Trading volumes are good, but there is a fear on the performance of physical delivery. Most airlines are closed for business across the globe causing logistic issues. It makes it challenging for physical loco-swaps, inter market trading and to satisfy domestic consumption trends of wholesalers and retail investors.
The premium for the most-traded COMEX June contract rose to $50 -or 3%- above London spot gold from around $25 in recent days.
There are currently 357,369 of these contracts active representing 35.7 million ounces of gold for delivery in June. And then the global gold producers in Switzerland, are closed for business, which adds a squeeze to the globally supply to out weight demand.
Did you know that less than 1% of futures contracts traded are physically settled. So why the panic? Gold is not like Silver, it is not an industrial demand asset. Same as PGMs.
Gold is a safe haven asset in times of crisis, which is a proven fact. The lesser economies world-wide believe in this culture of preserving their wealth by saving in physical gold holdings.
