Metals Futures: Gold, Silver, and Copper on COMEX

Key Takeaways

• COMEX metals futures include GC (100 troy oz gold), SI (5,000 troy oz silver), and HG (25,000 lb copper), each with physical delivery specifications that anchor futures to the cash market.
• Silver is roughly 3 to 5 times more volatile than gold on a percentage basis, so a single SI contract at $30/oz carries $150,000 in notional, far more risk per contract than most traders expect.
• Gold responds to real interest rates and dollar strength; copper tracks Chinese manufacturing and global PMIs, investors who bundle them as "commodities" are running two very different macro trades.
• The LBMA twice-daily gold auction in London sets the global reference price; COMEX futures and LBMA spot trade in tight arbitrage through the exchange-for-physical (EFP) market.

What It Is

The five contracts that carry the bulk of COMEX volume are:

• GC, Gold, 100 troy ounces, tick $0.10 = $10
• SI, Silver, 5,000 troy ounces, tick $0.005 = $25
• HG, Copper, 25,000 pounds, tick $0.0005 = $12.50
• PL, Platinum, 50 troy ounces
• PA, Palladium, 100 troy ounces

GC and SI deliver physical metal at COMEX-approved depositories in New York. HG delivers to warehouses globally. Most traders close positions before first notice day and never take delivery, but the option to deliver is what anchors futures to the physical market.

Micro contracts (MGC at 10 troy ounces of gold, SIL at 1,000 troy ounces of silver) extend access to smaller accounts.

The Intuition

Gold and silver behave partly like money. They are inventory assets with low storage cost, no cash flows, and long histories as stores of value. Their price responds to real interest rates, dollar strength, central bank reserve policy, and inflation expectations.

Copper, by contrast, is an industrial metal. Its price tracks Chinese property starts, global manufacturing PMIs, and electrification demand. Copper is often called "Dr. Copper" for its reputation as a leading indicator of the global cycle.

Platinum and palladium are hybrid: stores of value, but also critical inputs to auto catalytic converters, which ties them to vehicle production.

How It Works

Gold futures quote in US dollars per troy ounce, minimum tick $0.10. One GC contract represents 100 troy ounces, so a $1 move in gold equals $100 of P&L per contract. Silver quotes the same way; one SI contract is 5,000 ounces, so a $0.01 move equals $50.

Copper quotes in cents per pound. A quote of 450 means $4.50 per pound, and one HG contract of 25,000 pounds is worth $112,500 at that price. Tick size is 0.05 cents = $12.50.

Delivery specifications matter. GC requires 100 ounces at 995 fineness minimum from an exchange-approved refiner. SI requires 5,000 ounces at 999 fineness. Copper requires Grade 1 electrolytic cathode conforming to ASTM B115. These specs allow the exchange to treat any qualifying bar or cathode as interchangeable.

The global cash price reference for gold and silver is the LBMA auction, run in London twice daily. COMEX futures and LBMA spot trade in close arbitrage, with the futures-spot basis (EFP) being its own standalone market.

Worked Example

A jewelry manufacturer needs 5,000 ounces of gold in six months. Spot gold is $2,300 and the six-month future trades at $2,320, reflecting storage and interest cost.

To lock the cost, the manufacturer buys:

contracts to buy = 5,000 / 100 = 50 GC contracts
cost locked = 50 x 100 x $2,320 = $11,600,000

If by delivery, spot gold is $2,600, the manufacturer's futures position gains $280 x 100 x 50 = $1.4 million, offsetting the higher physical purchase price. If spot falls to $2,100, the futures lose $1.1 million, but physical gold is cheaper. Either way, the manufacturer's total cost is locked near $2,320.

A speculator betting that gold will rally on a falling real-yield regime takes the same long position without the physical need. Their P&L is pure directional exposure, and they typically roll or close before first notice day to avoid delivery.

Common Mistakes

1. Treating gold like copper. Gold responds to real rates and currency debasement themes. Copper responds to global industrial production. A macro trader who is long gold and copper thinking "both are commodities" is running two very different trades.

2. Ignoring the EFP. The exchange-for-physical spread between COMEX futures and LBMA spot widened dramatically in 2020 and 2024 when shipping gold between London and New York hit logistical bottlenecks. EFP widening is a signal, not just a technicality.

3. Over-sizing silver. Silver is roughly 3x to 5x more volatile than gold on a percentage basis. One SI contract at $30/oz is $150,000 notional. New traders who size silver like gold get wiped out by a single volatile session.

4. Confusing COMEX gold with GLD. The GLD ETF holds physical gold in vaults and tracks spot. GC tracks the front-month future, which differs from spot by financing and storage. Over long horizons, roll yield on futures creates a return drag that GLD does not suffer.

5. Forgetting delivery logistics. If you hold GC into first notice day, the long gets assigned a warrant for 100 ounces at a specific depository. Moving that metal is expensive. Most retail traders should close or roll well before the delivery window.

Frequently Asked Questions

Q: What are metals futures in simple terms? Metals futures are standardized contracts to buy or sell a fixed quantity of gold, silver, copper, or other metals at a price agreed today for delivery at a future date. They let producers lock in sale prices and investors gain leveraged exposure to metal price moves without storing physical metal.

Q: How do metals futures affect investment decisions? Gold futures provide a way to hedge against dollar weakness and inflation expectations without holding bullion. Copper futures give investors direct exposure to the global industrial cycle. Including metals futures in a portfolio adds non-correlated return streams and a potential inflation hedge.

Q: What is a real-world example of metals futures? A jewelry manufacturer needing 5,000 oz of gold in six months buys 50 GC contracts at $2,320 to lock the cost. When delivery arrives and spot gold is at $2,600, the futures position gains $1.4 million, offsetting the higher physical purchase price. The all-in cost stays near $2,320 per ounce.

Q: How can investors use metals futures in an inflation hedge strategy? Gold futures are the most direct way to express a real-rate thesis: when inflation rises faster than nominal rates and real yields fall, gold tends to appreciate. Investors can buy GC futures with modest margin, receiving full notional exposure without tying up the full purchase price.

Q: How are metals futures different from buying a gold ETF like GLD? GLD holds physical gold and tracks spot with no expiration. GC tracks the front-month futures contract, which differs from spot by financing and storage costs. Over long horizons, roll yield on futures creates a return drag that GLD avoids, making ETFs more suitable for long-term passive gold exposure.

Sources

1. CME Group. "Gold Futures Contract Specs." https://www.cmegroup.com/markets/metals/precious/gold.contractSpecs.html
2. CME Group. "Silver Futures Contract Specs." https://www.cmegroup.com/markets/metals/precious/silver.contractSpecs.html
3. CME Group. "Copper Futures Contract Specs." https://www.cmegroup.com/markets/metals/base/copper.contractSpecs.html
4. LBMA. "Prices and Data." https://www.lbma.org.uk/prices-and-data
5. World Gold Council. "Research." https://www.gold.org/goldhub/research

Disclaimer

This article is educational content only and is not financial advice. Nothing here is a recommendation to buy, sell, or hold any security. Consult a licensed advisor before making investment decisions.