The rush for physical gold and silver remains hot

A Goldman customer snaps up 12 million oz of silver.

April 30, 2025 10:50 AM

+++++++++++++++ Gold

An 881 contract jump in open interest on the last day before first notice pushed the number of contracts standing for delivery on the May contract to 9,306. That is the second highest ever for an inactive month.

The May contract was only bested by the prior March contract which had 10,210 contracts stand for delivery indicating a modest (9%) slowdown in the red hot pace of physical buying. See the plot below which shows the inactive contracts in blue.

Often the open interest on first notice day is the “ta’da” moment which quantifies the amount of physical changing hands. However, during this recent buying splurge which commenced during the December 2024 contract we have see a lot of contracts created and delivered during the delivery period. The prior contract of March had 9,188 contracts created during the delivery period compared to the 10,210 standing on first notice day. My point is that for this recent hot pace of physical transactions to continue, we’d also need to see strong creation of contracts during the delivery period.

Below is the chart of ultimate delivered metal where you can see that this May contract will need about 10,000 contracts created during the delivery period to sustain the pace of physical transactions.

First day delivery notices totaled 9,143 or 98% of the contracts standing for delivery. That is much higher than the average of about 60% indicating there won’t be any naked short drama.

First day delivery notices plot as follows:

The largest short was JP Morgan customer accounts at 2,870 contracts followed by Wells Fargo and Morgan Stanley house accounts (meaning the bank’s own account). Wells routinely flips metal, so look for that to be repurchased over the next few weeks. Morgan Stanley has been on a huge selling spree since February where they have sold about a net 3 million oz. This sale, although large is smaller than the prior 3 contracts, so maybe their sale blitz is over or slowing. See plot below:

Those three sellers accounted for 77% of the shorts. Bullion banks accounted for 51% of shorts which is somewhat less than average because JP Morgan customers were big sellers.

The largest buyers were the Bank of Montreal and Standard Chartered bank house accounts, both at about 2,960 contracts each. Those two accounted for 64% of buying.

BofA watch: You always gotta watch the big dog. The Bank of America bought a modest 131 contracts.

The breadth of market participants is much diminished from the contracts since this buying splurge started in December. This suggests that for many players the buying splurge was driven by one time adjustments. Basically players like family offices may have decided to adjust their gold allocation, achieved that goal and are now holding.

++++++++++++++++++++ Silver

The May silver contract is an active month and had 13,566 contracts stand for delivery, 14% less than the blowout March contract at 15,691. Same as gold, the physical rush remains strong but tailing off slightly.

First day delivery notices were 11,692 or 86% of the number standing for delivery. Like gold that is a high fraction indicating shorts actually have metal to deliver.

Also like gold, breadth was limited as selling and buying were dominated by few players. Four shorts accounted for 85% of selling … Bank of Montreal, JP Morgan Customers, Macquarie and Wells Fargo’s house account.

Note that the HSBC “customer” account isn’t dominating the action. That account sold “only” 720 contracts (3.6 million oz). If you’ve followed my work at all over the last 18 months you know that this account has been the dominant seller by far. During the last active month contract (March) they sold over 20 million oz. If this is a sign of a selling reduction, this could be extremely bullish for silver.

Buyers were slightly less concentrated as I’d need to add the top 5 to exceed 85%. JP Morgan customer accounts were the largest buyer followed by Goldman customers. Graphically, buyers and sellers are plotted below:

The name “Goldman”, either the bank or customer accounts, has been essentially absent since 2022 on the issues and stops reports. This may surprise some of you since most believe Goldman is a big bullion player. In this case, it is a Goldman customer, not the bank, who snapped up 12 million oz. That is the biggest buy by far in that account. See the plot below, and welcome back Goldman customers.

BofA watch: Absent!

I wrote a script to quantify market breadth of longs and shorts. Look for that analysis in the coming days.

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