Parrot"The paper Comex price will become irrelevant if gold...

Parrot

"The paper Comex price will become irrelevant if gold producers sell their gold direct to large buyers at prices much higher than the paper Comex price."

That is true.

But it has never happened in the past, and there is no reason to expect it to happen in the future.

A couple of thoughts:

Virtually no production is delivered into the futures at the moment.

If the Comex Gold Futures were non-deliverable (cash settled on expiry in the way Australian Government Bond Futures are settled) they would still track the spot price very closely.

As is demonstrated time after time in the small scale of deliveries relative to trade volumes, futures traders aren't interested in owning gold or selling gold. But they want exposure to the gold price. It is that very desire to replicate the P&L derived from trading physical gold that gives the futures market its appeal.

Derivative traders like and trust "paper" gold, and that isn't going to change.