What is COMEX?

Trading designation for a primary futures and options market focused on trading of precious metals. The majority of contracts for metals are never delivered on.

COMEX is a commodity exchange headquartered in the World Financial Center in New York. Comex, previously known as Commodity Exchange Inc., was founded in 1933 and merged with 4 other exchanges, including the National Metal Exchange, the Rubber Exchange, the National Raw Silk Exchange, and the New York Hide Exchange. The union of Commodity Exchange Inc. and the New York Mercantile Exchange produced the largest global precious metals futures and options trading exchange. Comex is a division of the Chicago Mercantile Exchange (CME).

COMEX does hold or supply precious metals, they are simply the intermediary between sellers and buyers. COMEX holds futures contracts for the following precious metals:

  • Gold
  • Silver
  • Copper
  • Aluminum
  • Palladium
  • Platinum
  • Steel.

The nature of futures markets, like COMEX, is that they hold contracts that are used primarily used for hedging. Hedging means any exchange, or similar agreement/contract drafted solely to mitigate the fiancial risk to a group as it concerns fluctuations in price, etc. in financial transactions, and trading. This means that COMEX holds contracts that are seldom delivered on, generally less than 5% of trades go through to delivery. Trades are essentially promissory notes made with the understanding that metal exists.

If a trader does go through with a transfer, the transaction is finalized based on the settlement price previously set by COMEX on the day the seller provides the notice of intent. COMEX does not determine or set prices. Prices are determined by buyers and sellers. Price fluctuations and the activity of traders around the world impact the pricing of precious metals around the world.

The CME group reports that COMEX administers well over 300,000 futures and options contracts daily.

What people ask…

What is the meaning of Comex?
Where is the Comex located?
Which is an example of a commodity?
Are commodities a good investment?

See Also…

Futures, Depository, London Bullion Market (LBMA) System

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