by Peter Schiff, Schiff Gold:
This analysis focuses on gold and silver data provided by the Comex/CME Group. The Comex allows investors/traders to gain exposure to commodities using futures contracts. Contracts can settle for delivery of the physical commodity. Tracking the demand for physical metal can give better insight into the market. See the article What is the Comex for more detail.
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Silver: Recent Delivery Month
“First Position Day” is when contracts must post 100% margin to stand for delivery. First Position Day typically occurs a few days before the delivery month starts (e.g. May 29 for a June contract). Throughout the delivery month, contracts can settle in cash, or more contracts can be opened and stand for immediate delivery (usually a sign of strong physical demand). Figure 1 below shows the last 24 months of silver delivery data when compared to First Position and the day before First Position. As can be seen, Open Interest falls rapidly between the two days. This can be seen more clearly in Figure 4 below, the Open Interest countdown chart.
Silver is wrapping up a minor delivery month. The data is much more positive than that of gold (below). At 679 contracts opened for immediate delivery, this is the second most for a minor month since Jan 2020, trailing only Feb 2021 — directly after the attempted Reddit squeeze.
We can see how this most recent month stacks up more directly with other minor months below. Figure 2 shows that silver deliveries fell just slightly behind the total deliveries for April. Another important data point to note is the total deliveries as a percentage of max Open Interest (black dot), which came in at 130%. This means that total delivery exceeded by 30% the maximum amount of Open Interest at any given time for the June contract.
Strong overall deliveries and strong indication by investors opening and settling for immediate delivery.
To put this past June in historical perspective, see the chart below. This shows the month of June dating back to 2011 when silver had its last major run up to $50. The chart shows the dollar amount of silver being delivered rather than the number of contracts. Because there are 5,000 ounces per contract, this is calculated by taking the (Number of contracts) * (price of Silver) * (5,000).
It is important to highlight specifically how this June compares to June 2020. As can be seen in the gold charts below, June last year set a historical record for gold delivery. At the time, silver was experiencing very high premiums and was about to enter its major run-up for July, but delivery volume was still within range. As the chart below shows, this past June exceeds every other June by at least 4 times!
Silver: Next Delivery Month
We can now jump ahead to July to see if momentum is continuing. July is a major delivery month for silver. The chart shows how contracts roll with the lines diving into First Position Date. The contract currently shows the data up to June 28, which is one day before First Position (June 29).