LAST GROWL OF THE PM BEAR? / MACLEOD FINANCE

Last growl of the PM bear?

We are into contract expiry on Comex again. Silver’s active July contract settles on Monday. Option expiry was yesterday. Are we now about to see gold and silver prices recover?

ALASDAIR MACLEOD

It has been a long slog lower with silver more than halving from the 29th of January spike and gold losing over $1500. 

It should be the paper markets’ get out of jail card, and they have certainly managed to reduce their liabilities. 

The cost has been enabling China to pick up large quantities of physical gold — 692 tonnes and ridding herself of about $26bn up to May this year so far. 

And she has accumulated 1,626 tonnes of silver in Q1 2026 increasing to an estimated 2,000—2,500 tonnes to date.

In effect, the cost of western book-squaring has been a loss of large quantities of bullion. 

And now China’s major banks are giving notice to their trading customers to close their speculative positions in gold and silver — more on this below.

In this wrap-up week for July contracts on Comex, gold declined to $4050 this morning in European trade, down $160 from last week’s close having traded as low as $3960 yesterday. 

Silver at $58.30 was down $6.40 over the same timescale. 

Since 1st January, silver is down 18% and gold is down by 6.5%.

The influence of contract expiry in silver is illustrated by the surge in volume on Comex:

In the last week, open interest has contracted by 4,882 contracts representing 24,410,000 ounces. 

It marks a long period of declining open interest to the lowest levels for more than two decades:

For establishment market makers and bullion bank traders, it has been a remarkable record of risk containment. 

From July 2025, these actors in the swap category have managed to reduce their net shorts from 82,217 contracts to 25,706 contracts currently. 

But the swaps are still short of an average of $784bn at current valuations. 

Their only redemption has been producer hedging increasing their shorts by 16,000 contracts in the last year.

The story in gold is similar. 

The next chart of gold’s open interest on Comex makes this point:

In summary, both gold and silver for deferred settlement are as oversold as it gets. 

It is the point at which investors bent on accumulating wealth measured in their fiat currencies have been selling out, while the establishment is buying — in the case of market makers seeing which way the winds are blowing and trying to contain their prospective losses.

Asians, led by China’s government see things differently. 

They don’t want our paper, whether that be a market promise to deliver or fiat currencies as liabilities of G7 central banks. 

448 tonnes of gold and 5,928 tonnes of silver have been stood for delivery on Comex this year so far, despite the discouragement of falling prices. 

They understand that real money has no counterparty risk, and that is gold. 

Fluctuations in paper values are irrelevant. 

Customs returns tell us that China encashed paper dollars for 692 tonnes of gold by end-May and presumably continued to do so in June.

China realises that she must bring gold trading for her yuan closer to home and beyond the control of the US and other G7 governments. 

It would be naïve of us to think that China won’t apply similar methods, but from her actions it is clear that she intends to use gold to secure the value of her own currency by turning it into a gold substitute. 

She can do that at a time of her choosing, but when she does the entire fiat currency system will be exposed as a sham and face collapse.

It appears that the word is out to China’s large banks. 

China Construction Bank is closing its customer trading facilities for gold and silver on the Shanghai Gold Exchange from July 24th and ICBC made a similar announcement for the same date: “it would close agency personal auction trading through mobile banking, online banking. 

After the closure the closing selling and delivery operations of customers holding positions will be restricted”.

Coupled with Chinese banks reducing transaction fees to 0.2% on their customers’ gold accumulation accounts, these moves are clearly aimed at reducing speculation and encouraging accumulation. 

The common date of 24th July suggests an event is in the wings. 

What that will be we can only guess.

Timing is of the essence. 

If she acts too soon China will be blamed for creating all our woes. 

She might decide to wait until it is obvious that she acts to protect herself from the collapse in our fiat currencies which are entirely our responsibility. 

It seems unlikely that 24th July will see the yuan fixed to gold. 

Could it be a revelation of how many tonnes China has actually accumulated off-balance sheet over the last 40 years, as a first step to a yuan gold standard?

Whatever it is, the message from China’s establishment banks to its customers is don’t be short!