The gold to paper ratio in Comex is 300 to 1. The truth is accepting delivery is expensive. You cannot get a small amount of gold on comex. You’ll need a vault to put it in, insurance, armored truck service, etc. Most people buy gold futures as a hedge or speculation, and don’t want to actually go through the cost of accepting delivery.
The concern has always been a run on Comex if physical demand suddenly increases. In some ways that would be good, as the paper market is artificially keeping the price of gold down. If you don’t settle in gold you sell more contracts, and the supply is artificially inflated. In short term it will be awful for Comex, which does a very large amount of commodity futures.
The concern has always been a run on Comex if physical demand suddenly increases. In some ways that would be good, as the paper market is artificially keeping the price of gold down. If you don’t settle in gold you sell more contracts, and the supply is artificially inflated. In short term it will be awful for Comex, which does a very large amount of commodity futures.