Thursday, October 18, 2007

Whither the gold volume?

I was poking around LBMA gold clearing statistics and wondering where the Gold volume went?

As other commodity prices rise near to and exceed long time highs, trading volumes in those commodities rise:

CHICAGO, IL, July 2, 2007The Chicago Board of Trade (CBOT®), one of the world’s leading derivatives exchanges, today announced that it set a new record for quarterly trading volume, with 255,947,010 contracts traded during the second quarter of 2007. Total second quarter volume increased by 23 percent compared with the same quarter in 2006. Exchange average daily volume (ADV) reached a record 3,999,172 contracts during the second quarter, up 21 percent over the second quarter of 2006. Volume on the e-cbot® electronic trading platform set quarterly records for both total volume and ADV. Total electronic volume was 200,531,673 contracts, and electronic ADV was 3,133,307 contracts – up 43 percent and 41 percent, respectively, over the second quarter in 2006.

Some volume may have leaked over to the COMEX and some might have leaked into the new ETFs but not 15M OZ. worth per day, and that volume decline is not from some frenzied peak in Gold trading like 1980-81, but from the LTCM/Russian default days when Gold's price was in a contained downtrend from the early '96 peak of just over $400.

I don't have any answers, just speculations at this point, but my curiosity has been whetted.


Aggressive Growth Trend Follower said...


Your blog is daily reading. I value, appreciate it much.

Can you help me understand this latest gold volume blog. I dont understand the basic meaning behind what you question? I need 5th grade clarity on this one.

Thank you


Daniel said...


I'll take a shot at the motive for absent trade volume; as speculative trade increases, so will volume in relative terms. Apparently volume hasn't although price has, implying that strategic repositioning is taking place, before things really get going. How's that?

Thanks for a great blog.

Dude said...

Thanks to both of you for the kind words. I'm glad you enjoy reading the blog.

In response to the first question, I'm wondering why the volume of Gold traded on the supposedly main gold trading site in the world has been falling for years.

For Daniel, one possibility which came to my mind was along the lines of your view, it may be that, as GATA has been alleging for years, that the west no longer has the volume of Gold it pretends to have.