This analysis focuses on gold and silver physical delivery on the Comex. See the article What is the Comex for more detail.
Silver: Recent Delivery Month
Silver has started delivery in a minor month. As can be seen below, the amount delivered is below recent months at 1,517 contracts. There are only 100 contracts remaining open, so it is unlikely October will negate the current downward trend.
If silver can take a page out of the gold playbook, maybe it sees a large intra-month delivery. It would need 400 contracts just to get over the disappointing August. Considering the large volume delivered on day 1, this isn’t out of the question but couldn’t be considered probable.
A final insight to notice is the black dot, which shows delivery as a % of max Open Interest for the month. As shown, this was the lowest month by a wide margin. As mentioned last week, silver showed a lot of promise in early September before fading a few weeks before the close.
Figure: 1 Recent like-month delivery volume
One positive trend is that the minor months are not seeing much drop-off in Open Interest coming into the close. As the chart below shows, the major months show a big drop between blue and green bars. The minor months are steady into the close which indicates that the holders in minor months are not speculating but actively looking for physical delivery.
Figure: 2 24 month delivery and first notice
Isolating the month of October over the past several years shows how this October stacks up to previous ones (dollar amounts shown). It is good to see this is the second biggest October going back 10 years.
Figure: 3 Notional Deliveries
Silver: Next Delivery Month
Jumping ahead to November, another minor delivery month shows it is below trend. Open Interest is well below the other months for the same time period. This could be because December is such a large month, but it still shows a lack of physical demand in the market as compared to earlier this year. That being said, Open Interest is way above where it was at the same time last November (turquoise line).
Figure: 4 Open Interest Countdown
Unfortunately, it’s hard to think the trend below will not continue based on how November looks right now.
Figure: 5 Historical Deliveries
Gold: Recent Delivery Month
The charts below follow the same order as the silver charts above.
October gold is a bit harder to figure out. The Open Interest never gets nearly as high as other major months, but it is also well above minor months. It’s a “tweener” between August and December. It’s hard to be disappointed in the 11,468 contracts delivered thus far, especially with another ~5,000 contracts outstanding.
25% of max Open Interest for the month has already been delivered and that figure is likely to grow in the weeks ahead (black dot below). While the current October is well below last October and the other major months, it shouldn’t be considered a disappointment. It also shouldn’t be considered an overwhelming success either though.
Figure: 6 Recent like-month delivery volume
Another positive insight is comparing the close from this October to last October. In 2020, October saw contracts fall by over 4,000 into the closing day. In 2021, this figure was less than 2,000.
Figure: 7 24 month delivery and first notice
Looking at past October months, it becomes clear how much 2020 stood out. In this light, 2021 looks pretty good! Considering the total will get above $2.5B by the end of the month, this will be the second-best October since 2009 (the thick of the Global Financial Crisis).
Figure: 8 Notional Deliveries
Gold: Next Delivery Month
November gold is a regular minor month. While it looks to be having a slow start, it’s actually 200 contracts above last November. With December looming, it’s hard to think November will see much interest, but it cannot be ruled out.
Figure: 9 Open Interest Countdown
It will be interesting to see if November can muster enough interest to continue the nice rising trend that has been in place since May 2021. September showed a lot of strength with a high number of contracts opening mid-month for immediate delivery. Maybe November can repeat the performance!
Figure: 10 Historical Deliveries
With December as the final major month in both gold and silver, it’s clear that 2021 will come in well below the delivery volume seen in 2020. Regardless, it’s still been a strong year relative to history.
Figure: 11 Annual Deliveries
Data Source: https://www.cmegroup.com/
Data Updated: Nightly around 11 PM Eastern
Last Updated: Sep 29, 2021
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