Understanding how the COMEX futures market works provides indications on
how the price for physical gold is set, according to Viking Analytics.
Gold futures are standardized, exchange-traded contracts in which
the contract buyer agrees to take delivery, from the seller, a
specific quantity of gold at a predetermined price on
a future delivery date.
The Reverse Proof American Buffalo, a model of
Also in this week’s print issue, we explore a cluster of Lincoln
cents found while searching two rolls and ponder their origin.
According to Viking Analytics, precious metals investors and
traders pay attention to the Commitment of Traders, or COT, report,
released each Friday, based on the settlement of trading from the
The COT report dated Aug. 27 reveals more than 500,000 contracts of
open interest for gold futures and more than 741,000 contracts of open
interest for futures and other major risk-weighted options. Open
interest means contracts that have not been settled by physical
delivery of the metal purchased.
The price of physical gold is closely tied to the futures market
price. According to Viking Analytics, “as a result, it it not
necessarily the physical supply and demand for gold that sets the
price, rather this is done by the supply and demand for the digital
Physical gold is gold that has been purchased and for which delivery
has been made to the buyer. Digital gold is gold purchased that may be
part of an exchange-traded fund or purchased by an individual, while
the physical metal is stored elsewhere.
Connect with Coin World:
up for our free eNewsletter
Like us on
us on Twitter
The figure of 741,000 contracts from the Aug. 27 COT report suggests
the presence of 71.41 million ounces of digital gold cumulatively held
by buyers and sellers in the futures market, with the majority in the
December contracts that close in three months, according to Viking Analytics.
“With average annual quarterly mine production of gold near 25
million ounces, we can see that the current COMEX open interest is
currently nearly three times quarterly mine production,” according to