Market Report: Please Find Me Some Physical

by Alasdair MacLeod
Gold Money

Ahead of the Easter break it has been an interesting week for precious metals. Gold rose $55 from last Friday’s close to $1681.8 yesterday, the highest closing level since 2012. Silver rose a dollar on the week to close last night at $15.40.

Bullion banks had a very tough week, with the exchange for physical gateway between Comex and London having broken down. When EFPs work properly, there is rarely more than a $2 difference between Comex and London, but that has blown out leaving the active Comex June contract trading $60 above spot. This could turn into a disaster for Comex, because spreads like that indicate that increasing numbers of longs are likely to stand for delivery, given the lack of bullion available elsewhere at almost any price.

There is a similar position in silver, with the active May contract trading 52 cents above spot. Given that this contract has less than three weeks to run, the squeeze on silver is probably more urgent, and market traders will be watching developments in this contract closely.

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