how comex works. simple explanation.I wander how many people still don't know this?
They don't sell and buy physical metals there. They sell and buy contracts. What is the contract? It is you "intention" to pay for Gold in "todays" "prices" and get delivery in 3 months. That is 3 months contract, if you want delivery in 6 months it is 6 month contract...Those are all futures.
These futures contracts are traded between each other like they mean something. They are traded hunders and hundres size bigger then actual physical metal available there,.
When first notice day for a soon-to-be-expiring contract is approaching, the Comex requires speculative position holders to reduce the size of their position in that soon-to-be-expiring contract to 3,000. That contract is now known as the spot month. The trader needs to have that position reduced by the close of business on the business day prior to first notice day. The time between first notice day and the last trading day is the only time to make or take delivery.
“The vast majority of futures contracts do not go into delivery,” said Jim Wyckoff, Kitco’s technical analyst.
That’s because the futures market isn’t designed for delivery. “It’s a hedging market and it lets people mitigate their price risk, long or short,” Lesh said.
Ahead of first notice day, most precious metals market participants will either roll over their position to another contract month or they will exit the position. For the few participants who want to make or take delivery, there’s a process.
“You have the make the exchange aware, you have to make your clearing firm aware that you want to take or make delivery … in advance. You have to get the receipts in order. It’s not like you can say one day I want to take delivery and do it the next day,” said Sean Lusk, director of commercial hedging at Walsh Trading.
The whole thing is just pure gambiling. Unfotunately they call it "Gold" , and peole think this is Gold "price". That's why the world need realy Physical Gold trading platform.