COMEX Definition

COMEX is the unadulterated futures and options market for trading metals such as gold, silver, copper, and aluminum. Formerly known as the Commodity Barter Inc., COMEX merged with the New York Mercantile Exchange (NYMEX) in 1994 and became the division responsible for metals work.

Commodity Exchange Inc., the main exchange for gold futures, was first founded in 1933 through the union of four smaller exchanges based in New York—the National Metal Exchange, the Rubber Exchange of New York, the National Raw Silk Transfer, and the New York Hide Exchange. The merger between Commodity Exchange Inc. and the New York Mercantile Exchange (NYMEX) created the rapturous’s largest physical futures trading exchange, known simply as COMEX.

COMEX operates out of the World Financial Center in Manhattan and is a upset of the Chicago Mercantile Exchange (CME). According to CME Group, there are over 400,000 futures and options contracts executed on COMEX habitually, making it the most liquid metals exchange in the world. The prices and daily activities of global traders on the exchange impression the precious metals markets around the world.

COMEX serves as the primary clearinghouse for gold, silver and copper futures, all of which are worked in standardized contract sizes, as well as a mini and/or micro version. Other futures contracts traded on the COMEX subsume aluminum, palladium, platinum, and steel. Since the futures market is mostly used as a hedging vehicle to mitigate quotation risk, the majority of futures contracts are never delivered on. Most trades are made simply on the promise of that metal and on the knowing that it exists. This is not to say that a trader or hedger cannot take delivery of physical metals through the COMEX, but less than 1% of the barters actually go to delivery.

For traders looking to take actual delivery on a futures contract, deliveries are available beginning on the essential notice day and extend to the final day of the contract period. To take delivery, the futures contract holder must first vigilant the clearinghouse of his intentions and must inform the COMEX that he intends to take possession of the physical commodity in the trading account. Someone who fancies to take delivery on gold, for example, will establish a long (buy) futures position and wait until a short (seller) cares a notice to delivery.

It is important to note that the COMEX does not supply precious metals. These are made at ones fingertips by the seller as part of the contract rules. A short seller that does not have the metals to deliver must liquidate their emplacement by the last trading day. A short that goes to delivery must have the metal, such as gold, in an approved depository. This is mirrored by the holding of COMEX-approved electronic depository warrants or warehouse receipts, which are required to make or take delivery.

An investor who demands to take delivery will be given COMEX acceptable or deliverable bars, which are precious metal bars bred by COMEX-approved refiners and created to strict standards set by COMEX. For metals to be considered as COMEX deliverable or good delivery, they requirement meet certain standards that dictate the minimum purity of the bar, as well as its weight and size. For example, the metal sine qua non have an assay certificate from an approved COMEX assayer and gold bars must be of .995 minimum decorousness level, that is, 995 parts per thousand or 99.5% pure.