Gold at New Record Nominal High; Comex Open Interest Below Recorded Levels

Gold: Gold has surged to new record nominal highs above $1.064/oz in trading in Europe this morning. With the US holiday yesterday gold traded in a $10 range on Monday. In euro and GBP terms, gold is trading at €719/oz and £675.86/oz respectively.

Concerns regarding the dollar and rising oil prices seem to be the impetus for gold’s new record highs today. While the large COMEX positions may suggest a correction is likely, it is important to note that open interest levels remain well below the record 593,953 contracts seen in mid January 2008 (the gold open interest on the COMEX rose 2326 contracts to 502,513 yesterday). Indeed such open interest figures were seen for much of the final quarter of 2007 and the first half of 2008 (as seen in the excellent chart featured in Le Metropole Café last night).

Also, it is important to note that the COT data is only one factor and not the sole factor in price determination. Questions regarding the definition of commercial shorts and as to whether the shorts may be hedging their positions through unreported purchases elsewhere are worth considering. Large physical buyers have many avenues to acquire bullion and do not have to buy through the COMEX and take delivery (indeed few do).

Ratings agency Standard & Poor’s is now warning that the US will have to officially - and imminently - raise its federal debt limit to over its $12.1 trillion debt ceiling. This is leading to real concerns of monetary inflation and currency debasement.

Silver: Silver is currently trading at $17.86/oz, €12.09/oz and £11.36 and looks as sound as gold from both a technical and fundamental basis. Silver’s nominal high at $50/oz of 30 years ago remains a viable price target in the coming years.

Platinum Group Metals: Platinum is trading at $1,348/oz and rhodium is trading at $1,750. Palladium continues its strong run and is currently trading at $333/oz.

Disclosure: no positions

Comments

[ussmls7:]

What if comex had to cover so many contracts that there was no metal to cover period? What if JPM & GS was told no cash settelments,only "physical metals"? What would be the out come or how would it effect the price of Gold & Silver & what would all the people holding Paper Promises do? I think we will see very soon as the house of cards falls down!

Oct 13 10:38 AM

[GMiki1:]

Apparently (where did I read this? a Kitco column?) there was *another* COMEX gold near default when buyers demanded large deliveries. The shorts offered a 25 percent premium above spot to make a cash settlement, but that was refused. Two central banks scraped together some gold thus saving the big bullion banks from defaulting. I see silver is down today--worth buying a little. :)

Oct 13 10:42 AM

[ManAboutDallas:]

JPM and GS own and control the COMEX through their stooges. NEVER forget the OTHER "Golden Rule":

"Whoever HAS the gold, MAKES the rules."

End of discussion

On Oct 13 10:38 AM ussmls7 wrote:

> What if comex had to cover so many contracts that there was no metal
> to cover period? What if JPM & GS was told no cash settelments,only
> "physical metals"? What would be the out come or how would it effect
> the price of Gold & Silver & what would all the people holding
> Paper Promises do? I think we will see very soon as the house of
> cards falls down!

Oct 13 01:00 PM

[bkdc:]

COMEX does not have a monopoly on world gold trading.

Oct 13 07:31 PM

[tripleblack:]

Correct. Not even close.


On Oct 13 07:31 PM bkdc wrote:

> COMEX does not have a monopoly on world gold trading.

Oct 15 07:31 AM