IAUM - Comex Reins In Platinum But Sees Gold Deliveries Rise
2023-04-01 06:58:00 ET
Summary
- Gold has been seeing a large number of contracts roll in the final day of the contract. That did not happen this month.
- Unlike gold, the removal of silver has continued unabated.
- Platinum had three challenging major months, but the Comex finally got a handle on the activity.
- The big players are diversifying away from the banking system and turning cash into physical metal.
Gold has been seeing a large number of contracts roll in the final day of the contract. That did not happen this month. This has resulted in a large delivery volume.
So far, 16,923 contracts have been delivered with 4,583 contracts remaining in open interest. Assuming these deliver, the total will exceed 21,500 contracts. Add in another 2,000 potential net new contracts (the recent average – red bars below), and gold could see upwards of 23K contracts delivered. This would be the largest delivery volume since October last year.
As shown below, open interest in April had been trending lower over recent weeks. April bucked the trend when it saw very few contracts roll in the final day (red line going flat).
The House accounts are showing an interesting trend. BofA ( BAC ) was back in the market buying, adding 4,368 contracts. Delivering out was JPMorgan ( JPM ) who issued 10,682 contracts. Many other house accounts were actually buying but in smaller volumes. Wells ( WFC ), Macquarie ( MCQEF , MQBKY ), and Citi ( C ) were all buyers this month.
JPMorgan likely knew this was coming. Last week, we identified JP as making a massive move from Eligible to Registered to the tune of 578K ounces of gold ($1.15B). This was clearly a move to cover what was going to be a large delivery month. As they issued over 1M ounces worth of gold yesterday, they will likely be handing over more than all the Registered metal they moved last week.
Net removal of metal from the Comex has been slowing in recent months. With this latest move by JPMorgan, the exodus of metal may resume. That said, another possibility is JPMorgan trying to disperse their metal across different house accounts considering that BofA, Citi, and Wells house accounts took delivery on almost 9,200. House accounts are probably less likely to remove the metal, so TBD on what the motives were here… but no question that it was planned.
Gold: Next Delivery Month
Looking ahead to May (a minor month for gold), open interest is a bit below trend. As highlighted in the technical analysis , it is odd – and possibly bullish – to see open interest low with much higher prices. Futures are not the sole driver in the latest price move.
Looked at it as a percentage of Registered shows gold in the middle of the range.
Delivery volume is still elevated but also trending down in minor months.
The cash market looks very well controlled, but with spreads getting a bit wider at each roll period.
Silver: Recent Delivery Month
Silver is on the other side, seeing a full collapse in delivery volume. I have hypothesized before that this is because there is simply little metal to deliver so contract holders are being encouraged to roll or cash settle.
Silver never really saw any interest in the April contract despite everything going on in the banking sector.
The game in silver has been after the contract start delivering. This can be seen with the red bars below, so time will tell if we see an uptick in delivery volume. April actually finished stronger than both February and November, so it is not impossible to see a jump in deliveries.
House Accounts
BofA was active last month, with the highest volume since last March. They are still restocking after the major backstop they created in September. The activity has been muted this month so far.
Unlike gold, the removal of silver has continued unabated. There was a surge in Registered at the start of the March contract but metal continues to be removed from the vault in both Registered and Eligible. If anything has slowed, it has been the additions to the Eligible vault that had been occurring through most of last year. The direction has become much more one-way in recent months (primarily out).
Silver: Next Delivery Month
May silver is a major month but is starting well below trend. Similar to gold, this level of open interest despite rising prices could be a very bullish sign.
On a relative basis, May is actually looking quite strong!
Major month volume has been falling after peaking last March during the start of the Ukraine war.
The spread costs remain near recent highs, suggesting traders anticipate higher prices in the future.
The spot market has jumped back up out of backwardation for the time being.
Platinum
Finally, we turn to Platinum which was rather disappointing. This could have been planned though. The last major month in Platinum saw over 100% of Registered stand for delivery which caused the Comex to rush some metal into the vault at the last minute. Clearly, the Comex did not want to see a repeat.
Open interest in platinum was being pushed lower much earlier in the contract.
Furthermore, physical inventory saw an uptick early last week as another safety measure.
Wrapping up
Delivery volume has picked back up in gold. Silver delivery volume remains suspiciously quiet but the exodus of metal from Comex vaults has continued. Platinum had three challenging major months, but the Comex finally got a handle on the activity.
Smart money is still quietly taking metal out of the vault. The latest uptick may be in response to SVB. The big players are diversifying away from the banking system and turning cash into physical metal. The detailed report shows that much of the activity was from JPMorgan to other bank house accounts. The activity over the next few weeks could help explain this move. Is it for confidence reasons? Is someone preparing to take delivery? Are the house accounts sensing weakness somewhere? Hard to know, but clearly people recognize that a move to physical is a way to diversify away from the banking system.
Data Source: Futures & Options Trading for Risk Management - CME Group
Data Updated: Nightly around 11 PM Eastern
Last Updated: Mar 30, 2023
Gold and Silver interactive charts and graphs can be found on the Exploring Finance dashboard: https://exploringfinance.shinyapps.io/goldsilver/
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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Comex Reins In Platinum But Sees Gold Deliveries Rise