You're talking about the "price of physicals" in a retail context. That is a tiny part of the gold market. The pricing and supply of ounce coins does not necessarily reflect the pricing and supply in the overall gold market. SPDR's bar of gold bullion does not get liquidated into coins.
Gold. GOLD!!!!! Gooooollllllllllddddddd!!!!!!!!
- Thread starter ChesusRice
- Start date
Harrekin
Well-Known Member
Try take delivery on a Comex gold cert.
Ill talk to you in a couple of years when they're still making excuses why they havnt delivered yet...
They sell far more certs than they have reserves, don't believe me?
Look it up yourself, you lazy shit.
Why are you going to insist that I search out your evidence? If it's so easy to see that they sell more paper than they have gold, show me.
Harrekin
Well-Known Member
You're the one who disbelieves, fuck you, stay in your ignorance then.
EVERYBODY but you seems to be acutely aware of the fact gold certs are simply for trading, you will NEVER be let redeem them.
Balzac89
Undercover Mod
[video=youtube;BfCn8NlLHko]http://www.youtube.com/watch?v=BfCn8NlLHko&feature=player_embedded#at=90[/video]
4:20 Jeffrey Christian, formerly a staffer at the Commodities Research Group in the Goldman Sachs Investment Research Department and now head and founder of the CPM Group, Douglas confirms that the "LBMA trades over 100 times the amount of gold it actually has to back the trades."
4:20 Jeffrey Christian, formerly a staffer at the Commodities Research Group in the Goldman Sachs Investment Research Department and now head and founder of the CPM Group, Douglas confirms that the "LBMA trades over 100 times the amount of gold it actually has to back the trades."
Harrekin
Well-Known Member
I've taken the time to look through a report by someone claiming that LBMA is a fractional reserve scam. Here's that document: http://www.gata.org/files/ThunderRoadReport-10-15-2009.pdf.
On page 5, the author states that clearing statistics are based on the "daily average amount of gold transferred by the LBMA's six clearing members each month." The author then complains that the clearing statistics reflect net volumes--if one buyer buys 10,000 ounces of gold and sells 10,000 ounces of gold to the same counterpart for the same date, there is no clearing, even though 20,000 ounces of gold technically traded. I should stop here and say that this criticism makes no sense. If you buy and sell 10,000 ounces of gold in the situationI just described, you didn't actually trade anything--your positions were perfectly offset--so it makes sense that the clearing statistics wouldn't reflect your position. There really is no position, since any gain on the ounces bought will be exactly canceled out by loss on the ounces sold.
On page 6, the author notes that daily clearing volume is 22.3 million ounces, or 693 tonnes. He then uses this quote: "Previous estimates of the daily volumes traded in the London market have suggested that the quantities are a positive multiple of the clearing volumes with a multiplier of between 5 and 9." So the trading volume is 5-9 times 693 tonnes, or between 3,500 and 6,200 tonnes. From here, the author claims "is conservative" and assumes that only 2,744 tonnes of gold trade through London daily. He then tries to suggest that this an unrealistic amount of gold to trade, given that world production and market-permissible metal is so limited in supply.
The problem with the author's argument should be immediately clear: exchange volume is irrelevant. Let's say Microsoft has 10 billion shares, and in one day 20 billion shares trade hands. This doesn't mean that all of Microsoft's stock in existence was actually traded or that there are fake Microsoft share certificates floating around. 2 traders could have sold the same 100 million block of shares 200 times in a single day, producing 20 billion shares worth of volume even though it was the same 100 million share block.
The volume of gold traded is irrelevant because there are offsetting hedges that cancel out many of the positions. This is why clearing volume at the end of the day is significantly less than trading volume (5-9 times more). Your video clips explain this hedging.
Edit: You realize what you put in quotes is some other person's spin on what the guy meant by what he said, right? Because the person testifying in that video doesn't say what's in quotes at 4:20, he says there's a difference in how the market uses the term "physical market" versus how another group uses the term "physical market." I wasn't clear on what the distinction between the uses actually is.
I draw attention to this, from an article that used that quoted text: "if we look at the physical market,the LBMA, it trades 20 million ozs of gold per day on a net basis which is 22 billion dollars. That’s 5.4 Trillion dollars per year. That is half the size of the US economy. If you take the gross amount it is about one and a half times the US economy; that is not trading 100% backed metal; it’s trading on a fractional reserve basis." Again, an exceedingly misleading statistic. If I bought the gold yesterday for $1,200 an ounce and sold it to someone else for $1,250 today, $2,450 in gold was traded between the days. This does not mean that you need $2,450 worth of gold, only that bars worth that amount traded hands. The amount of money that changed hands with $2,450 in volume, in these two transactions, was only $50.
If the difference in price on the 20 million ounces traded each day is $10 for the day, that's $200 million actually changing hands, even though the value of the gold bars being passed around is substantially higher. If that were a daily average, we'd only be talking about $73 billion actually changing hands.
Accordingly, this data does not support the idea that the London market is engaged in fractional reserve trading.
The contract is for physical delivery. You haven't provided any evidence that there never is any physical delivery.
Obviously there is no physical delivery when that particular gold futures contract is traded, because what you're trading is the right to take delivery of the specified amount of gold. Delivery only takes place at the end. The fact that a contract is traded 1,000 times before delivery is irrelevant.
Harrekin
Well-Known Member
Delivery NEVER FUCKING HAPPENS!
Are you really so thick that you can't understand simple words?
Sure, you seem to have a vague understand of how it's SUPPOSED to happen, yet can't comprehend that it doesn't.
Riddle me this, Captain Genius...define a "rollover" in this context and why necessity brought it about ?
Think about it now...
You MUST have a minimum of 1000 contracts in order to invoke a physical delivery.
one gold contract = one 100 troy oz banker bar.
Gold can only be delivered to you in physical form if you are a licensed depository, otherwise its cash settlement only. Thems is the rules.
http://www.cmegroup.com/rulebook/NYMEX/1a/113.pdf
No one is getting physical.
Here is a picture of people lined up to buy gold, this was a couple of weeks ago. China, jewelry stores.
Supply and Demand have nothing to do with pricing anymore, those tenets of economy only work in a free market. We haven't had a free market for quite some time.
You are correct, Tokenprep is wrong, but will not admit it. never will, too much pride and an Ego that barely lets his head fit through doorways.
I understand your words. Now prove them. I'm not just going to take your word for it--that would make me a moron.
"Rollover" isn't a word appearing in the CME gold delivery procedure, so why don't you tell me?
Where is that rule? I understand the contract size.
Except that's not what those rules actually say: "Gold may be delivered in fulfillment of an Exchange contract for gold only from a Licensed Depository." Similarly, there is no procedure for cash settlement in this rule. The only reference to "payment" is this unrelated reference: "The Clearing Member to whom delivery is made shall at once make payment to the member making delivery by the electronic transfer of federal funds ("payment"). Payment shall be made upon the basis of the weight as certified in the weight certificate for the lot and the fineness of such gold up to 9999 fine as stamped on the bar."
So where is your cash settlement rule coming from, then?
You just blatantly distorted the settlement rule, and you're going to tell me I'm the one who's wrong? The settlement rule doesn't even mention cash settlement.
Harrekin
Well-Known Member
Settlement happens before the cert even matures.
Are you sure you know how this works?
Oh? Where does the settlement procedure say that?
I'm asking you for links because the contract I looked at--the one you said had no physical settlement--doesn't even provide for anything else.