Comex gold buyers are removing metal from the vaults as quickly as they buy metal ... 85% of metal bought departs registered.

And gold sellers are only selling current inventory

Summary:

Analysis of comex data reveals that comex gold vaults are emptying nearly as fast as gold is being bought. Over the last 3 months the total gold withdrawn from registered is 85% of the delivery notices stopped (bought).

Furthermore, gold is not being re-supplied. Over the last 3 months total gold deposited is only 13% of the delivery notices issued (sold).

This has resulted in a huge vault drain with a net reduction of 2.5 million oz of registered or 14.5% of the total so far this year.

The backstory:

Prior to covid-19 and QE infinity, the comex gold delivery mechanism was a gentleman’s game with coordination between buyers and sellers to deliver physical gold while maintaining minimal physical gold in the vaults. You can see that on the plot below where monthly deliveries in 2019 often exceeded gold in the vaults.

That changed after QE infinity when gold rapidly transitioned to a physical market. Note the sharp increase in monthly deliveries in Q2 2020. The reaction at the vaults was immediate as registered gold increased rapidly.

During periods in 2022, late 2023 and now in 2024 gold buyers have been removing nearly all of the gold they acquired on comex. That isn’t apparent … but read on.

The top plot below is daily deposits and withdrawals shown in red. Those curves are less useful because of the spikiness of the data. Also shown is the 1 month trailing average deposit or withdrawal shown in blue.

It is apparent that withdrawals jumped in late 2022, late 2023 and again in 2024.

On the other side of the ledger is issues and stops … metal bought and sold. The second plot below shows the daily issues and stops (red line) and the one month average (blue line). Of course issues equals stops. I’m showing the two separately so they can be visual compared to the upper plot. But don’t concern yourself with that visual comparison. I’ll do the math on the next plot.

The key to understanding the market is comparing metal sold to metal moved into the vaults and also metal bought to metal moved out of the vaults. I calc’d those ratios and present the data as a moving average below. The moving average makes sense because metal is often moved into the vault in advance of sales and moved out of the vault some time after it is bought.

The upper portion of the top plot below shows the ratio of metal moved into the vault to metal issued (sold). When the number is zero, that means no metal is moving into the vault. You can see that during mid 2022, nearly no metal was moving into the vault relative to metal sold.

When the number is 1.00, that would mean all of the metal being sold was moved into the vault. This only occurred during the big vault build in 2020 after comex turned into a physical delivery market.

The corollary to deposits to the vault is withdrawals. That is shown in the lower portion of the top plot which tracks the ratio of metal withdrawn to the metal bought. When this number is -1.00, ALL the metal bought is being removed. You can see the three periods in 2022, late 2023 and the latest quarter in 2024 when this is the case.

And when this number is zero, no metal is being removed relative to metal bought.

The lower plot shows the ratio of the net change in registered to metal issued. A number of -1.00 means that all metal transacted is being removed and a number of 1.00 means that all metal transacted was moved into the vault.

The key conclusion is … during this first quarter of 2024 sellers have been removing gold nearly as quickly as they have bought the metal. This is the third occasion in the recent past this has occurred. In the days ahead, I’ll peruse the issues and stops reports to see if I can correlate specific buyers to those 3 periods. Look for that in the days ahead.

In the meantime, we can wonder why nearly all the longs are removing gold from the vaults. Apparently they have no plans to sell it on comex any time soon.