COMEX December Contract Squeeze, page-30

"zero sum game."

Is COMEX a zero sum game?

I agree that some markets look like self contained bubbles where money just passes back and forward between traders almost on the toss of a coin. COMEX could look like that, if you ignored its external connections.

But COMEX isn't self contained. It couldn't influence the price of gold if it was.

There are very large risk averse participants in the physical gold market (producers, bullion banks and manufacturers) who (directly or indirectly through OTC derivatives) use risk appetite of COMEX traders to limit their exposure to adverse movements in the price of gold. Every time they trade or hedge, they cross a spread and leave a little money on the table for the COMEX traders.

It is almost like paying insurance premiums.