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Comex InitiatesTrading Collars

ByCumberland Advisors
AuthorDavid Kotok
Published 12/21/2014, 02:00 AM
Updated 05/14/2017, 06:45 AM

“Comex Institutes Trading Collars for Precious Metals”

The article linked above was forwarded to me by Jim Roemer, a commodities ETF subadvisor to Cumberland. I asked Jim if he saw any explanations about the trading band that the CME has put in place. This link was all he could find.

Gold and Silver prices are now going to trade with an influence (trading collars) that did not previously exist. We shall see what this will bring. We think there is more to know here than is written in the article cited above.

Note that gold is hoarded in some places in this world – India, for instance. It has historical credentials as a currency across nearly the entire globe. Many around this planet see it as a store of value. And, until the Roosevelt Administration, it was used for money in the United States (1933 ended this by edict from Washington).

We do not yet know what this trading band means for the prices of precious metals. We cannot predict the price of gold. But we do see market action that suggests things are changing, and the hatred of the “barbaric metal” by central bankers and policy makers may be overdone. We see precious metal prices as below the marginal cost of production in many mines.

Our clients now have a small position in the precious metal mining ETFs. These stocks (hence ETFs) appear to be struggling to make a serious bottom after a prolonged sell-off in metal prices.

We think 2015 is going to be an interesting year.

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