by SchiffGold  0   0

Usually, I only do one Comex Countdown into the close, but… you know… a war just started. Throw on top the fact that the Comex has been flashing warning signs lately, and I think a daily update is warranted for the next 3 days. It’s very possible delivery volume is very robust which could put pressure on the physical market. I will keep the commentary light and the charts simple…

Feb Silver

First a look at Net New Contracts (opened mid-month for immediate delivery). As shown below, incredible strength with 1,202 contracts or nearly 30% above the previous record of 931.

image1 11

Figure: 1 Recent like-month delivery volume

When looking at the house accounts, we can see two things.

  1. BofA is not fully responsible – they only have 50% (616 contracts)
  2. Retail looks to be the other half

image3 11

Figure: 2 House Account Activity

March Silver

When compared to previous major months, open interest went from middle of the pack to front of the back. Still, 2 days to go, but we could be looking at another record.

image2 11

Figure: 3 Open Interest Countdown

Spreads are still fairly tight, so the market hasn’t gotten out of control yet.

image5 11

Figure: 4 Roll Cost

Feb Gold

Total delivery volume will end up being below average as shown below.

image4 11

Figure: 5 Recent like-month delivery volume

Much of this is due to cash settlements. Nearly 1,706 contracts were cash-settled. This is a far deviation from the trend which has seen some months have as many as 5,000+ contracts opened mid-month for immediate delivery. As mentioned previously, large net contracts in either direction raise interesting questions, but seeing a record number of cash settlements certainly raises an eyebrow!

image7 10

Figure: 6 Cumulative Net New Contracts

This includes BofA in the market taking almost 6,000 contracts for delivery.

image6 11

Figure: 7 House Account Activity

March Gold

We can see that March pulled back some yesterday, but is still staying way above trend.

image9 7

Figure: 8 Open Interest Countdown

April Gold

April is also showing a big move above trend in terms of open interest as shown below.

image8 7

Figure: 9 Open Interest Countdown

Finally, similar to silver, the spreads on the April contract are in line.

image10 7

Figure: 10 Roll Cost

What does it all mean?

The market is fairly opaque, which can make it difficult to know exactly what is going on. However, the open interest data is showing some pretty big divergences from the trend. With the Fed having lost control of inflation, it’s hard to believe this is all related to Russia and Ukraine, especially considering some of these divergences started to materialize before the conflict. The bottom line, interest in gold is picking up.

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

Data Updated: Nightly around 11 PM Eastern

Last Updated: Feb 23, 2022

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

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