COMEX registered gold inventories fall to under 170,000 ounces available for delivery. These are the lowest levels on record and a mere $200 million could buy all the available gold in COMEX warehouses. Lower inventory levels make it more likely that a gold delivery could panic the market, similar to what just happened in the sugar market. We have been closely monitoring COMEX gold inventories and we've noted how low they've fallen compared to previous years. In this article we want to update investors on what has been going on with the COMEX and note that registered gold inventories continue to fall. We do believe that keeping track of COMEX inventories is something that is recommended for all serious investors who own physical gold and the gold ETFs (SPDR Gold Shares (NYSEARCA:GLD), Sprott Physical Gold Trust (NYSEARCA:PHYS), Central Fund of Canada Limited (NYSEMKT:CEF), etc) because any abnormal inventory declines or increases may signify extraordinary events behind the scenes that would ultimately affect the gold price. Investors should remember that the gold market is surprisingly opaque for a market that is one of the largest in the world - any data that provides insight into this market should be monitored by serious precious metals investors. Now, let's take a look at where COMEX gold inventories stand and what investors can learn from them. We will take a closer look at these numbers but let us first explain the COMEX a little more for investors who are unfamiliar with it. Introduction to COMEX Warehousing COMEX is an exchange that offers metal warehousing and storage options for its clients. The list of their silver warehouses can be found here and their gold warehouses can be found here. In the case of silver and gold, the metal is stored at these official warehouses on behalf of banks and their clients and can be used to settle futures contracts, transferred between clients, or withdrawn from the warehouse. This offers large holders of precious metals a convenient way to store their metal with minimal storage fees - very convenient indeed if you hold large amounts of gold or silver and you don't want to store them in your basement. Silver and gold stored in these warehouses can fall into two categories: Eligible and Registered. Eligible metals are those that conform to the exchange's requirements of size (1000 ounce bars for silver and 100 ounce bars for gold), purity, and refined by an exchange approved refiner. Eligible metals are stored at COMEX warehouses on behalf of banks or private parties, but are not available for delivery for a futures contract. Registered metals are similar to eligible metals except that these metals are also available for delivery to settle a futures contract. COMEX issues a daily report on gold, silver, copper, platinum, and palladium stocks, which lists all the metal that is currently stored in COMEX warehouses and how much eligible and registered metal is present. This information allows investors insight into how much metal is currently backing COMEX futures contracts, what large gold and silver owners are doing with their metals, and how many clients are requesting delivery of their metals. Let us now take a deeper look at the gold draw-downs being seen in the COMEX warehouses. One thing to note here is that this data excludes the newly published Hong Kong warehouse data which we are still looking to incorporate. The Hong Kong stocks add up to a little over 1.2 million ounces, and that is the difference between the 6.85 million total ounces in the table above and the little more than 8 million ounces seen in the earlier graph. Finally, while the Hong Kong stocks increase the total number of ounces held in the COMEX warehouses, none of these stocks are eligible ounces and thus the 161,643 registered ounces above represents all registered ounces available for delivery at the COMEX warehouses. As investors can see in the chart above, we've seen a major drawdown in COMEX inventories over the past few months, which has accelerated in the first few weeks of September. The 161,643 registered ounces of gold is the lowest that we've seen at the COMEX since our records started. Investors need to remember that registered gold is the only gold available for delivery unless someone moves eligible gold into the registered category. Finally, let us take a look at possibly the most important number when it comes to COMEX gold inventories - the registered gold cover ratio. We've discussed this in-depth in a previous article so please refer to that article for details, but in a nutshell it is the amount of investors owning a claim to each registered gold ounce (i.e. owner per registered gold ounce). As investors can see in the graph above, registered gold stocks have dropped to levels where only 1 ounce of registered gold is backing 259 claims on that ounce - the highest levels we've ever witnessed. Another thing that investors should note is that COMEX Open Interest amounts to 419,016 contracts, and at 100 ounces per contract, that means that total gold represented by outstanding open interest is 41.9 million ounces. In a nutshell that means that traders hold contracts representing 41.9 million ounces, yet we know that registered ounces (i.e. available for delivery) are only around 161,000 - puny compared to how much gold is actually being held. Total US COMEX inventory ounces (i.e. available and non-available ounces) are 6.85 million ounces, which is essentially a 5:1 leverage ratio - which is on the higher end of the historical range. Of course none of this matters unless deliveries rise, and as of now, we haven't been seeing any extraordinary delivery action. But we'd remind investors that the lower available inventories get the greater the chance of one major delivery sending the market into panic. All investors need to do is look at what happened to the sugar market this past week: And here's what happened to sugar prices when this large request for delivery was made: Unlike sugar, gold (and silver) are much easier to ship and more durable, thus it would be far easier to take delivery on enough gold to cause a bit of a panic in the market than 1.2 million tonnes of sugar. We cannot say this will happen, but certainly low inventories make it a much more chaotic situation if it does happen. Conclusion for Gold Investors There has not been too much action in the COMEX over the past few weeks, but registered gold inventories continue to drop. The lower they get the more likely an unexpected delivery order could cause some chaos in the market, and thus we think the low COMEX registered gold inventory levels are favoring the bulls. As we've said before we are very bullish on gold as we think it is one of the safest investments that can be made for an investor with a time horizon of 3-5 years. That is why we think that investors should consider keeping a large exposure to gold with positions in physical gold and the gold ETFs (SPDR Gold Shares , PHYS, CEF). Additionally, the miners that have been underperforming gold over the last few months may offer investors considerable leverage to any rise in the gold price. Investors looking for this leverage may want to consider evaluating gold miners such as Goldcorp (NYSE:GG), Agnico-Eagle (NYSE:AEM), Newmont (NYSE:NEM), or even some of the explorers and silver miners such as Tahoe Resources (NYSE:TAHO) (we're not suggesting these companies specifically - only suggesting them for further investor research). More