My take on the commodity supercycle and stock market zeitgeist...and the new era of precious metals, uranium (just bottoming, btw)and alternate energy. As I have said here since 2005 "Get ready for peak everything, the repricing of the planet and "black swan" markets all over the place".
2 September 2009
Where there is smoke....Gold clearing now top fringe fodder ~ So was the GFC, so I guess..
You do some good work Trace but these two statements are not correct:
1) “gold demand that was previously satisfied with physical bullion through forward contracts between private parties can now be satisfied with unallocated gold accounts”. A significant majority, if not all, institutional forwards are already settled via unallocated. Accordingly, this move by CME is not “a massive change” in the market – OTC market transactions are primarily settled via London unallocated accounts, and will continue to be if they move to CME.
2) “Why the CFTC would allow supposedly gold-backed ETF shares to satisfy the physical commodity component in an exchange of futures for physical transaction” is also incorrect. That announcement is about Exchange for Physical (ETP) transactions, not physical settlement of a COMEX futures contract. I checked rule 113.02 (http://www.cmegroup.com/rulebook/NYMEX/1a/113.pdf) and there is not mention of ETFs. The issue with ETPs is explained well here http://silveraxis.com/todayinsilver/2009/07/30/exchange-of-futures-for-physical-efp-explained-part-one/
I thought I might draw you on this issue. Thank you. How would you rate the cred of the Perth Mint vis a vis "paper gold and silver" as defined by the ETF critics...
2 comments:
I left this comment at runtogold.com:
You do some good work Trace but these two statements are not correct:
1) “gold demand that was previously satisfied with physical bullion through forward contracts between private parties can now be satisfied with unallocated gold accounts”. A significant majority, if not all, institutional forwards are already settled via unallocated. Accordingly, this move by CME is not “a massive change” in the market – OTC market transactions are primarily settled via London unallocated accounts, and will continue to be if they move to CME.
2) “Why the CFTC would allow supposedly gold-backed ETF shares to satisfy the physical commodity component in an exchange of futures for physical transaction” is also incorrect. That announcement is about Exchange for Physical (ETP) transactions, not physical settlement of a COMEX futures contract. I checked rule 113.02 (http://www.cmegroup.com/rulebook/NYMEX/1a/113.pdf) and there is not mention of ETFs. The issue with ETPs is explained well here http://silveraxis.com/todayinsilver/2009/07/30/exchange-of-futures-for-physical-efp-explained-part-one/
Thx Bron,
I thought I might draw you on this issue. Thank you. How would you rate the cred of the Perth Mint vis a vis "paper gold and silver" as defined by the ETF critics...
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