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

Comex Update: Gold Deliveries Pick Up Late in the Contract

  by    0   0

Gold deliveries in January have reached 6,327 contracts with only 178 remaining in open interest. While this fell shy of the last five minor months, there are a few signs that are noteworthy.

First, the delivery volume was greater than last January. This is important because January is typically a slow month after the major December contract.

Gold: Recent Delivery Month

Figure: 1 Recent like-month delivery volume

The second point of interest is that gold entered the January contract on a very weak note (shown by green bar below). It has been catapulted higher by contracts opening mid-month for immediate delivery (red bars below).

Figure: 2 24-month delivery and first notice

Even more noteworthy is how late the deliveries started. The red line below shows that net new contracts did not pick up until day 8 and then climbed rapidly. In fact, activity typically levels off at this point in the contract, but new contracts continue to be opened for immediate delivery.

Figure: 3 Cumulative Net New Contracts

As noted above, January is usually a low delivery month. However, this January has set an all-time record for dollar delivery volume with more than $1.17B of gold standing for delivery. This is 15% higher than the record set last January and almost 3x higher than the previous record set in Jan 2020.

Figure: 4 Notional Deliveries

Activity in the bank house accounts was fairly muted compared to previous months. They took net delivery of about 30% of the total delivery volume. BofA was a big participant making up 583 of the 1,893 net increase. This was the lightest net activity going back to November 2021.

Figure: 5 House Account Activity

The recent stock report mentioned how the epic drawdown seen in 2022 had slowed. Since then, momentum has picked back up in gold, seeing 3 consecutive days of outflows exceeding 160k. The restock in December has been completely wiped out.

Figure: 6 Recent Monthly Stock Change

Gold: Next Delivery Month

Jumping ahead to February shows strength. February is a major month and it’s currently at the higher range of recent contracts with 4 days to go.

Figure: 7 Open Interest Countdown

When looked at on a percentage basis relative to Registered, February looks even stronger. It is well above where all other contracts were at a similar point and sits at 133% of all Registered metal. Contracts will continue to roll, so gold will not have its platinum moment yet. But that day looks to be coming!

Figure: 8 Countdown Percent

Major month delivery volume has slowed some but remains at historically high levels.

Figure: 9 Historical Deliveries

Spreads

The market remains in strong contango with the highest spreads seen since at least summer 2021.

Figure: 10 Futures Spreads

The spread in the cash market is dropping as contract expiration nears, but it will spike back up once February rolls.

Figure: 11 Spot vs Futures

Silver: Recent Delivery Month

Silver delivery volume did see its largest minor month since August, but is still relatively quiet compared to the activity seen in 2021. This may be because there is simply not much metal to deliver!

Figure: 12 Recent like-month delivery volume

Net new contracts (red bar) is very low compared to recent history.

Figure: 13 24-month delivery and first notice

This can be seen further in the chart below where there was a large cash settlement when the contract started and then very modest net new activity throughout the delivery period.

Figure: 14 Cumulative Net New Contracts

The bank house accounts are quiet this month after a very busy December. BofA has started the process of restocking the inventory they delivered in September, but progress is quite limited. In September, they delivered 5,013 contracts to hold up the market. Since then, they have only restocked 1,006 ounces (~20%).

Figure: 15 House Account Activity

Unlike gold, this January was not a record in silver. It came in behind 2021, 2022, and even 2014.

Figure: 16 Notional Deliveries

Perhaps the most interesting data point is the inventory report. Registered metal has completely flat-lined for the last two weeks. No metal in or out. Why? This runs counter to everything that has happened over the last year plus that has seen major activity in Registered.

I have a theory that a lot of Registered is optics. It’s not really available for withdrawal. My theory is the floor of registered is not 0, but somewhere higher where the market starts to break. In platinum, this level was 130k. In silver, that level appears to be 33M ounces. It will be interesting to see how this plays out over the coming weeks.

Figure: 17 Recent Monthly Stock Change

Silver: Next Delivery Month

February silver is another minor month and is not yet showing much strength. There was a pickup in recent days, but nothing of note. Total open interest is still below 500.

Figure: 18 Open Interest Countdown

When viewed as a percentage of registered, we are barely above 5%. This pales in comparison to the strength seen in the January contract that was coming into the close at a record level.

Figure: 19 Countdown Percent

Spreads

The silver spot market has stayed out of backwardation for a few weeks now.

Figure: 20 Spot vs Futures

Wrapping up

February is a major month in gold and current open interest suggests it could be a strong delivery month. This is a promising sign after the December delivery volume underwhelmed and January started weakly.

Silver is a bit more complicated. Activity is muted, but the enormous drop in Registered cannot be ignored. Combined with the fact that it has completely flat-lined in the last two weeks implies that the market is under much more pressure than what the current price suggests.

The physical market remains under stress. Best to get bullion while you can!

Figure: 21 Annual Deliveries

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

Data Updated: Nightly around 11 PM Eastern

Last Updated: Jan 24, 2023

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

Comex Results: Gold Sees Massive One-Day Roll While Silver Adjustments Break Records

Strange activity continues at the Comex! Delivery volume for February was a little less than half the contracts open at first notice. 6,005 contracts were delivered with 7,370 remaining in open interest. This was a much larger relative delivery than December which saw less than a third of contracts delivered on the first day. Things seemed suspicious […]

READ MORE →

QT Falls Short Again and the Fed Lost Almost $100B in January

The Fed has a targeted balance sheet reduction of $95B a month. The Fed has failed to meet its target in 7 of the last 8 months with only an $81B reduction in January. The Fed fell woefully short of meeting their $35B MBS target, seeing only $16.7B (less than 50% of the target). The Treasury […]

READ MORE →

Gold and Silver May Need a Breather Before Moving Higher

The price analysis last month titled Gold and Silver are Setting up for a Strong Advance in 2023 highlighted that both metals had shaken off the weakness and looked to be headed higher. It concluded by saying…

READ MORE →

Money Supply Shrinks in 2022 for the First Time on Record

For the first time ever, the money supply contracted on an annual basis in 2022. The seasonally adjusted Money Supply in December was negative for a fifth consecutive month, coming in at -$147B. This was the largest monthly contraction in M2 going back to 1959. This type of contraction typically does not happen!

READ MORE →

Comex Inventory Withdrawals Have Slowed but Not Stopped

The flow of gold and silver out of Comex vaults has slowed in recent weeks, but there is no question that metal continues to move out. 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 […]

READ MORE →

Comments are closed.

Call Now