The singular most important development in the gold market in my 53 years being involved in gold is the Russian cash bullion market now in the process of development. This is a new broad public means of gold price discovery that sits ready to replace the paper gold manipulative fraud market.
Russia and China cannot be pleased by the Fed utilizing the Gold banks to move gold around so violently. Yes, they can buy cheap but so can you. Are you happy with the COMEX paper gold ability to manipulate price at will? You can buy gold cheap, but I hear precious few voices enthralled with the opportunity the COMEX knuckle draggers have offered us at $1187.
With a cash exchange functioning in Russia, the bombastic paper offering of multi year world production will get its hand called and head handed to the paper manipulators. On this exchange you deliver the real gold or get bought in real gold.
I would love to have a membership on that exchange.
After one more try in late 2014 the manipulators will be flattened by Russia’s "Free Gold" friends.
COMEX revealed: Investigating the paper gold market
Posted Jun 6 2013 by Jan Skoyles
Since the gold price crash in April there has been wide debate about how the gold market works. Analysts have contrasted paper gold versus physical gold, urging that the different parts of the gold markets offer very different services to investors. Conspiracy theories have also abounded.
In our previous analysis we looked at the different parts of the gold market and found that the COMEX was still the beating heart of gold price discovery. COMEX still had greater volumes and numbers of bids and offers setting the gold price than the largest ETFs and physical suppliers.
When the gold price tumbled in April, it was the huge orders that had appeared on COMEX that were to blame. Hundreds of tonnes of gold were sold in seconds, knocking prices down dramatically.
For some gold commentators the way the gold price is set on COMEX distorts the gold market, meaning the gold price is often detached from actual gold bullion demand. These analysts argue that since it is mainly paper traded at COMEX and because small percentages of this paper gold can ever be delivered in physical form, COMEX is the flawed central part of setting gold prices.
Gold bullion being drained from COMEX
The recent decrease in inventories, particularly from the JPMorgan warehouse, has attracted much scrutiny of late. Discussion of COMEX settling large gold contracts with cash, rather than gold, i.e. defaulting, continue to animate many a gold market discussion.
Notable investors, such as Eric Sprott, believe the odds of cash settlement occurring in the futures markets are ‘about 100%’.
In light of this we take a look at the health of COMEX and ask if it is close to breaking point.
Open Interest on COMEX reached a peak at the end of 2010 at 650,000. It has never reached similar levels since and at the time of writing many appear concerned that the overall open interest is continuing to fall.
However, looking at the graph below there does not appear to be a clear downward trend in activity on COMEX. Market participants appear happy to keep bringing their business to this exchange.