Open interest collapses
As China buys up the bullion, the relevance of paper markets on Comex (and London) is shrinking. Liquidity and relevance of paper gold and silver relative to bullion are diminishing.
This market report analyses why open interest on Comex has declined to multi-year lows and the consequences. Clearly, liquidity has been drained from western paper markets by the continual drift of bullion into firm Asian hands. We present evidence of the strains on market makers on Comex who have limited capital resources and we debate the consequences.
Open interest is now at multi-year lows
This week saw open interest in the Comex gold contract drop to under 350,000 contracts. This is the lowest it has been in at least thirteen years.
It is the clearest indication of a near total absence of speculative interest on Comex, and because Comex arbitrages with London, it will be true of that market as well. This is even more remarkable given the price rise since 2023 would normally lead to greater speculative interest, but it has collapsed instead, particularly after December 2024.
We see the same trend in Comex’s silver contract, which is next:
