Gold and Silver Supplies Running Out!

Gold coins placed in the concept of saving, gold investment educ

Gold and silver inventories at the Comex/CME futures exchange have experienced a decline in June, with 300,000 ounces of gold leaving the vaults. This comes after two months of increasing inventories. The movement of metal can be seen in the charts and tables below, which analyze the physical stock/inventory data at the Comex.

In terms of gold, the outflows have resulted in a decrease in the Registered category (metal available for delivery) and an increase in the Eligible category (metal not available for delivery). This is the opposite of what typically occurs before delivery begins. Additionally, there was a significant uptick in pledged gold holdings on June 6, marking the largest single-day increase since April 2022.

As for silver, outflows have also continued after a brief respite in May. The Registered category has seen a consistent decline, reaching its lowest level since 2016. The daily activity in silver has been more volatile than gold, with sporadic outflows and inflows in the Registered category.

Looking at the movement activity over several time periods, both gold and silver have had nearly identical changes in the Registered and Eligible categories. However, silver has experienced a significant decrease in Registered supplies over the past three years, with a decline of 81%.

Palladium and platinum, although smaller markets, have also seen small net outflows over the past month. Platinum is approaching a delivery month that could potentially witness increased activity.

The activity across different banks/holders reveals that Malaca and Asahi have added to their gold holdings, while JP Morgan and Brinks have experienced losses. In silver, Asahi received a significant inflow of 1.7 million ounces over the month, while JP Morgan was the only other bank with a meaningful increase. Outflows were spread across CNT, Delaware, Manfra, and HSBC.

In historical perspective, the recent activity in gold has shown that while banks restocked in May, the inflows did little to change the overall trend of declining inventory. The ratio of Registered gold as a percentage of total gold has returned to the previous level in March, sitting at 52%. Silver, on the other hand, continues to see a depleted supply in the Registered category, with the ratio reaching its lowest level on record at 10%.

The available supply for potential demand reveals that the open interest in gold and silver has fluctuated. However, the ratio of paper contracts to Registered gold remains fairly high, indicating a potentially higher demand. In contrast, the coverage in Registered silver is worse, with 28 paper ounces for each physical ounce available for delivery at the Comex.

In conclusion, the outflows of gold and silver from the Comex vaults have resumed after a brief period of increasing inventories. The depletion of Registered silver supplies and the downward trend in overall gold supply suggest that there could be a shortage of physical metal in the near future. This may lead to higher prices as demand exceeds supply.

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