Not that long ago, I watched as the number of contracts against each ounce of available gold at the COMEX was reported to be 75 : 1. That is, for every one ounce of real, physical gold, traders had paper contracts saying every one of the 75 traders were the one rightful owner of that same one ounce of gold.
The COMEX is like almost any other stock market forum, except the metals are traded there. Traders put up their hard-earned money in exchange for “ownership” of physical metals. They trust that when they want their physical metal the COMEX will gladly hand it over to them. Until now the big banks have had no trouble moving physical gold from the COMEX into their private accounts. But those days may be limited.
Once the ratio of owners for each ounce had climbed to 75 : 1, I then watch as the ratio climbed to a remarkable 85 owners for every one ounce. Then ownership ratio climbed to 100 :1. Then, 125 : 1. Then, 180 : 1. And, today, per Zerohedge.com, ownership rests at a sky-high 540 : 1.
Fear mongering websites would have you believe that if one owner had the gumption to demand withdrawl of his or her physical gold, the other 539 owners would have their fortunes simply collapse. I doubt that, that would be the scenario. A more likely scenario would the the immediate intervention of the government that would never allow the COMEX to collapse. If the COMEX collapsed, then gold price would jump as high as the moon. If the COMEX collapsed, the USA dollar would collapse when gold took off. The government will do everything in its power to protect the value of the USA dollar. And, I am certain the government has lots of tools in its tool shed to ensure the protection of the value of the US dollar.
Still, if you are an investor in gold trading vehicles, from the COMEX to ETFs and gold mining stocks, this might be a great time to visit a professional financial adviser who is trained and qualified to provide investment advice. I’m not a professional financial adviser. But I do enjoy watching he quirkiness of the stock and COMEX markets.
WARNING: Always talk to a certified financial planner before playing around with your hard-earned savings.