deciding to pull it from the vaults.
Figure: 2 Recent Monthly Stock Change
Silver is seeing the largest outflow in four months. While Registered is seeing an uptick as metal is made available for delivery, Eligible is seeing the largest outflow since March of last year. February is only halfway through so the outflows could grow in the remaining two weeks.
Figure: 3 Recent Monthly Stock Change
Looking at the detailed report below shows slow and steady withdraws from Eligible throughout the month. There is also a big move from Eligible to Registered. With strong delivery demand continuing through the month, this metal could have moved to meet this demand.
Figure: 4 Recent Monthly Stock Change
The table below summarizes the movement activity over several time periods.
- Nearly 30% of the metal that has left the vault over the last year did so in the last month
- Total vault holdings have fallen by almost 3% with Eligible decreasing by 3.6%
- Eligible has fallen by 12% over the last year
- Movement has slowed over the last week
- Silver has seen stock deplete by 45M ounces over the last year or 11.4%.
- This is concentrated entirely in Registered as holders have removed the metal from being available for delivery
- Unlike gold, silver holders are content to leave their Eligible metal within the Comex vaults
- The activity over the last month has all occurred in the last week
Figure: 5 Stock Change Summary
The next table shows the activity by bank/Holder. It details the numbers above to see the movement specific to vaults.
- For the second month in a row, metal has only left with no vault seeing inflows
- Brinks lost 7% of total holdings in a single month
- HSBC also saw moderate outflows of 180k or 2.4%
- JP Morgan has been incredibly quiet over the last year given that it has the largest holding at 38%
- HSBC has also seen large outflows in Silver over the last month, losing 5.8% of the position
- Over the last week, HSBC is down 1.5%
- CNT has also seen a sizeable loss in the last week of 2%
Figure: 6 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.
The gold inventory peeked in February of last year and has been steadily falling ever since.
Figure: 7 Historical Eligible and Registered
Silver also saw an increase in Registered around March 2020 but has been draining, albeit more slowly than gold.
The recent uptick in Registered as a % of total (far right spike in black bar) is due to the recent flip of Eligible to Registered noted above.
Figure: 8 Historical Eligible and Registered
Available supply for potential demand
As can be seen in the chart below, the ratio of open interest to total stock has fallen from over 8 to 1.5. In terms of Registered (available for delivery against open interest), the ratio collapsed from nose bleed levels (think Nov 2019 where 100% stood for delivery) down to 2.98 in the latest month.
This ratio saw a recent uptick as open interest in gold increased recently alongside falling inventory. The move has not (yet) been as large as the uptick in November when gold surged above $1870 briefly.
Figure: 9 Open Interest/Stock Ratio
Coverage in silver is weaker than in gold with 9.5 open interest contracts to each available physical supply of Registered (up from 9 last month and 7.4 the month before). This is now the highest it has been since June 2020. Some of this is due to open interest reaching the highest since Aug 2021, but the majority of the increase has been from physical metal leaving the vaults.
Figure: 10 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. Open interest can increase much faster than physical metal can show up in Comex vaults.
As metal continues to leave the Comex vaults, the constraints on supply should be felt in higher prices.
Data Source: https://www.cmegroup.com/
Data Updated: Daily around 3 PM Eastern
Last Updated: Feb 15, 2022
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