Comex Gold Open Interest
By Sprott Money
Comex Gold Open Interest
Posted with permission and written by Craig Hemke, TF Metals Report (CLICK HERE FOR ORIGINAL)
In defending their long held short positions, the Comex Banks have now issued enough new contracts to drive total open interest back to levels not seen since 2011. Will they be successful in capping price or are they about to get a religious experience? We’re about to find out.
Let’s start with the basics so that we’re all on the same page….
The Bullion Banks act as de facto “market makers” on the Comex. In doing so, they have the ability to create new futures contracts for trading across the board. In a sense, there are three possible transactions:
- A Bank issues a new contract. A willing Spec buyer (long) takes one side and the Bank (short) takes the other. Net result = 1 new contract and total open interest increases by that one contract.
- A Bank issues a new contract. A willing Spec seller (short) takes one side and the Bank (long) takes the other. Net result = 1 new contract and total open interest increases by that one contract.
- A buyer and a seller meet ( the bid and ask/offer) and they exchange an existing contract at the current price. Net result = No change in total open interest as no new futures contract has been created.
On The Comex, where The Banks seek to manage and control the paper price, since time immemorial The Banks have been NET short and the Specs have been NET long the paper contracts. The degree to which The Banks are short and the Specs are long fluctuates daily and, once per week, the CFTC surveys all of the market participants to get their summary positions. This data is compiled and released every Friday as the “Commitment of Traders” report.
OK…so far so good?
Now here’s where the fraud begins. The Banks, acting in their capacity as “market makers”, have a virtually unlimited power to create from thin air as many Comex paper derivative contracts as they’d like. In doing so, The Banks take the risk of being short while the Specs, in taking the other side of the trade, take the risk of being long. The fraudulent game that The Banks play is in never being forced to deliver upon of their paper obligations. The Specs simply seek gold “exposure” so they buy the paper derivative contract and The Banks sell it to them. If prices go up, the Specs make fiat and The Banks lose fiat. If prices go down, The Banks make fiat and the Specs lose fiat.
Again, though, very little physical gold is ever delivered. Thus, the only price “discovered” is the price of the derivative itself, not the actual physical metal.
Having the unlimited ability to create new contract supply gives The Banks the nearly unlimited ability to control price, too. How? Think of it this way:
- You call up your …read more
Source: Comex Gold Open Interest
100% Pure Garcinia Cambogia Extract – Appetite Suppressant – Carb Blocker Capsules – 2100 MG – 90 Caps Looking for something special ? Find The Lowest Price HERE Posted May 10th, 2016 in Uncategorized.
