by Craig Hemke, Sprott Money:
COMEX Futures VS Spot Gold and Silver Prices
Whether it’s the threat of looming tariffs, a shortage of metal due to over-leverage, a repatriation before revaluation, or something else, what’s undeniable is the surge of activity in and around the COMEX, its vaults, and its monthly delivery schedule ever since Trump won the U.S. presidential election late last year.
We’ve been writing, speculating, and opining upon the reasons for the unusual price and physical activity in gold (and silver) for several weeks now. For today, though, let’s dispense with the “why” and instead focus upon the “what”, the “where”, and the “how”.
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The first thing you should be watching is the spread between the spot price (London) and the front month futures price (New York). Normally, this spread is less than $10 in gold and 20¢ in silver. However, beginning in December, the spread in each has blown out to extreme levels. These spreads ebb and flow over time, but the key is that they are persistent—all the way up to present—and suggest a lack of confidence in executing the level of arbitrage necessary to close the price difference. As of Monday, March 31, this spread was $34.
Delivery Demand Surges in COMEX Gold Contracts
Next, let’s check the level of “delivery demand” on COMEX. The calendar for COMEX gold includes the front/delivery months of February, April, June, August, October, and December. The other six months of the year are considered off or non-delivery months. However, regardless of what month the calendar shows, delivery demand on COMEX is breaking records.
The “delivery month” of December 2024 saw a slightly higher-than-normal/average amount of activity with a total of 25,856 Dec24 contracts being “delivered”. At 100 ounces/contract, that’s 2,585,600 ounces or about 80 metric tonnes of gold.
Any other year, the pace would slow in the non-delivery month of January, and that’s what appeared would happen this year as just 3,258 COMEX gold contracts remained open when the Jan25 went off the board on December 30. But that was the end of “normal”. Over the course of the month, 19,280 additional Jan25 contracts appeared in the queue and total “deliveries” surged to 22,538 by month end. That’s another 70 metric tonnes and nearly as much as December. This was unprecedented, and the anomalies had just begun!
Next came the delivery month of February, and a record 59,296 Feb25 gold contracts remained open and “standing for delivery” when that front month contract went off the board on January 30. Even if no other contracts were added in the weeks that followed, the COMEX was set for a very busy month. However, just like January, a rush of delivery demand arrived during the month, and total deliveries for February reached a new all-time high of 76,567 contracts. Doing the math, that’s 7,656,700 ounces or about 238 metric tonnes! WOW!
The month of March in COMEX gold is another non-delivery month, yet, like January, 10,210 Mar25 contracts remained open when the contract went off the board on February 27. And, like January, another 9,188 queued up during the month and total deliveries finished at 19,398. That’s 60 metric tonnes more!
So, if you’re following along, December through March—just those four months—saw 144,359 COMEX gold contracts “physically delivered”. That’s nearly 450 metric tonnes and a total that, if it were held by just one country, would make it the 12th-largest sovereign total in the world!
2024 COMEX Gold Deliveries Outpace Entire 2023
Oh, and for additional context, the entire calendar year of 2023 only saw 132,427 deliveries. Again, that’s total—for the full year of 2023—and we’ve now seen a larger total in just the past four months! Do you understand now why it’s safe to say that the current delivery demand is unusual and unprecedented?
It’s continuing, too! Last Friday, March 28, saw the delivery month Apr25 go off the board and into its “delivery” phase, and just like late January and the Feb25, a whopping total of 55,878 Apr25s remained open and standing. As such, the COMEX may be on track to deliver another 70,000+ contracts over the course of the next four weeks!
