How much longer can the Comex sustain these outflows?
This article first appeared on SchiffGold.
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.
Gold is now in its 11th straight month of net outflows, seeing 285k ounces leave the vault. The exodus of metal has slowed since last year where some months were seeing almost 3M ounces leave Comex vaults.
Figure 1: Recent Monthly Stock Change
Gold may be about to start leaving the vault again in short order. As the chart below shows, this latest week was the busiest week of outflows in the last month. Given the price of gold finished the week at $1993, the ongoing banking crisis, and general fear in the market… it seems likely that demand for physical could be ready to soar. That could drive larger outflows from Comex vaults in the near future.
Figure 2: Recent Monthly Stock Change
Pledged gold continues to decline, but similar to the inventory at large, the drop has been slowing.
Figure 3: Gold Pledged Holdings
Outfows in silver continue at a strong pace, seeing 3.5M ounces in outflows MTD. Registered is actually seeing inflows for the second month in a row, most likely because inventory of Registered had reached dangerously low levels. As mentioned previously, the real floor is not actually zero but somewhere higher. This is for optics to keep confidence in the fractional reserve silver trade.
Figure 4: Recent Monthly Stock Change
Unlike gold, the outflows slowed this week. The big moves into Registered occurred just as the March silver contract started its delivery. If Registered silver was not getting close to the bottom, why did the Comex have to move 7M ounces of silver into the Registered category to handle the March delivery volume? This metal was moved specifically to handle that demand which indicates available silver stocks are getting dangerously low.
It’s interesting that the metal has not flowed back into Eligible as it typically does after delivery. The data shows that it was none other than JP Morgan taking the majority of the delivery at 5.2M ounces. Perhaps JP decided to obtain silver specifically for the purpose of keeping it in Registered to inflate the numbers. This move increased JP Morgans total allocation of Registered from 32% to 41.6%. This means almost half of all Registered silver now sits in JP Morgan vaults… most likely for optics.
Figure 5: Recent Monthly Stock Change
The table below summarizes the movement activity over several time periods to better demonstrate the magnitude of the current move.
Gold
Silver
Palladium/Platinum
Palladium and platinum are much smaller markets but it’s possible that is where the market breaks first.
Platinum is heading towards its next delivery month in April. In January, PLatinum looked like it could break the Comex. At the time, we highlighted they had only bought a few months. Well, we are now close to where inventory will be put to the test once again.
1 Week Change | 1 Month Change | 1 Year Change | 3 Year Change | ||||||
Holder | Total | Ounces | Percent | Ounces | Percent | Ounces | Percent | Ounces | Percent |
Gold | |||||||||
Eligible | 10,466,490 | -189,455 | -1.8% | -368,580 | -3.4% | -5,753,133 | -35.5% | 4,881,405 | 87.4% |
Registered | 10,899,907 | 57,207 | 0.5% | -89,377 | -0.8% | -6,685,907 | -38.0% | 7,239,532 | 197.8% |
TOTAL | 21,366,397 | -132,248 | -0.6% | -457,957 | -2.1% | -12,439,040 | -36.8% | 12,120,937 | 131.1% |
Palladium | |||||||||
Eligible | 9,206 | -397 | -4.1% | -423 | -4.4% | -18,833 | -67.2% | -25,440 | -73.4% |
Registered | 42,079 | 0 | 0.0% | -991 | -2.3% | -20,501 | -32.8% | -45,248 | -51.8% |
TOTAL | 51,285 | -397 | -0.8% | -1,414 | -2.7% | -39,334 | -43.4% | -70,688 | -58.0% |
Platinum | |||||||||
Eligible | 77,516 | 0 | 0.0% | -49 | -0.1% | -80,521 | -51.0% | -57,185 | -42.5% |
Registered | 118,507 | 0 | 0.0% | 0 | 0.0% | -149,127 | -55.7% | -394,504 | -76.9% |
TOTAL | 196,023 | 0 | 0.0% | -49 | 0.0% | -229,648 | -53.9% | -451,689 | -69.7% |
Silver | |||||||||
Eligible | 245,780,057 | -1,476,280 | -0.6% | -10,607,215 | -4.1% | -3,795,097 | -1.5% | 14,358,337 | 6.2% |
Registered | 37,924,652 | -101,934 | -0.3% | 6,140,293 | 19.3% | -55,481,651 | -59.4% | -104,421,286 | -73.4% |
TOTAL | 283,704,708 | -1,578,213 | -0.6% | -4,466,922 | -1.6% | -59,276,748 | -17.3% | -90,062,948 | -24.1% |
Data as of: 2023-03-17. Historical data (1 year/3 year) may not be exactly 1 and 3 years ago. |
The next table shows the activity by bank/Holder. It details the numbers above to see the movement specific to vaults.
Gold
Silver
1 Week Change | 1 Month Change | 1 Year Change | 3 Year Change | ||||||
Holder | Total | Ounces | Percent | Ounces | Percent | Ounces | Percent | Ounces | Percent |
Gold | |||||||||
BANK OF NOVA SCOTIA | 0 | 0 | 0 | 0 | -605,454 | -100.0% | |||
BRINK'S, | 4,859,230 | -55,890 | -1.1% | -134,150 | -2.7% | -3,186,944 | -39.6% | 4,459,427 | 1,000.0% |
DELAWARE DEPOSITORY | 161,657 | 0 | 0.0% | -643 | -0.4% | -19,207 | -10.6% | 20,256 | 14.3% |
HSBC BANK, USA | 6,274,783 | -12,024 | -0.2% | -205,235 | -3.2% | -704,777 | -10.1% | 1,114,319 | 21.6% |
INT. DEPOSITORY DELAWARE | 155,343 | 0 | 0.0% | 0 | 0.0% | -79,216 | -33.8% | -277,536 | -64.1% |
JP MORGAN CHASE BANK NA | 7,755,679 | -64,334 | -0.8% | -78,552 | -1.0% | -5,769,055 | -42.7% | 5,493,107 | 242.8% |
LOOMIS INTERNATIONAL (US) | 218,312 | 0 | 0.0% | 0 | 0.0% | -227,394 | -51.0% | 146,417 | 203.7% |
MALCA-AMIT USA, LLC | 636,601 | 0 | 0.0% | -6,883 | -1.1% | -1,191,862 | -65.2% | 475,861 | 296.0% |
MANFRA, TORDELLA & BROOKES, | 1,304,792 | 0 | 0.0% | -32,492 | -2.4% | -1,260,586 | -49.1% | 1,294,540 | 1,000.0% |
TOTAL | 21,366,397 | -132,248 | -0.6% | -457,957 | -2.1% | -12,439,040 | -36.8% | 12,120,937 | 131.1% |
Silver | |||||||||
BANK OF NOVA SCOTIA | 0 | 0 | 0 | 0 | -24,327,572 | -100.0% | |||
BRINK'S, | 24,382,950 | -34,790 | -0.1% | -427,023 | -1.7% | -23,513,293 | -49.1% | -25,781,040 | -51.4% |
CNT DEPOSITORY, | 22,129,628 | 127,639 | 0.6% | -1,641,112 | -6.9% | -8,117,466 | -26.8% | -38,067,145 | -63.2% |
DELAWARE DEPOSITORY | 41,092,911 | 3,322 | 0.0% | 194,734 | 0.5% | 18,048,261 | 78.3% | 25,572,768 | 164.8% |
HSBC BANK, USA | 17,391,201 | -600,482 | -3.3% | -1,801,129 | -9.4% | -1,341,279 | -7.2% | -11,313,855 | -39.4% |
INT. DEPOSITORY DELAWARE | 828,095 | 0 | 0.0% | 0 | 0.0% | -2,511,839 | -75.2% | 447,096 | 117.3% |
JP MORGAN CHASE BANK NA | 146,872,767 | -135,328 | -0.1% | 519,219 | 0.4% | -33,355,822 | -18.5% | -36,866,123 | -20.1% |
LOOMIS INTERNATIONAL (US) | 15,743,439 | -938,574 | -5.6% | -789,761 | -4.8% | -1,318,941 | -7.7% | 7,614,499 | 93.7% |
MALCA-AMIT USA, LLC | 3,598,326 | 0 | 0.0% | 0 | 0.0% | 1,370,468 | 61.5% | 2,837,615 | 373.0% |
MANFRA, TORDELLA & BROOKES, | 11,665,390 | 0 | 0.0% | -521,851 | -4.3% | -8,536,837 | -42.3% | 9,820,810 | 532.4% |
TOTAL | 283,704,708 | -1,578,213 | -0.6% | -4,466,922 | -1.6% | -59,276,748 | -17.3% | -90,062,948 | -24.1% |
Data as of: 2023-03-17. Historical data (1 year/3 year) may not be exactly 1 and 3 years ago. |
Zooming out and looking at the inventory for gold and silver shows just how massive the current moves have been. The black line shows Registered as a percent of total.
Inventories in gold have been falling evenly in both categories, which is why the black line has stayed relatively flat even while supplies have been crashing. It’s amazing how closely the ratio has stayed close to the 50% mark. In October, the ratio reached 45%, but quickly rebounded to 50%.
In September 2019, all of the Registered stood for delivery, so it is likely that this ratio is now being actively maintained to make sure confidence persists in the system. Given current market dynamics, this confidence could be put to the test.
Figure 6: Historical Eligible and Registered
Silver has seen far more concentrated outflows from Registered, getting as low as 10.9% of total inventory in February. With the move by JP Morgan, the ratio has since recovered to 13.3%, but this is still at historically low levels compared to history.
Figure 7: Historical Eligible and Registered
The recent “spike” can be seen on the far right side in the chart above. From this perspective, the moves by JP Morgan seem much smaller. A similar spike up happened in March 2022 which quickly reversed as metal started flowing back out of Registered immediately after. Will 2023 see a similar pattern?
Figure 8: Historical Registered
The LBMA had been seeing similar outflows of silver from their vault, but that appears to have stopped for now.
Figure 9: LBMA Holdings of Silver
Coverage on the Comex continues to deteriorate. On Jan 26, before the recent sell-off in gold, the amount of paper gold for each Registered physical ounce was 4.6. That is the highest level since July of 2020, right before all the new supply was added. The ratio now sits at 4.2, but the drop has mainly been driven by a fall in Open Interest rather than a surge in inventory.