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Conservative Congressman Questions COMEX


The gold market remains chaotic with physical (geographical) shortages, increasing physical demand, paper squeezes, retail interest soaring, and now congressmen raising concerns with regulators.

First some good news (ish) - The last few weeks have seen the huge premium for between COMEX futures and spot compress as Bloomberg reports that Australia’s largest gold refinery has ramped up production of one kilogram bars to ease the supply squeeze in the US. 

“We’re producing as many kilobars as we can, we’re probably churning out seven and a half tons of them a week at the moment and we are forward sold well into May,” Richard Hayes, chief executive officer of the Perth Mint, said in an interview.

“A very large portion of those kilobars are ending up as Comex deliveries.”

And the futures-spot premium has compressed (though remains rich to normal)...

Source: Bloomberg

The mint, which reopened a kilobar production line in response to the supply crunch, expects elevated demand to prove to be only a short-term issue.

"Arbitrage issues around the Comex will be short lived and I don’t see them lasting for months and months,” Hayes said.

“This is this is an unusual situation where you’ve got plenty of physical metal, it’s just in the wrong form and in the wrong place.”

This whole debacle and the COMEX changing rules for delivery prompted representative Alex Mooney (R-WV) - who has ostensibly continued where former Representative Ron Paul (R-TX) left off - to raise questions with the CFTC about his growing concerns about delivery defaults in gold and silver.

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