General discussion, page-4433

Reply to MATHIUS1:

Rising open interest is a double-edged sword as 99.9% of speculators are without the financial means to take physical delivery (due to the leverage inherent in futures trading) and eventually have to close their positions, i.e. sell. The charts below show open interest in gold and silver since 2019. When there was high OI, futures traders (speculators) drove the price higher than underlying physical demand would otherwise dictate, and market prices traded at a premium (Monetary Metals analysis, spread between spot and futures prices).

The good news today is OI remains relatively low and market prices are below their "fundamental", trading at a discount and, in gold's case, still a ~15% discount despite the run higher. I.e. demand for physical rather than paper has been the driving force in spite of dishoarding by Western investors (e.g. ETF outflows, UK net exports) who are chasing higher yields, stocks and crypto. Evidence suggests this has been primarily Chinese driven to date.