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Money Metals News Alert
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June 23, 2025 –
Gold and silver prices ended slightly lower in last week???s trading and are trading
sideways today.
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Markets have largely
ignored the Israeli attack on Iran. However, there was a big rally in oil last
night.
Stock prices last week
ended down a bit, bond yields drifted slightly lower, and the dollar had modest
gains versus other major currencies.
The U.S. joined in attacks
on Iranian nuclear facilities over the weekend and markets will be responding this
week to the escalation.
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Buying demand for retail coins,
rounds, and bars continues to be soft. Selling was plentiful as investors
responded to silver hitting $37/oz and gold???s new all time high at $3,433/oz.
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Gold : Silver Ratio (as of
Friday's closing prices) – 93.1 to
1
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Complicated Price Discovery In Metals
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Price discovery for precious metals is
complicated. There are several different markets for gold and silver.
These markets include the retail
bullion market, the London spot market, and the COMEX futures market.
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Another market is called
Exchange of Futures for Physical (EFP).
The EFP process was
developed as a means for institutional investors to swap contracts for actual bars
outside of the regular COMEX delivery process. EFP insulates the highly leveraged
and volatile COMEX market during periods of low supply and high demand for COMEX
bars.
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For example, buyers who needed to
deliver 1,000 oz silver bars early in the year paid as much as $1/oz more than the
current London spot price. Institutional investors transferred tons of metal from
London to the U.S. to meet the enormous demand for deliverable bars in the U.S.
Retail investors who wanted to sell
were left out, unable to capture that premium in either of the markets they had
access to.
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How Does Exchange of
Futures for Physical (EFP) Work?
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In EFP trade, one party swaps a
futures contract with another party who has actual physical bars. They make the
swap without going through the usual COMEX process where the buyer purchases a
contract and then stands for delivery of bars from the seller.
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The swap still gets
recorded by the exchange and the trade is ultimately cleared by the exchange, but
prices are negotiated privately between the two parties.
The parties get the
protection of COMEX oversight, rules, and enforcement but they don???t have to enter
the open market for price discovery.
This is the important bit.
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The trade is negotiated between
institutions who have bars available and the institutions who need them right away
– like manufacturers who need silver as a component for their production.
It is done without the influence of
smaller speculators or the retail public reading the signals about supply and
demand and jumping in.
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It???s Hard to Read the
Signals
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There is lots of confusion. Many
bullion investors are watching gold and silver prices go higher and assume demand
for retail bullion products must be strong.
The truth is buying demand in the U.S.
has been muted, and there are plenty of sellers.
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Dealer inventories of
coins, rounds and bars are plentiful.
The best way to gauge
supply and demand in the retail bullion markets is by watching premiums. Those are
at the lowest levels in years.
Physical demand for larger
exchange-sized bars did surge early in the year as institutional buyers scrambled
for inventory, but retail investors had no way to participate.
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The COMEX prices for gold and silver
can???t be counted on to reflect either weak demand from retail nor strong demand
from institutions, and same with the reverse.
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This week's Market Update was
authored by Money Metals Director Clint Siegner.
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This copyrighted material may not
be republished without express permission. Offer only available through email
promotion. Offer does not apply to previous orders and may not be combined with
any other offer or program. Special shipping rates or other restrictions may apply
to international orders. The information presented here is for general educational
purposes only. Money Metals Exchange and its staff do not act as personal
investment advisors. Nor do we advocate the purchase or sale of any regulated
security listed on any exchange for any specific individual. While our track
record is excellent, investment markets have inherent risks and there can be no
assurance of future profits. You are responsible for your investment decisions,
and they should be made in consultation with your own advisors. By purchasing from
Money Metals, you understand our company is not responsible for any losses caused
by your investment decisions, nor do we have any claim to any market gains you may
enjoy. Money Metals Exchange is not a regulated trading ???exchange??? as defined by
the CFTC and the SEC.
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