United States (New York) - Market Introduction

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Introduction

As a gold market, New York has only really come into its own since 31 December 1974 when Americans were once again permitted to buy and sell gold freely for the first time since 1933. In the intervening years the gold business had been strictly licensed through a handful of banks, such as Republic National Bank of New York and Rhode Island Hospital Trust National Bank, which supplied gold to authorised jewellery and industrial fabricators.

But once those restrictions were lifted, the New York market developed in its own unique way through futures (and later options) trading. The concept of futures had developed in Chicago in the 1830s essentially for agricultural projects. The application to gold came only in the 1970s, initially at the Winnipeg Commodity Exchange in Canada, but then on COMEX (Commodity Exchange Inc.) in New York and at the Chicago Board of Trade and the Chicago Mercantile Exchange from 1975. They brought a completely new dimension to gold trading, but ultimately it was COMEX which set the pace, so that today it is COMEX (now a division of NYMEX) that is the heart of America's gold market. As one writer put it, "The world of gold stays awake for COMEX".

In parallel with COMEX as the great terminal market, however, an increasing amount of gold trading is done outside the exchange by market-makers in spot, forward and over-the-counter options. This is often known as 'the upstairs market'. But its volumes are not recorded. So COMEX remains supreme in terms of a formal market with its transactions closely recorded and observed by analysts.