The **gold cover ratio** in the context of the CME (Chicago...

The **gold cover ratio** in the context of the CME (Chicago Mercantile Exchange) typically refers to the ratio of physical gold held in exchange-approved vaults to the amount of gold futures contracts outstanding. It is a measure of the exchange's ability to back the futures contracts with actual physical gold, ensuring liquidity and stability in the gold futures market.

### Key Points:
1. **Definition**: The gold cover ratio is calculated as the amount of physical gold (in ounces) stored in CME-approved depositories divided by the total open interest in gold futures contracts (also measured in ounces, as each contract typically represents 100 troy ounces of gold).

2. **Purpose**: It indicates the extent to which futures contracts are "covered" by physical gold available for delivery. A higher ratio suggests a greater ability to meet delivery demands if all contract holders demand physical settlement, while a lower ratio could signal potential risks in a supply squeeze.

3. **CME's Role**: The CME Group operates COMEX (Commodity Exchange), which is one of the primary exchanges for trading gold futures. The exchange ensures that gold held in its approved vaults meets strict standards for purity and storage, and this gold can be used to settle futures contracts.

4. **Typical Values**: Historically, the gold cover ratio varies but is often significantly less than 1:1, meaning there are more futures contracts outstanding than physical gold available. For example, a ratio of 0.1 would mean there is only 1 ounce of physical gold for every 10 ounces represented by futures contracts. This is normal in futures markets, as most contracts are cash-settled or rolled over rather than physically delivered.

5. **Implications**:
- **Market Stability**: A low cover ratio can raise concerns about the ability to deliver physical gold if many traders demand delivery simultaneously, though this is rare.
- **Speculation vs. Physical Demand**: A high volume of futures contracts relative to physical gold reflects the speculative nature of the market, where most participants trade for price exposure rather than physical ownership.
- **Price Impact**: Significant changes in the cover ratio, such as a sharp drop in vaulted gold or a surge in futures open interest, can influence gold prices or market perceptions of supply risks.

6. **Data Availability**: The CME publishes data on gold inventories in its approved vaults and open interest in futures contracts. You can calculate the cover ratio by dividing the total ounces of gold in COMEX vaults by the total ounces represented by open futures contracts. This data is available through CME’s daily or weekly reports on their website (https://www.cmegroup.com).

7. **Recent Context**: As of my last data update, I don’t have real-time figures for 2025 gold inventories or open interest, but I can search for current data if needed. Historically, COMEX gold inventories have fluctuated between 8–12 million ounces, while open interest can represent 50–100 million ounces, implying cover ratios often below 0.2. For precise figures, check CME’s latest vault reports or open interest data.

Current data is below in the chart showing the gold cover ratio at 1.09.
Very bullish sign for Gold and as a result Silver