96% Leverage… Zero Delivery #shorts

Key Concepts

• US-centric COMEX futures
• Global spot market dislocations
• Undeliverable futures contracts
• Leverage in futures contracts
• Discount to deliverable spot

Paper to Physical Imbalances in Plain Sight

The most apparent and challenging-to-conceal paper-to-physical imbalances are, in fact, hidden in plain sight. These imbalances are primarily observed in the unprecedented US-centric COMEX futures market.

COMEX Futures and Global Spot Market Dislocations

The COMEX futures market generates futures that lead to global spot market dislocations. This means that we are witnessing thousands of tons of futures contracts that are undeliverable. Specifically, these contracts exhibit 96% leverage and have "zero chance of being deliverable."

Trading at a Discount

A critical indicator of this problem is that these undeliverable futures contracts trade at a "massive discount to deliverable spot and gold silver contracts." This significant price discrepancy highlights a fundamental imbalance between the paper market (futures) and the physical market (spot).

Conclusion

The existence of undeliverable futures contracts trading at a substantial discount to their physical counterparts on the COMEX is presented as clear evidence of a significant problem within the market.

For a more in-depth discussion, a full episode is available via the provided link.