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COMEX Deliverable Silver far less than imagined as 50% of ‘Eligible’ is not Available
Ronan Manly

Back in April 2020 during the LBMA-COMEX gold crisis of 2020, when gold prices on COMEX diverged nearly $100 higher than gold prices in London, and the LBMA and CME (COMEX) rushed out multiple combined statements trying to assure the market about “healthy gold stocks in New York and London” (while at the same time scrambling to send shipments of gold bars from London to New York), there appeared some intriguing correspondence between the CME and the Commodity Futures Trading Commission (CFTC).

Specifically, that correspondence (which was a submission by the COMEX to the CFTC certifying a doubling in ‘position limits’ on gold futures trading from 3000 contracts to 6000 contracts) contained the bombshell admission that 50% of the ‘Eligible’ gold in the COMEX-approved vaults in New York should be subtracted from ‘Deliverable Supply’ since that portion of gold in the ‘Eligible’ category is held by long-term investors and has nothing to do with COMEX gold futures trading. For background see the BullionStar article “COMEX Bombshell – Most eligible vaulted gold has nothing to do with COMEX” from 16 April 2020.

So instead of all the gold in the COMEX approved vaults (i.e. total of ‘Registered’ category and ‘Eligible’ category gold) being available to back COMEX gold futures trading, the CME was saying no, the estimated deliverable supply of gold is equal to ‘Registered’ + 0.5 (‘Eligible’).

Eligible, Registered and Deliverable

For anyone confused about the COMEX ‘Eligible’ and ‘Registered’ categories of inventories, join the club. Nearly everyone has been, at one time, confused by these terms. So here is a quick tutorial, straight from the horse’s mouth of the CME:

Eligible metal is metal that is acceptable for delivery against the Contract (i.e., which meets the specifications and approved brands of the Contract) for which a warrant has not been issued.”

Registered metal is eligible metal for which a warrant has been issued.

COMEX warrants are classified as electronic documents of title under the Uniform Commercial Code (UCC) and are issued by Exchange-approved COMEX depositories.

Each warrant is registered at the Exchange and linked to specific bars with identifiable and unique warrant numbers traceable to each COMEX depository.”

Also: “COMEX depositories” = COMEX approved vaults = COMEX approved warehouses.

You might ask where I’m going with this? Where I’m going with this is Silver.

Because while COMEX operator (the CME) revealed its hand about the COMEX deliverable gold supply in April 2020 during the initial panic phase of the LBMA-COMEX gold crisis, it also turns out that the CME also revealed its hand about the COMEX deliverable silver supply during the initial panic phase of the LBMA-COMEX silver crisis, a.k.a. the beginning of the #SilverSqueeze frenzy in February 2021.





Ronan Manly is a precious metals analyst with BullionStar whose blogs  often cover current themes including what's going on in the  London gold market and the gold activities of central banks.

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