The gold market is becoming more and more dislocated. After a frustrating four year correction the gold price is once again in the ascendancy. Money is flowing in exchange traded funds, physical bullion and Comex contracts.
Demand for paper gold has been so strong that available gold at the Comex is now dangerously low. The amount of paper claims versus physical gold held at the Comex has exploded to 564-1. There is more chance your child will gain entry to Yale, Standford and Yale than receive physical delivery from a Comex gold contract.
Investors in the trading pits are as nervous as hell. The mainstream media won’t mention it as they are too busy telling you how well government debt is trading or discussing the growth potential of Facebook.
Nearly all other futures markets have ample physical supply and for most part help price discovery. Yet regulators are happy to turn a blind eye to the paper ponzi scheme operating in the gold and silver markets.
A futures market needs a physical market because one day someone will stand for physical delivery. A collapse of the Comex might not happen this week, but the situation is critical. If the Comex defaults the price could go parabolic.