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So what happened to that wonderful new 400-ounce-bar Comex gold futures contract?

Section: Daily Dispatches

11:46p ET Friday, April 17, 2020

Dear Friend of GATA and Gold:

More than three weeks ago the London Bullion Market Association and CME Group, operator of the New York Commodities Exchange, announced that they were cooperating in the creation of a Comex gold contract offering delivery not just of the usual Comex 100-ounce bar but also the option of a certificate for a one-quarter stake of ownership in a 400-ounce bar.

The CME Group's announcement is here:

The LBMA, the Comex, and financial news organizations portrayed this new futures contract as the remedy to what was starting to seem like a delivery problem in New York, where the gold futures price had exploded far above the so-called "spot" price in London.

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But while the new contract is supposed to have been trading on the Comex for the last two weeks, the exchange's trading data for the contract shows that it has not yet traded at all:

Your secretary/treasurer e-mailed CME Group's press office about this yesterday, asking for an explanation. There has been no reply.

The various news organizations that greeted the new contract as the solution to any scarcity of gold at the Comex and to logistical problems in shipping gold to New York might seem obliged to seek an explanation from CME Group as well.

A Bloomberg News story called to your attention by GATA tonight --

-- suggests that transport impairments have been resolved but acknowledges, toward the end, that the strange divergence between New York and London prices continues and that the wonderful new contract for certificate ownership of a quarter of a 400-ounce bar has not yet traded. The Bloomberg News report doesn't ask why.

Bloomberg News did not ask the rogue London metals trader Andrew Maguire for comment, but your secretary/treasurer did, and it may be fair to quote him extensively as long as CME Group is clamming up.

Maguire says: "The new 4GC contract is not being marketed by CME Group. This raises a major red flag. In fact, it increasingly looks like this contract is not fit for purpose and is just smoke and mirrors.

"All the news reports from last week through this week were touting phantom chartered airplanes full of 400-ounce bars being transported to New York. If this was true, the bullion is missing.

"No London 400-ounce bars have entered any CME Group vaults. Furthermore, underscoring deliberately spun misinformation, these erroneous air shipment reports are distributed to assure CME Group and LBMA customers that gold spot and futures contracts are backed by physical. Any wholesaler will tell you that employing special charter flights -- which require specialist insurance requirements -- is not the way gold is transported. Bullion shipments are regularly sent as cargo on passenger flights without any additional insurance being undertaken. To date, no bullion has been transported from London to New York."

But if the financial news organizations that touted the new Comex contract won't follow up on its quick disappearance, the contract will have served its purpose.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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