COMEX stock drawdown: single most important metric to watch
The table below shows the average total (registered + eligible) COMEX stock in millions of ounces for each of those years.
Year | Gold | Silver |
---|---|---|
1980 | 3.5 | 80 |
2001 | 1.0 | 100 |
2012 | 11.0 | 140 |
Now | 8.0 | 166 |
However, the stock figure by itself doesn’t tell us much, as how can we compare the 1980s with today when we have a much larger economy. The important metric is to compare stocks in relation to open interest. If stocks decline but open interest declines as well, then the stock drop is to be expected.
Thankfully Nick at Sharelynx calculates this for us – what he calls Owners per Ounce, or Stocks Cover and you can find the charts here. It is just open interest in ounces divided by stock in ounces. I like to invert it, which gives you a percentage indicating how much of the open interest is backed by stock, a sort of fractional reserves figure. The table below has those approximate figures I’ve eyeballed from Nick’s charts.
Year | Gold | Silver |
---|---|---|
1980 | 13% | 10% |
2001 | 9% | 28% |
2012 | 26% | 22% |
Now | 19% | 21% |
And for those who will say what about if everyone stands for delivery, well consider that while most of the shorts don’t have the metal, most of the longs don’t have the cash. We know this because of all the talk about margin calls causing people to have to sell. Think about that – if they couldn’t meet the margin calls, then it means they didn’t have the money to stand for delivery.
Source: http://goldchat.blogspot.com/2013/04/comex-stock-drawdown-single-most.html
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