by Dr. Jeffrey Lewis, Silver-coin-investor:
In our recent LIVE Q&A interview with renowned silver analyst, Ted Butler, the following question came up. Below is the transcript of Butler’s response.
Ted: Its a great question. COMEX is the center of the gold and silver universe.
Technically, there is trading on these other exchanges. Take the LBMA for example.
I don’t trust any of their statistics, mainly because they don’t provide that many statistics and they don’t provide them in detail. They come out once a month, give you a volume figure for what they traded in a month and that’s it.
With the COMEX, you got this exquisitely detailed information on every aspect of the trade. I don’t think you get anything in London. And perhaps for this reason, the COMEX is the price setter. Everybody follows the COMEX.
I don’t know if it’s a combination of tradition – or where are big players go…
But when you’re looking at something that happened on a Tuesday, at 5:00 in the morning, someone says, “Oh, they must be selling in London or they must be selling in China. Wherever.”
But they’re not selling in those places. They’re selling on the COMEX. It’s all an electronic market, it’s all done in the GLOBEX system and we accept it. It’s just everything in the world is priced off of the COMEX. There’s a basis trade. In other words, it’s just the way that it is and it’s what’s enabled the thing to go a little bit haywire.
I admit that it’s crazy that one exchange would have such a powerful, inordinate, dominate control on pricing. I’m not cheering it, I’m just admitting it. I’m just observing it.
If you’re looking at why prices move, all you’ve got to look at is what’s happening on the COMEX and what’s happening on the COMEX is reflected in the Commitment of Traders Report. And while I can’t predict what’s going to happen tomorrow or next week or whenever, I can explain what has happened to prices and why prices have gone up and down. It goes back to this silly game between the managed money traders and the commercials.
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