Gold market snarled by virus lockdown as world races for haven

Bloomberg/Jack Farchy and Justina Vasquez/3-24-2020

“The strains have rippled through gold trading, with liquidity at some points running thin in a vast market that’s dominated by the world’s biggest banks and watched by millions of mom-and-pop investors.”

USAGOLD note:  This article includes a revealing chart showing the futures’ premium level over spot at its highest level since 1980. To address the physical squeeze, Comex told Bloomberg it would launch a new gold futures contract denominated in 400-ounce bars against which investors could take delivery. The question, as we raised yesterday at this page, is whether or not customers holding contracts would be “willing to exchange for the new contract.”  That, it appears at first glance, would mean holders rolling their positions forward and not taking delivery on the April contract. The chart below offers a sense of the outstanding long position at the COMEX – not all will want delivery.

bar chart showing net long positions on the COMEX with emphasis on money manager positions

Chart courtesy of the World Gold Council

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