by Peter Schiff, Schiff Gold:
Gold has been seeing a large number of contracts roll in the final day of the contract. That did not happen this month. This has resulted in a large delivery volume.
So far, 16,923 contracts have been delivered with 4,583 contracts remaining in open interest. Assuming these deliver, the total will exceed 21,500 contracts. Add in another 2,000 potential net new contracts (the recent average – red bars below), and gold could see upwards of 23k contracts delivered. This would be the largest delivery volume since October last year.
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Figure: 2 24-month delivery and first notice
As shown below, open interest in April had been trending lower over recent weeks. April bucked the trend when it saw very few contracts roll in the final day (red line going flat).
Figure: 3 Open Interest Countdown
The House accounts are showing an interesting trend. BofA was back in the market buying, adding 4,368 contracts. Delivering out was JP Morgan who issued 10,682 contracts. Many other house accounts were actually buying but in smaller volumes. Wells, Macquire, and Citi were all buyers this month.
Figure: 4 House Account Activity
JP Morgan likely knew this was coming. Last week, we identified JP as making a massive move from Eligible to Registered to the tune of 578k ounces of gold ($1.15B). This was clearly a move to cover what was going to be a large delivery month. As they issued over 1M ounces worth of gold yesterday, they will likely be handing over more than all the Registered metal they moved last week.
Figure: 5 Recent Monthly Stock Change
Net removal of metal from the Comex has been slowing in recent months. With this latest move by JP Morgan, the exodus of metal may resume. That said, another possibility is JP Morgan trying to disperse their metal across different house accounts considering that BofA, Citi, and Wells house accounts took delivery on almost 9,200. House accounts are probably less likely to remove the metal, so TBD on what the motives were here… but no question that it was planned.
Figure: 6 Recent Monthly Stock Change
Gold: Next Delivery Month
Looking ahead to May (a minor month for gold), open interest is a bit below trend. As highlighted in the technical analysis, it is odd – and possibly bullish – to see open interest low with much higher prices. Futures are not the sole driver in the latest price move.
