Reviewed by Sep 30, 2020| Updated on
COMEX is a futures and options market to trade commodities such as silver, gold, aluminium, and copper. COMEX was previously known as the Commodity Exchange Inc and is now merged with NYMEX and handles metals trading.
COMEX basically serves as the principal gold clearinghouse. Apart from gold, it is also a clearinghouse for silver and copper futures. These commodities are traded in regulated contract sizes. Sometimes these are also traded in micro and mini versions.
Steel, platinum, aluminium and palladium are also traded on COMEX. As the futures market is typically utilised as a hedge to deal with the risk, most of the futures contracts are hardly delivered.
It is critical to know that the COMEX will not supply metals that are considered precious. The supply of these metals is made by the seller which is as per the rules of the contract. Short sellers not having metals to deliver will liquidate their positions before the end of the last trading day. Sellers going for a short must possess a metal such as gold and that should be deposited in an approved depository.
COMEX is a result of the merger of the Rubber Exchange of New York, the National Metal Exchange, the New York Hide Exchange and the National Raw Silk Exchange.
Generally, the trades are simply placed based on the promise of a particular metal and on knowing that it really exists. This may not be enough in saying that an individual who is hedging or trading is not allowed to take physical delivery of metals via COMEX but under 1% of the overall trades are encashed through delivery.
COMEX requires you to understand: 1. COMEX operates out of Manhattan. 2. COMEX is the primary clearinghouse for silver, gold and copper futures. 3. COMEX is a division of the Chicago Mercantile Exchange.