COMEX’s Gold and Silver Futures Market Trade Data Not Adding Up

So far in 2020, the exchange has seen 172k contracts of 100 oz gold delivered, valued at $25.7 billion. Silver deliveries in 2020 have been even more extraordinary, with 43,798 contracts of 5000 oz silver delivered, valued at $5.8 billion.

These are large numbers for the precious metals market which does not routinely see so much physical settlement in a year. The vast majority of contracts are rolled into the next available delivery months, or settled for cash.

This basically means players on the market are looking to take the metal off the hands of traders and put it into safe storage. And while the numbers of physical deliveries have been staggering this year, gold being taken off market has been a trend dating back to the tech crisis in 2000. The following chart, for instance, shows that majority of gold stored in COMEX allocated to the “eligible” category, which is vault storage and NOT used in futures market trading. See chart below from

So the fact that deliveries have ramped up on the metals is not surprising, and it could be that we are in a short squeeze in the market for the metals. While the COMEX claims there is enough gold in registered to satisfy current deliveries, we have started to see some anomalies in the data which potentially paint a different picture.

Shadow Contracts

On August 28th, the last day of the month to roll over an existing September contract to the next active contract month in December, we see CME group reporting open interest of 3070 contracts. See screenshot from the CME website below.

What is interesting is that you are not supposed to be able to deliver more contracts of gold ounces in a month for which you have open interest, because you can only deliver against open contracts. Typically, we see many contracts rolled until the last day and then the rest are settled. But so far for September, the CME group is reporting 3457 contracts posted for delivery, or 387 more than the 3070 that should have been available to be posted. And we are only 6 days into the month of September, at time of this writing.

What gives on the COMEX? We are not sure, but it sure looks suspiciously like we have a “shadow” contract being presented on COMEX for delivery. That, or all of the CME group accountants need to be fired for failing to do basic math correctly.

The errors could be forgiven if they miscalculated the amount of paper futures contracts rolling from one month to the next. Well not really, but at least it would have much less effect on the overall price of gold. Why is this? Because as we have shown numerous times this year on our site, when physical deliveries pick up, the prices of gold and silver always follow.

And this is to be expected, because while the COMEX allows as many paper derivative contracts to be placed as bets on the market price, we only have a finite amount of the real metals available on the market at any given time. Those cannot be printed up at the push of a button on a computer like the paper contracts can be. This has two effects on the market.

First, when the physical deliveries are miscounted, the paper contract derivative trades overstate short term speculative interest in the metals versus those willing to take ownership. Secondly, and probably more importantly, it overstates the amount of physical metals available for delivery on the futures market for those that want to take delivery. It basically amounts to fraud, much as if your bank claimed to have enough cash for your deposit, and then notified you when you showed up to the bank that you would have to wait 2-3 months to get your cash.

Contract Volume Discrepancies

Since we have been watching the COMEX so intently this year, we have noticed some other discrepancies in the reported contract volume on COMEX. The next series of screenshots shows various daily reports in which the CME group reported more physical deliveries that day than the amount of closed contracts.

That again appears to indicate physical gold and silver are being exchanged without closure of a corresponding contract. Does this mean gold and silver are being raided off the COMEX market without a corresponding futures contract settlement? You can decide this for yourself, since CME group has never provided the transactional data needed to “true up”, from an audit perspective, their aggregate trading volumes.



Concluding Thoughts

Looking at the shadow contracts and discrepancies in daily contract numbers makes on question all of the gold and silver market data reported by the CME group for the COMEX market. Who knows how long the mistakes in accounting have been allowed to exist. Just because the CME reports a number, I know of no audit of the transactional data published to guarantee its authenticity.

If the market is misreporting the amount of open contracts and the deliveries of physical gold and silver, then how can market participants rely on this data to make trading decisions on the futures market?

Further, how do we all now value the gold and silver prices used in our daily physical transactions? The answer is we don’t, and this will lead to a new era in how the public views the gold and silver market. While these shadow transactions exist in particular, I expect the market to heavily question COMEX’s reported physical inventories. Just like a fear of cash shortages would cause a run on the banking system, fears of physical precious metals could cause a run on whatever is left in the COMEX warehouses.

Then we would see a rapid change in the prices of gold and silver, which would have to be determined off-exchange. These would seemingly come from physical market exchanges by large parties, from banks to wealthy individuals. It may be much harder to pry gold and silver from their current owners if they are unsure current prices are high enough to properly value them.

And then what happens to the miners? If they do not have a legitimate pricing mechanism via the COMEX, how do they forecast metals prices for their mine business models? We may see a flurry of independent contract negotiations from merchants using the metal directly to the miners producing it, circumventing the whole futures exchange model.

We will see how long the issues persist in the CME futures data reporting. But it is becoming clear that the system that the world uses to value precious metals may about to undergo rapid changes when the world finds out how unstable that system currently is.

Gold and Silver Miners are Surging

Economic Backdrop

News of mine closures and restrictive measures throughout the mining supply chain, not to mention a disastrous fall in travel, had adversely affected mining operations. Falling asset prices, which had also spread into the precious metals sector, did not help margins for the miners who could still operate in the constrained economy.

However, the rising precious metals prices since March have buoyed the mining sector, which have begun to see sharp upward ticks across many popular mining funds. We will look at several of them to get an idea of the returns investors have had over the last couple of months.

Gold Miners

The Gold Bugs Index (HUI) has recovered nicely since March, exhibiting a 2x gain from the March bottom. In addition, the index formed a bullish cup pattern over the month of June, which is indicating building momentum for another upside move.

Moving over to the VanEck Gold Miners (GDX) index, we see a very similar 2x+ move up with a bullish cup pattern forming over the month of June. It as if the gold investor market is anticipating another run up amid increasing concerns over a second wave of COVID infection breakout in the US.

The iShares MSCI Global Gold Miners ETF (RING) has the same pattern as the previous two indexes, wouldn’t you know it. One would begin to think that these funds are all seeing the exact same investment pattern emerging. We will discuss causes for that pattern more in detail further along in the article.

The exact same pattern has emerged in the Sprott Gold Miners ETF (SGDM), a 2x recovery since mid-March with a bullish cup pattern formed over June. Again, this miner index looks poised for a breakout to the upside if the fundamental economic news in the US proceeds to get worse.

Gold Juniors

The pattern in the gold juniors is very similar, except that the launch higher since March was more pronounced than in the other funds. We can see that the juniors experienced a 2.5x gain from 20 to about 50, and formed the bullish cup pattern, but with a gentler and more rapid slope.

Here is the VanEck Vectors Junior Gold Miner Index (GDXJ). This indicates more upside momentum with less hesitation by junior gold mining investors who were piling into the various junior gold stocks.


Silver is the more volatile of the precious metals from a price perspective. While gold tends to move in comparatively gentle movements, silver’s chart often exhibits more violent price movement tendencies. This is largely in part to silver’s industrial usages, where price movements reflect the futures market expectations of oncoming supply and demand.

But, many investors still see silver as a monetary metal, and when gold moves steadily to the upside like it has since Q4 of 2018, silver tends to follow in the same direction. Given the gold silver ratio being near all-time highs, many precious metals investors feel as though silver has much more room to run to the upside to bring that ratio back down to historic norms.

Here we will look at the Global X Silver Miners ETF (SIL) and we see that it experienced about a 2.3x move to the upside. The fund had a very shallow cup formation in June, but investors are clearly anticipating larger moves in silver to address that abnormal high in the gold silver ratio.

The silver junior mining chart is similar, but you can clearly see more volatility in the silver juniors than in the majors. Looking at the PureFunds ISE Junior Silver Index (SILJ), we see a similar 2.4x move to the upside with a shallow cup formation in June.

However, the index has just recovered to previous highs from December. The price action is also more volatile than in the majors, with a sharper downside correction in March and recovery in April through June.

Moving average indicators also show a weaker recover of the 50 day over the 200 day, indicating there is a bit more skepticism in the staying power of the silver junior miners than there is in the majors.

Final Thoughts

Gold and silver prices heading higher are not to be unexpected given the deflation in the world economy due to COVID concerns, and the shutdowns in various local economies. Both precious metals are living up to their reputations as stores of value and safety valves as the global economy lets off some of its steam.

I believe the charts are following the confidence of the markets in the COVID economy. The drop in mining equities was likely due to liquidations and fear from an unknown adversary in the virus. The gains in the indexes, resultant from increased investment into physical precious metals and their associated funds, has pushed the miners higher as more of the supply chain begins to reopen.

Conflicting US economic data will continue to support the bullish precious metals equity charts. While June saw 4.8 million jobs created, we also have a record number of unemployed and reports of 25,000 retail closures along with a potential for 85% of independent restaurants to remain permanently closed.

The damage being done to the economy now is weakening the structure available for a recovery. Despite the encouraging jobs numbers, it is a drop in the bucket compared to the losses. Given all time highs in sovereign and corporate debt, it does not appear we are anywhere near out of the woods as we battle the effects of a virus-ravaged economy.

Therefore, it would not surprise to see the precious metals equities continue to run to the upside. In fact, it should be expected until some serious changes in economic fundamentals begins to occur. It is not looking promising that this recovery will occur in the near future.

For a look at all of today’s economic events, check out our economic calendar.

Benefits of Owning Precious Metals vs the Derivatives

The GLD and SLV ETFs

Here are some charts that show precious metals advantages over the derivative options. First, we will start with SPDR Gold Shares (GLD). Note – all charts courtesy of

Just before I get into the chart analysis, I want to refrence a recent interview that I had with Nick Barisheff, CEO of BMG Group, discussing the numerous pitfalls of owning the GLD ETF. While I will not go over the title risks specific to that investment vehicle, you can refer to that article for a detail review of them.

We can see that when GLD is matched to the daily gold price, we see a descending trend line. Meaning, GLD has under-performed the physical gold price during that time span. While GLD may be easier to own, it comes with management fees that degrade its performance compared with gold. Further, there are no redemption rights in GLD for regular shareowners; only the Authorized Participants may withdraw the metal. Therefore, there is no safety in owning a share of the GLD.

Next we look at the iSHARES Silver Trust (SLV) compared with silver’s performance.

We can see the same degradation of returns in SLV to silver, as we did in GLD to gold. These occur for the very same reasons as noted above for GLD, so no need to repeat those again.

Gold and Silver Stock ETFs

The second gold derivative I want to review are some of the more popular gold miners indexes. The main point to remember here are that while gold mining stocks may offer leveraged gains to the underlying metals price, the index funds are mixing in the best and some of the worst options in that space.

You are spreading your risk among several companies that you may not choose to invest in individually, after doing your research. Therefore, I encourage gold stock investors to do their due diligence in the space first, and pick companies that tend to outperform the space on a consistent basis. The starting factors that I recommend basing these decisions on are:

  • Company Management
  • Deposit Type and Quality
  • Jurisdiction

We start by looking at the NYSE Arca Gold Gold Minders Index (GDM).

What is interesting here is that the GDM started off promising originally, but generally followed the recessions downward in 2000 and again in 2008. However, this index has been downhill since 2011 when gold reached its peak of over $1900, and has not recovered at all compared with gold which is rebounding into the mid $1700 price range. This is a trend we will see with several of the stock indexes.

Next we examine the VanEck Vectors Gold Miners ETF (GDX) and notice that it has never recovered from gold’s fall in 2011 either, even though the gold price has rallied strongly from $1190 in late 2018 to its current price over $1700. Again, the index is not doing well.

Looking at the VanEck Vectors Junior Gold Miners ETF (GDXJ), we see a bleaker picture than the gold majors.

The performance of gold juniors has nearly fallen off the chart. This is also consistent with research that my friend Kai Hoffman of has done with respect to the junior minor financing space.

Notice the steady decline in junior mining resource financings in Canada closely mirrors the performance of the gold mine junior stocks since 2011. As money has not flowed back into the junior mining space, the junior gold minors have not had the money to finance exploration and development efforts, and as a result, their share prices have not recovered as a whole.

Next we look at the NYSE Arca Gold Bugs Index (HUI) and find a similar picture to the other major gold miner indexes.

The HUI dipped upon both of the last recessions, and since 2011, has not recovered. The index would be undervalued, many would argue. But the fact that this has gone on for nearly 10 years tells me that physical gold is considered more precious by the market than the gold miners, at least for the last decade.

A relatively new entrant into the gold miner index is the US Global GO Gold and Precious Metals Minders ETF (GOAU). Its recent performance is respectable to gold; however, there is much less time data available to analyze on this one. Therefore, I cannot recommend it as a hedge against recession like I can physical gold until we see how it performs during the next economic pullback.

Pay particular attention to the sharp drop in March of 2020, likely due to the COVID crisis. Likely, the drop can be attributed to fund managers and large retail investors selling shares to hedge risk elsewhere in their portfolio. That is not a particularly good sign with respect to the recession resistance of this fund.

One thing to note about the GOAU – it invests a lot of its money in gold streaming and royalty companies, so it could be more resilient to economic downturns. Getting its returns on production of the metals, regardless of cost pressures, means the fund is somewhat insulated from drastic changes in the cost structure of gold or the general short-term direction of the gold price. However, when gold companies cannot produce gold profitably, the returns on these companies tends to wane as they have less income.

Let us take a look at a leveraged fund, the Direxion Daily Gold Minders Index 2X Shares (NUGT), which is 200% leveraged to the gold price movement.

Any takers on the NUGT when compared with physical gold? Note how after 2011, this fund never recovered even though gold’s price is well on its way. Translated, this means that leveraged indexes to gold prices don’t do any better. This is mainly because a 50% loss in value requires a 100% recovery to break even, and when you multiply that by 2x the effect, it gets ugly pretty fast. No thanks, I think I will pass!

For the silver miner funds, lets first examine the Global X Silver Miners ETF (SIL).

In this case, we see somewhat decent performance in the ETF, though not as good as the silver price. Consider that there are some pretty good primary silver miners in a very small market of participants. This is why this particular ETF is not absolutely horrible.

But, also consider that primary silver miners have a hard time making a lot of profit because the market price of silver has been below its mining cost for the majority of the last ten years. Wake me when silver hits, and stays, above $20 an ounce. I think this chart gets much more interesting then.

Lastly (but not leastly), we examine the Pure Funds ISE Junior Silver ETF (SILJ).

The $20 price of spot silver in 2016 caused an impressive bull run in this index. But it has been a slow drain from that point to now. I think this basically mimics the price of silver over that same time period. The silver juniors might also get very interesting over $20 an ounce silver, just like the majors. This is worth at least paying attention to, if for nothing other than leverage to a bull market in silver’s price.

Concluding Thoughts

Generally speaking, the physical precious metals tend to have better performance than the various derivative investments, whether stocks or the GLD and SLV. There are a few sort-of exceptions that involve short time frames or very specific niche areas of the precious metals derivative markets. However, over any length of time, owning the physical precious metals provides better returns, and therefore, security within your portfolio.

The risks of owning physical precious metals are reduced when storing them in a legitimate third party storage facility that has the following characteristics:

a) allocated storage (clear title to the owner)

b) regular audits

c) safe jurisdiction

d) insurance

e) low fees (common) compared with those charged by brokers to trade stocks and funds

For a look at all of today’s economic events, check out our economic calendar.

This article was written by Robert Kientz, the editor and publisher of Gold Silver

A Technical Analysis Behind Gold And Silver’s Recent Surges

  • Gold emerges from a bullish flag pattern to retest old highs.
  • Silver finally wakes up after a recent head fake, and this time it looks real.
  • If the gold/silver ratio means reverts in this market environment, silver investors are going to have really, really big smiles on their faces.

Silver tends to follow gold as a risk hedge but had been lagging behind gold’s run from $1190 dating back to late 2018’s market correction. It appears silver investors finally woke up and decided to participate in the market now that gold appears to have solidly reached a new plateau.

Gold Technical Analysis

Gold’s price breakout from $1580 in April is the more obvious of the two monetary metals, exhibiting a bullish flag pattern dating back to the beginning of April.

The low in gold’s price coincided with the introduction in the States of the coronavirus lockdowns in March. This began the flag pattern that lasted until mid-May, when gold finally got up and started to run. Gold recently retraced back to just over $1720 and has appeared to find a new base at that level. Gold continues up over $15 on the day, at the time of this writing on May 19th.

I expect gold will retry previous highs around $1760 until it finds continued support, with the next point of resistance being $1785 which it tested twice in 2012. From there, it is onto $1900 an ounce if the gold bull continues to run on current economic uncertainty.

Silver Technical Analysis

Precious metals investors know well that silver bull markets typically follow gold ones. What is puzzling is that the latest leg of the gold bull market started in late 2018, and silver chose to break formation and test lows in the $14 range while gold soared.

Well, finally, silver investors are starting to feel the love again with the latest jump back into the mid $17 price range. Silver head faked to $19 last summer and then proceeded to range trade before diving down to $11.50 per ounce range in Q1 of 2020.

With silver futures prices trading well below the $16.50 average cost of mining for silver primary producers, many market pundits were scratching their heads at the price action, waiting for a rebound to follow gold’s rise.

Now we may finally have it, with three short term silver price targets noted on the chart. Silver has tested and popped through the two recent bottoms in the mid $16.50s, noted once late last year and again in Q1 of 2020.

Upside momentum, given bull’s continued strength and the continuation of partial US economic lockdowns, appears stronger than in recent years. It would not surprise me to see silver test its highs in 2015 and 2016 of over $20 per ounce.

If the bull continues, silver’s next major point of resistance is the $35 range last seen in 2012, 3 years after the peak of the last financial crisis. If the coronavirus has indeed popped the current bull market bubble, we could well see the silver challenge the $44 – $50 range from its peak in 2011.

Final Analysis

Source: MacroTrends

Being a gold investor since 2000 has been glorious, as it has out-returned all major stock market indices handily in that time frame. Silver has been more of a roller coaster ride, bouncing around from $5 an ounce in 2000, to $50 in 2011 and down to $11.50 this year.

Silver investors have a right to be wary of holding the metal for any length of time and expect volatility in the price stemming from both industrial demand and the increased potential for financial market chaos. But those investors are often very handsomely rewarded for their wait.

The gold to silver ratio peaked at 114 in April of this year, as shown in the MacroTrends chart above. Mean reversions of this ratio point to a potential bottom of about 20 to 1. And this is with a massive gold bull market going on amidst trillions of debt leverage that keeps growing around the world as deflation sets in.

I don’t see silver retesting old lows any time soon. If the gold-silver ration means reverts to old levels, what price would silver have to reach then? Assuming gold stops at $1900 when economic chaos finally peaks, the reversion price of silver would be $95.That would put some smiles on the face of silver investors after a long and patient waiting period.

This article was written by Robert Kientz, the editor and publisher of Gold Silver

Gold Fundamental and Technical Outlooks are Bullish

The S&P500 chart shows that the recovery been heavily overbought and probably due for more downside correction. The market is not going to recover to previous highs any time soon, and with deflationary pressures in the economy, it is more likely to have a larger move down over the next year to 18 months.

Companies are sitting on mountains of debt that is likely to be downgraded as damaged Q2 earnings reports begin to print this summer. Right now stocks are in a sideways, though highly volatile, lull until we learn the true damage that the shutdowns had on cumulative US production and the supply chain. Early winners are online retail shopping, due to closed shops in the 50 states, while early losers are the hospitality and airline industries. However, the damage will likely run much deeper than this in core pools of economic output.


We expect to see creeping damage in the commercial and residential real estate sectors. All of those millions of lost jobs will eventually result in rising evictions. Those evictions will lead to spiking defaults on real estate loans, causing lenders to beg for more bailouts from the Fed.

All of the above factors will lead to much more easing by the Fed to support a deflating economy. Lenders are beginning to tighten credit, leading to a squeeze on banks desperate to avoid escalating loan defaults that are threatening share holder equity.

Balance sheet gearing of 12-1 and much higher of bank liabilities to shareholder equity means that either the government prints trillions to bail banks out of the credit contraction cycle, or face a financial catastrophe that very well could be many times worse than what we witnessed in 2008-09.

Source: Alasdair Macleod

Downstream, brick and mortar food stores will begin to come under much more pressure. The cash handouts to small business owners and hourly workers is a pittance compared with earnings. Part time workers don’t qualify for unemployment benefits in many states, though the CARES act does adjust who can apply for them.

While people are stockpiling supplies now, they will run out of money for food after they default on rent and mortgage payments if the economy doesn’t fully reopen immediately and the jobs are restored. The consumer had no savings to start off with, and the shutdowns are exacerbating existing problems with late cycle credit peak for businesses with falling revenues who cannot take on new employees due to debt service.

Economy Will Turn Up Before Beginning Stronger Contraction

We live in Texas, and our governor began a partial reopening of retail last week by allowing drive-up service. The governor is also expected to announce more reopenings this week, with other states like Georgia and Oklahoma participating.

State governments are somewhat timidly approaching business as usual while watching the COVID infection numbers published in the media. Should they begin to spike again, it is likely we will see some states tighten restrictions and implement new laws on use of masks and gloves in public.

The economies will begin to turn around a bit, but not after the damage has been done. We expect that the late cycle credit bubble has been pricked by the coronavirus, and deleveraging will start in earnest in the financial sector. The Fed will try to backstop the economy, but it would have to print trillions to do so and eventually that game ends. Other nations have already begun de-dollarizing and purchasing up their gold stocks to support central bank balance sheets with the tier 1 asset. The forces are already in place moving the world into a multi-polar economic model.

Gold Technical

All of the foregoing is bullish for gold from a fundamental standpoint. Now we look at where gold is trading on the charts and what we expect to happen in the next year.

After the 2008-09 recession, gold rose very strongly and became overbought in 2012, as shown by the stochastic indicator. Gold has been in a bull since 2000 and had returned better than the S&P, DOW, or Wilshire stock indices in that time frame. There was likely to be some profit taking, and that occurred starting in 2011 after gold reached an all time peak.

What we see now in the gold chart is one of two things, and possibly both. We have upside momentum on recent financial fears that started with a rough Q4 of 2018 when the stock markets saw a healthy 20% correction. Since then, gold has been on an impressive run from $1200 up to its current perch in the mid-$1700s.

While the stochastic is flashing overbought, this signal is different than in 2011 when gold had been running up for over a decade. Since 2011, gold has been declining or sideways in all but two and a half of those years, forming the bottom of a cup. This indicates the market building some momentum on the downside which will propel gold forward.

For instance, we see a small head and shoulders form between 2015 to 2017, indicating gold’s run was not over. And during that time the average daily range readings don’t suggest high volatility or an over-extension in trading. In other words, gold has been quietly building momentum when coronavirus came along and provided a reason for gold to run to the upside again. Have we already fired our last shot with gold, or are we premature to the bigger move?

One may think that gold is overbought again and due for correction. Let’s examine why a short term correction in gold is still bullish. If the Fed’s plan works and their easing has a short term supportive effect, we could see banks ease up on tightening credit and businesses will begin to employ again. Anyone who thinks this will not take months for job remediation to occur; however, are banking on the government being able to push button start the economy for the first time in US history. This has never been done before.

If gold corrects, it forms a multi-year cup-and-handle formation which makes the chart immediately more bullish for the next 3-5 years. Given weakening economic fundamentals upon a deflationary wave stretching across the world economy, I expect more gold accumulation on any gold price correction. Upside momentum in gold will continue until the credit cycle resets, likely after a large number of bankruptcies and defaults. Whether that happens now, or 3-5 years from now, is just a matter of timing.

This article was written by Robert Kientz, the editor and publisher of Gold Silver