Mark Moss compares London's $89 billion daily physical gold market to COMEX futures, where less than 1% of contracts settle in actual metal. When the LME faced a nickel squeeze in March 2022, delivery pressure forced the exchange to cancel trades and wipe out $4-$12 billion in value. Courts sided with the exchange, showing how paper markets can override contract holders.
We have London's clearing system that moved 17.7 million ounces per day back in February, almost $89 billion in gold changing hands, but on paper. On COMEX in New York, less than 1% of the future contracts being traded on gold ever ends in any physical gold moving. So you can see we have 2 markets, 2 entirely different things being bought and sold. Physical gold and paper gold. Now, when the metal, when the physical gold does fight back, when it tries to force its way, force its way, force its price discovery, watch what happens. So we can see back in March of 2022, we saw nickel squeeze on the London Metal Exchange. We saw delivery pressure. People wanted the physical, so they were pressuring to get the physical, and it threatened the members. So what'd the exchange do? Well, the exchange canceled the trades. It changed the rules. Somewhere between $4 and $12 billion Evaporated, erased out of thin air. Now, of course, sure, the traders, they sued, right? They sued. Hey, we got the trade right. We risked our money. We got it right. And you canceled on us. So they sued. They took it to the highest courts here, the UK High Court, Court of Appeals, UK Supreme Court, all of them denied.
