I keep hearing about a possible default in December gold as physical prices greatly exceed the current contract price, prompting holders of the contract to take delivery. This makes no sense to me whatsoever! Why isn't Smart Money buying Oct or Nov. gold to take delivery?
You are confusing the price paid by fools who overpay for 1 to 20 oz of gold coins/bars with the price in the real gold market that deals in 100 oz bars.
Private mints can make a killing minting silver and gold coins with the premiums nowdays. It is simply impossible for COMEX to stay stocked with the massive premiums on gold coins. The people minting these coins will call for delivery every last bar that COMEX has as long as those premiums exist. Its easy money for them and they will use every last bar. But I think default is the wrong word. I do not think your futures broker is required to have the commodity on hard at the futures price. More like not enough stock to cover deliveries. If that happened that would be very bullish for the gold price indeed, we would see a very nice spike in gold prices.
Sorry but there IS NOT a bar of gold somewhere backing every piece of paper gold traded....NO FRICKEN WAY!!! Funny if anyone is now going to suddenly TRUST all they same game players that are blowing out with most every other major instrument they peddle.
Please let us know when the COMEX warehouses run out of gold. If you have the cash you can buy all the 100 oz gold bars you can pay for.
jeb9999 is right. There's just a shortage of gold in small denominations, thanks to the rush into physical gold since the beginning of 2008. Have a look at the trading volume at LBMA: http://www.lbma.org.uk/stats/clearing COMEX shorts can cough up the cash and buy all the 100oz bars they need to fulfill their contracts.