I see that you'll believe anything. I said whoever wrote this tripe doesn't have a clue because he doesn't.
This is yet another of the endless made-up stories that circulate on the internet. The words "but this is not a strong area of specific expertise" is the first clue. He should have said he has zero expertise. The fact that it's a third-hand, "somebody said" story would be the next indicator that it's bogus.
For those of us with some actual knowledge of and experience in these markets, the fact that Comex DOESN'T EVEN TRADE A KILO (33.2 ounces) GOLD CONTRACT is the real knee-slapper.
Comex has a 50 ounce (miNY) contract in addition to their full-size 100 ounce contract.
Further, and funnier yet, is that the Comex miNY contract is CASH settled, there is no such thing as physical delivery. The CBOT trades a kilo contract, but it's also cash settled, with no physical delivery possible. You want delivery, you have to buy a 100 ounce contract. The Comex allows delivery of a 100 ounce bar or 3 kilo bars against their 100 ounce contract, you don't get a choice.
At this point it's clear that you also don't have a clue. But, you do qualify for membership in the club of idiots who hawk ridiculous Comex delivery conspiracy theories.
I've seen about four different versions of this particular bogus story. It's the same sort of junk that was circulating when I was trading metals back in '79 and '80, the only difference is that the conspirazoids didn't have the internet to facilitate the spread of their latest hogwash.
What is more clear is that you, and not the author of the original post, don’t know what you are talking about. The original post writer is simply confused about which exchange he bought his contracts on. He bought them on NYSE-Liffe (formerly CBOT), not COMEX.
Contrary to the incorrect information you are spouting, deliverable 1 Kilo gold contracts were offered for years on the CBOT, and, now that the NYSE-Liffe has taken over the CBOT gold and silver trade, 1 Kilo contracts are offered through it.
Settlement of delivery occurs through the same banks, mostly HSBC in NY. They also settle COMEX warehouse claims, so the original poster got confused between the two exchanges. He obviously bought his mini-contracts on NYSE-Liffe, where they are deliverable, not on COMEX.
The 1 kilo bars are the most popular format for consumer buyers, who want to take delivery. It makes sense that NYSE-Liffe would start running out of the smaller bars of gold because the other exchange (COMEX) doesn’t even offer them. COMEX miNY contracts are cash settled only.
All the futures exchanges are operating on the basis of fractional banking. Last year, for example, between options on futures contracts, and the futures contracts themselves, the COMEX was offering many times the known amount of silver mined each year, in the entire world. This is close to impossible for one New York City based exchange to do, especially when its official warehouses don’t have even a tiny fraction of that silver in storage.
Had everyone demanded delivery, back then, COMEX would have been sunk, once and for all. But, even now, in the tiny January delivery month, repeated delivery demands by small buyers, like the poster, is forcing up the price of silver, because the COMEX clearing members have even less silver than they have gold. I suspect, further, that their warehouse stock figures are heavily inflated and they have even much less than they list as warehouse “stocks”.
Since last year, COMEX clearing members managed to crash the price of silver, through a host of corrupt tactics, including temporarily raising the margin minimums at a time when hedge funds were being clobbered by crashing stock prices. That allowed clearing members of COMEX to buy back a lot of their contract obligations, at a profit obtained through techniques of fraud.
Take delivery folks, of NYSE-Liffe mini-contracts, and, for those who can afford them, the full 100 ounce gold/5,000 ounce silver COMEX and NYSE-Liffe standard contracts. Doing so will force a vast rise in the price of gold and silver to their real valuation. Right now, we are allowing a deb of vipers and thieves in NYC to profit from periodically crashing prices using fake contracts for non-existent metal, with questionable warehouse reserves, and fractional banking.