Saturday, May 5, 2012

The COMEX is Dying

The Comex, the commodity exchange which is part of the CME is dying.

I have previously mentioned that I and others have a suspicion that the Comex, ;largely manipulated by paper contracts rather than an exchange of real commodities, is dying.

With little comment, I present the following graphs:

Though the fall in open interest began to fall before the 2008 crisis, it has almost certainly accelerated since the collapse of MF Global and the outright theft of client segregated accounts by Jon Corzine.

The gold ETF, in my mind represents demand for "paper gold" compared to physical. Of course, it does not include gold derivatives which make up a huge amount of the "paper" that accounts for the 100 to 1 ratio of paper to physical. Physical gold demand was relatively constant until the 2008 crisis.

You may recall previous posts where insiders have indicated they had to pay large premiums to buy large, physical positions in gold.

A bifurcation between the physical market and the paper market has begun.

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