Mainholm
Sorry, I have been travelling during the last week and didn't see this question.
Under EFPs (exchange for physical), two parties can negotiate COMEX contracts directly and then novate the trades to CME for clearing. This is perfectly legal because it has no impact on price discovery on COMEX. (Longs and shorts are just changing hands.)
The reason EFPs are used is that there are a lot of large participants in the gold market with hedged physical positions. (Either long physical-short COMEX or short leased physical-long COMEX.) EFPs allow these participants to buy and sell their physical gold without exposing themselves to execution risk (making or losing money because COMEX positions can't be lifted at the same price as the spot price).
This is one of the dynamics that helps lock the spot price and COMEX together. If the COMEX price falls under the physical price, the holders of long physical-COMEX shorts, start buying COMEX and selling spot to lock in a profit.
So to claim that COMEX has nothing to do with the trade in physical gold is very wrong indeed.
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