Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Comex April Countdown: Silver Pops Higher with Gold Trending Strong

  by    0   1

The big action in silver occurred early in the month, making March a pretty large outlier. First, it continues the recent trend of increasing deliveries. Second, deliveries were 8.7% of the max open interest for the month. This is the highest percentage since July 2020 when prices took off. There are still 24 open interest contracts remaining.

Silver Current Delivery Month

Figure: 1 Recent like-month delivery volume

In terms of net new contracts, the latest month has actually surpassed the figure from September 2019 and stands well above any recent month.

Figure: 2 24-month delivery and first notice

Looking at the cumulative value shows the big spike up earlier in the month. Even though the trend flattened, there were still steady increases in contracts opened mid-month.

Figure: 3 Cumulative Net New Contracts

The appetite within the BofA house account took more than the combined outflow of all the other house accounts. BofA continued to increase deliveries throughout the month, having another 200+ deliveries since the mid-month report.

Figure: 4 House Account Activity

This March was unable to take out the March last year, but that should come as no surprise because that was when the market fell under intense pressure from the Reddit squeeze. Coming so close to last year shows the market is seeing strong physical demand even without the focused retail attention.

Figure: 5 Notional Deliveries

Silver: Next Delivery Month

The April contract has finally come to life in the final days, jumping upwards by more than 300 contracts.

Figure: 6 Open Interest Countdown

The spike up mirrors what was seen right before the February contract rolled. As shown in the chart below, February was a decently strong month given that it fell between another minor month and the major month of March.

Most impressive about February was that deliveries represented 232.4% of max open interest for the month. Could April have a similar mid-month surge that has become normal place recently?

Figure: 7 Historical Deliveries

Gold: Recent Delivery Month

Gold continues to show trend deviations. The largest minor month on record has continued to increase in recent days. It sits well above any minor month and exceeded Nov 2020 by more than 600 contracts.

Figure: 8 Recent like-month delivery volume

The chart below shows the day before First Position (blue bar) and then the day of First Position (green bar). As shown, one thing is very clear, the roll into close has gotten much smaller since the start of Covid. This means that more people are holding on and taking delivery instead of rolling at the last minute.

Figure: 9 24-month delivery and first notice

Similar to silver, gold saw a big jump early in the month and then just drifted a bit higher throughout the month.

Figure: 10 Cumulative Net New Contracts

BofA is taking delivery in massive quantities. More than 16k contracts have been delivered to BofA house in the last three months. This completely dwarfs any other activity going back to 2018.

Figure: 11 House Account Activity

From a dollar perspective, this March was nearly $500m larger than March last year.

Figure: 12 Notional Deliveries

One other thing to note. Last weekend, the stock report showed banks restocking gold after seeing several months of outflows. This is thought to be in anticipation of the next three months that all have the potential to see big delivery volumes.

During the last week, Eligible saw increases from new metal flowing in and also transfers from Registered into Eligible. This means investors were taking their metal off-market and can no longer be used for delivery in the upcoming month.

Figure: 13 Recent Monthly Stock Change

Gold: Next Delivery Month

April gold has picked up a bit of momentum in the final days before First Position. It now sits a bit above average with 3 days to go. Given the environment, gold could see higher delivery volume than December or February. The next report will be published on March 31 detailing the positions.

Figure: 14 Open Interest Countdown

Both December and February were lower than the current April contract with three days to go. As the chart shows, December especially saw high delivery volume. February would have been higher but actually saw significant cash settlement volume.

Figure: 15 Historical Deliveries

Spreads

Spreads continue to widen. This is making it more expensive for April holders to roll to June. The market has entered solid contango. This may be because of the massive interest in June contracts (see below).

Figure: 16 Roll Cost

Don’t count out May though. Despite being a minor month, the chart below shows that investors are clearly positioning for a big month. Minor months are not usually meant for trading, and investors are far more likely to take delivery. This is why deliveries typically exceed 100% of max open interest for the month (vs major months where it’s closer to 3-4%)

Figure: 17 Open Interest Countdown

Finally, a look at June open interest shows it’s well above trend. Current pace is equal to that of April 2020 in the depths of the market turmoil. It’s hard to see on this chart, but 2022 June gold is now more than 100k higher than June gold in 2020 or 2021. Remember that it was June 2020 that set the all-time record for deliveries and kicked off the summer surge in price.

Figure: 18 Open Interest Countdown

Wrapping up

Gold showed resilience this week in the face of Powell talking tough and a technical analysis that showed potential near-term downside pressure in a healthy bull market. April, May, and June are all showing strong indications of heavy delivery volume to come.

While it is easy to print paper money and even paper gold contracts, delivering metal requires a short to have metal registered in their name. Long delivery windows, restocking of inventory, and other data points indicate supply may be far more constrained on the Comex than the market realizes. It could be an interesting few months in the gold futures market. Stay tuned!

Figure: 19 Annual Deliveries

Data Source: https://www.cmegroup.com/

Data Updated: Nightly around 11 PM Eastern

Last Updated: Mar 25, 2022

Gold and Silver interactive charts and graphs can be found on the Exploring Finance dashboard: https://exploringfinance.shinyapps.io/goldsilver/

Download SchiffGold's Free Silver Report

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

CoTs Report: Managed Money Hammers Gold for 7th Straight Week

Managed Money continues to hammer the price of gold lower as the Net Short position increased to -43k contracts. Please note: the CoTs report was published on 9/30/2022 for the period ending 9/27/2022. “Managed Money” and “Hedge Funds” are used interchangeably.

READ MORE →

Surprise! Another Month = Another Failed Attempt at QT

The Fed has found it easier to raise rates than shrink its balance sheet. September was supposed to be the month when the Fed got serious about shrinking the balance sheet. After a few months of warming up with $47.5B monthly reductions, the Fed was going to step up in September and shrink by $95B ($60B in […]

READ MORE →

Comex: Platinum Shorts Live to See Another Day

I typically start this analysis with gold, but the action in the platinum market is impossible to ignore. The next four charts should tell you everything you need to know. First, similar to gold and silver, platinum has seen a much higher delivery volume since the pandemic struck in 2020.

READ MORE →

Collapse in Money Supply Is Still a Major Risk for the Market

Money Supply growth was barely positive in August at $2B and sits well below the $233B seen last year. As the chart below shows, Money Supply growth has collapsed since February. Last year started with five straight months above $200B, whereas 2022 has only seen one month above $100B and that was January.

READ MORE →

Calling the Fed’s Bluff: They are Holding a Losing Hand

The Fed has talked a big game lately. Many people (including me) assumed the Fed would fold a long time ago. There is a very good reason — the Fed will crush the economy and the US Treasury with higher interest rates. In reality, the Fed is holding a losing hand and trying to bluff […]

READ MORE →

Comments are closed.

Call Now