Gold Demand Outstrips Storage Capacity

Gold prices have been fluctuating due to various market factors, but a quieter story is unfolding in the background. The world's storage and settlement systems are struggling to keep up with the growing demand for physical gold and silver.

According to data from COMEX-approved vaults, registered gold has been steadily decreasing since January 8, falling below 15 million ounces on June 24. Although it has since rebounded to 14.88 million ounces as of August 27, this level is only at the 30th percentile of the past eight months' range.

Another issue is that open futures contracts still outnumber deliverable ounces by roughly 3 to 1. Additionally, 8,973 delivery contracts, nearly 900,000 ounces, were called in for delivery in just the past month.