Navigating the Precious Metals Market: A Beginner’s Guide to COMEX
If you’re like most, understanding the precious metals market can be challenging, with its complex terms and market dynamics.
I was in the same boat. A lot of smoke and mirrors, market talk, and terms that made my head hurt.
This post aims to demystify a key component of this market – COMEX, or the Commodity Exchange Inc., a division of the New York Mercantile Exchange (NYMEX).
Plus, it’ll just make you smarter overall and add some conversation ammo to your pocket.
Think of COMEX like a big marketplace, but instead of buying physical items, you just buy and sell contracts. The contracts are specifically for commodities like gold, silver, copper, etc.
The contracts are agreements to buy and sell a specific amount of a commodity at a set price on a future date.
The prices on these contracts serve as benchmarks for the global market. So the price you see for gold and silver when you Google them or see them on the news is the price set on COMEX.
COMEX does allow for physical delivery, however, most trading is done through these contracts and actual physical delivery is pretty rare.
So, COMEX is basically a massive influential marketplace for buying and selling contracts for precious metals and is where the spot price for these commodities is set.
That’s the basics. It’s often stated that if you want to know the REAL market price for gold and silver, look at the physical market, not COMEX. What are people paying for the physical gold coin or the physical silver bar? That’s what Main Street investors really want to know.
In a future blog post, I’ll dig into how bullion banks and other financial institutions use COMEX to manipulate prices. Which is illegal, by the way. Traders have gone to jail for it – read about it here.
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