Last growl of the PM bear?
We are into contract expiry on Comex again. Silver’s active July contract settles on Monday. Option expiry was yesterday. Are we now about to see gold and silver prices recover?
It has been a long slog lower with silver more than halving from the 29th of January spike and gold losing over $1500. It should be the paper markets’ get out of jail card, and they have certainly managed to reduce their liabilities. The cost has been enabling China to pick up large quantities of physical gold — 692 tonnes and ridding herself of about $26bn up to May this year so far. And she has accumulated 1,626 tonnes of silver in Q1 2026 increasing to an estimated 2,000—2,500 tonnes to date.
In effect, the cost of western book-squaring has been a loss of large quantities of bullion. And now China’s major banks are giving notice to their trading customers to close their speculative positions in gold and silver — more on this below.
In this wrap-up week for July contracts on Comex, gold declined to $4050 this morning in European trade, down $160 from last week’s close having traded as low as $3960 yesterday. Silver at $58.30 was down $6.40 over the same timescale. Since 1st January, silver is down 18% and gold is down by 6.5%.
The influence of contract expiry in silver is illustrated by the surge in volume on Comex:
In the last week, open interest has contracted by 4,882 contracts representing 24,410,000 ounces. It marks a long period of declining open interest to the lowest levels for more than two decades:
For establishment market makers and bullion bank traders, it has been a remarkable record of risk containment. From July 2025, these actors in the swap category have managed to reduce their net shorts from 82,217 contracts to 25,706 contracts currently. But the swaps are still short of an average of $784bn at current valuations. Their only redemption has been producer hedging increasing their shorts by 16,000 contracts in the last year.
The story in gold is similar. The next chart of gold’s open interest on Comex makes this point:
