What are Eligible vs Registered Gold? COMEX Vault Categories

In the world of COMEX precious metals futures, not all gold held in approved vaults is created equal. The distinction between "Eligible" and "Registered" gold is one of the most critical yet misunderstood concepts in futures markets—a classification system that determines which gold bars can actually be delivered against futures contracts and which cannot. This seemingly technical distinction has profound implications for market dynamics, delivery capacity, price discovery, and the potential for delivery squeezes that could send gold prices soaring.

Understanding the difference between Eligible and Registered gold is essential for anyone trading gold futures, holding physical gold, or trying to understand the mechanics of the COMEX futures market and its relationship to physical gold supply. This comprehensive guide explains what these categories mean, why the distinction matters, how gold moves between categories, and most importantly, how monitoring the Registered inventory provides critical insights into potential market stress and price movements.

What Are Eligible and Registered Gold?

COMEX-approved depositories (vaults) categorize all gold holdings into two distinct categories based on availability for delivery against futures contracts:

Eligible Gold

Eligible gold consists of bars that meet COMEX specifications for quality, weight, and branding but are NOT currently available for delivery against COMEX futures contracts.

Key Characteristics:

• Meets COMEX Standards: Bars are the correct weight (typically 100 troy oz), purity (minimum .995 fine, or 99.5% gold), and are from COMEX-approved refiners
• Stored in COMEX Vaults: Physically held in one of the COMEX-approved depositories (JP Morgan, HSBC, Brink's, Delaware, Manfra, etc.)
• Owner Hasn't Designated for Delivery: The critical distinction—the owner has not made this gold available to fulfill delivery obligations on futures contracts
• Can Be Withdrawn Anytime: Owner can remove gold from the vault without restriction
• Can Be Converted to Registered: Owner can change status to Registered if they choose

Think of Eligible gold as "qualified but unavailable"—it could theoretically be used for delivery, but the owner hasn't agreed to make it available.

Registered Gold

Registered gold consists of bars that meet COMEX specifications AND have been specifically designated by their owners as available for delivery against COMEX futures contracts.

Key Characteristics:

• Meets All Standards: Same quality requirements as Eligible gold
• Designated for Delivery: Owner has specifically registered these bars as available to fulfill delivery obligations
• Backing for Short Positions: Typically used by shorts who may need to deliver against their contracts
• Can Be Delivered Against Contracts: When delivery is demanded on a futures contract, Registered gold is what actually gets delivered
• Can Be De-Registered: Owner can change status back to Eligible or withdraw from vault

Registered gold is "available inventory"—the actual pool of gold that can be delivered when futures contracts come due.

Why the Distinction Matters Enormously

The Eligible vs. Registered distinction isn't just accounting semantics—it fundamentally affects market capacity, delivery dynamics, and price discovery:

1. Registered Determines Actual Delivery Capacity

Only Registered gold can be delivered against futures contracts. If open interest (number of outstanding contracts) exceeds Registered inventory, the market is "over-leveraged"—there's physically insufficient gold to deliver if significant percentages of longs demand delivery.

Example: If open interest is 500,000 contracts (50 million oz) but Registered inventory is only 10 million oz, there's a 5:1 leverage ratio. If just 20% of longs demanded delivery, there wouldn't be enough Registered gold.

2. Registered Inventory Declines Signal Potential Squeezes

When Registered inventory falls while open interest remains high or grows, the ratio of paper claims to physical inventory expands. This creates potential for delivery squeezes where shorts scramble to acquire physical gold to deliver, spiking prices.

3. Eligible Exists as a "Buffer" but Not a Guarantee

Eligible gold theoretically provides a buffer—owners could convert it to Registered if needed. However:

• Owners have no obligation to convert Eligible to Registered
• During stress, Eligible owners may prefer to withdraw gold entirely rather than make it available
• The presence of large Eligible stocks doesn't guarantee delivery capacity

4. Monitoring Ratios Provides Early Warning Signals

Savvy traders and analysts watch the Registered inventory and the open interest/Registered ratio as leading indicators of potential market stress. Falling Registered + rising open interest = increasing squeeze potential.

How Gold Moves Between Eligible and Registered

Gold frequently changes status between Eligible and Registered as market participants' needs change. Understanding these flows helps interpret inventory reports.

Eligible to Registered (Registration)

An owner converts Eligible to Registered when they want to make their gold available for delivery:

Common Scenarios:

• Short Position Holder: Trader is short futures and anticipates possibly needing to deliver, so registers gold as precaution
• Arbitrage Opportunity: Trader sees opportunity to deliver gold at futures price that exceeds spot, profiting from spread
• Inventory Management: Dealer manages inventory by registering gold when delivery month approaches

Process: Owner simply notifies vault/depository to change classification. No physical movement occurs.

Registered to Eligible (De-Registration)

An owner converts Registered back to Eligible when they no longer want gold available for delivery:

Common Scenarios:

• Short Position Closed: Trader no longer needs delivery capacity, de-registers
• Avoiding Delivery: Owner doesn't want their gold potentially delivered against their will
• Precursor to Withdrawal: Often gold is de-registered before being withdrawn from vault entirely

Withdrawals from Vaults

Gold can be completely withdrawn from COMEX vaults (removing from both Eligible and Registered categories):

• Owner wants physical possession outside COMEX system
• Gold being moved to non-COMEX storage (London vaults, private storage, etc.)
• Fabrication into jewelry, coins, or other forms
• Export to other markets (particularly Asia)

Significance: Net withdrawals (outflows exceeding inflows) indicate gold is leaving the COMEX system, potentially tightening physical markets.

Deposits into Vaults

New gold enters COMEX vaults as Eligible (occasionally directly as Registered):

• Newly refined production from miners
• Gold returning from other storage locations
• Imports from overseas markets
• Recycled gold refined into COMEX-eligible bars

Interpreting COMEX Inventory Reports: What the Numbers Tell You

COMEX publishes daily inventory reports showing Eligible and Registered holdings at each approved vault. Learning to read these reports provides valuable market intelligence.

Key Metrics to Monitor

1. Total Registered Inventory

• Current Typical Range: 8-20 million oz (varies significantly over time)
• Historical Low: Under 5 million oz during delivery squeezes
• Trend Matters Most: Falling Registered more concerning than absolute level

2. Open Interest to Registered Ratio

• Calculation: (Open Interest in oz) ÷ Registered Inventory
• Normal Range: 30:1 to 60:1 (30-60 paper oz per physical oz available)
• Warning Level: Above 80:1 suggests elevated squeeze potential
• Critical Level: Above 100:1 indicates severe potential for delivery stress

3. Eligible to Registered Ratio

• Typical Range: 3:1 to 8:1 (most gold is Eligible, not Registered)
• Rising Ratio: More gold moving to Eligible or being withdrawn, tightening available inventory
• Falling Ratio: More gold being registered, easing delivery concerns

4. Net Flows (Deposits vs. Withdrawals)

• Net Withdrawals: Total inventory declining, potential tightening signal
• Net Deposits: Inventory growing, easing supply stress
• Track Over Weeks/Months: Daily noise is high; trends over weeks are meaningful

Bullish Signals from Inventory Data

Combinations that historically precede gold price strength:

• Registered inventory declining steadily over weeks
• Open interest/Registered ratio expanding above 80:1
• Net withdrawals from total COMEX stocks
• Large conversions from Registered to Eligible preceding delivery months
• Registered falling while gold prices are subdued (disconnect suggesting physical stress not yet priced in)

Bearish or Neutral Signals

• Registered inventory growing or stable
• Net deposits into COMEX vaults
• Open interest declining faster than Registered
• Large Eligible to Registered conversions (increasing available supply)

Historical Examples: When Registered Inventories Signaled Major Moves

1. 2015-2016: Registered Collapse and Gold's Bottom

Setup: From mid-2015 through early 2016, COMEX Registered gold plummeted from over 8 million oz to under 5 million oz, while open interest remained elevated. The open interest/Registered ratio exceeded 100:1 at times.

Outcome: Gold bottomed in December 2015 near $1,050/oz and rallied to $1,375/oz by July 2016 (30%+ gain). The Registered inventory collapse correctly signaled physical stress that would drive prices higher.

2. March 2020: COVID Delivery Crisis

Setup: Refineries shut down due to COVID lockdowns. Physical delivery logistics collapsed. Registered inventory was adequate in nominal terms but the market couldn't convert London 400 oz bars (where most gold is stored) into COMEX 100 oz bars (what contracts specified).

Outcome: COMEX spot prices traded $50-70/oz below London spot (opposite of normal), creating unprecedented backwardation. COMEX changed rules to allow 400 oz bar delivery. Gold rallied from $1,475 to $2,070 within months.

3. 2022: Quiet Drawdown

Setup: During 2022, Registered inventory quietly fell from 12+ million oz to under 8 million oz while gold prices were pressured by Fed rate hikes.

Outcome: Gold bottomed in November 2022 near $1,620/oz and rallied to over $2,000/oz by May 2023, then ultimately to $2,400+ in 2024. The Registered drawdown during price weakness signaled physical accumulation that would eventually overwhelm paper selling pressure.

Why Understanding This Matters for Your Gold Investments

The Eligible vs. Registered distinction affects all gold investors, not just futures traders:

• Validates Physical Gold Premium: The fact that most COMEX gold is Eligible (unavailable) shows that physical ownership matters. Owners specifically choose NOT to make their gold available for delivery, preferring to hold it. This validates the premium and inconvenience of owning physical.
• Reveals True Futures Market Leverage: Open interest/Registered ratios of 50:1 or higher demonstrate that futures markets operate on massive leverage. This leverage works smoothly until it doesn't—when delivery is demanded, the lack of Registered inventory creates squeezes.
• Provides Leading Indicators: Falling Registered inventory often precedes gold rallies by weeks or months. Monitoring this data gives you early warning of potential price moves that futures prices haven't yet reflected.
• Affects All Gold Prices: COMEX futures set the global gold price benchmark. Delivery stress from inadequate Registered inventory affects spot prices, ETF NAVs, coin dealer prices, and everything else tied to gold.
• Confirms Physical Market Tightness: When Registered falls while prices are weak, it signals sophisticated players are accumulating physical gold despite bearish sentiment—a contrarian bullish indicator.

Key Takeaways

1. Eligible gold meets COMEX standards but isn't available for delivery; Registered gold is available for delivery against futures
2. Only Registered gold can actually be delivered when futures contracts come due
3. Registered typically represents just 10-30% of total COMEX gold inventory
4. Open interest/Registered ratios of 50:1+ demonstrate massive paper leverage over physical inventory
5. Falling Registered inventory signals potential delivery stress and often precedes gold rallies
6. Gold frequently moves between Eligible and Registered as owners' needs change
7. Net withdrawals from COMEX indicate gold leaving the system, potentially tightening physical markets
8. Historical examples show Registered drawdowns preceded major rallies in 2016, 2020, and 2022-2024
9. Monitoring COMEX inventory reports provides valuable market intelligence for all gold investors
10. Understanding Eligible vs. Registered is essential for interpreting COMEX dynamics and potential delivery squeezes

Conclusion

The distinction between Eligible and Registered gold represents far more than accounting categories—it reveals the fundamental structure of modern gold markets and the massive leverage embedded in the futures system. When you understand that hundreds of millions of ounces of paper gold claims are backed by just 10-20 million ounces of Registered physical gold actually available for delivery, the fragility of the system becomes apparent.

This leverage works seamlessly 99% of the time because most futures contracts are cash-settled or rolled forward rather than delivered. But during the 1% of the time when delivery is demanded—whether due to physical market stress, backwardation, or strategic squeezes—the inadequacy of Registered inventory relative to paper claims creates the potential for explosive price moves as shorts scramble to acquire deliverable gold.

For investors, monitoring Registered inventory provides a valuable early warning system. When Registered declines steadily while gold prices are pressured by futures selling, it signals that sophisticated players are quietly accumulating physical metal despite bearish sentiment. This divergence—paper weakness and physical tightness—rarely persists. Eventually, prices must rise to reflect physical reality.

The historical pattern is clear: periods of falling Registered inventory have preceded or coincided with major gold rallies in 2016, 2020, and 2022-2024. While past performance doesn't guarantee future results, the fundamental dynamics remain—when available delivery inventory shrinks while paper claims remain elevated, the probability of upward price pressure increases substantially.

Understanding Eligible vs. Registered gold transforms how you view COMEX inventory reports from obscure statistical releases into actionable market intelligence that can inform better gold investment and trading decisions.

Remember: Eligible gold exists but isn't available. Registered gold is available but limited. The difference between these categories often determines whether futures markets function smoothly or experience delivery crises that spike prices.