|
Perhaps I am behind the times and this has already been discussed. If not, here goes. I take the following quote from an article posted at CMI Gold and Silver, articles of interest section. I received it by email.
All I can say is, physical of any quantity must be getting tight, and that the exchanges are preparing to keep operating no matter what the financial environment is. Of course, settling gold contracts with shares of GLD where GLD may not have the gold and/or does not have to deliver gold if it doesn't want to, simply means you ain't gettin yer gold. Ever. Period.
-HLS
What is the U.S. Government Hiding?
by Patrick Heller
July 13, 2009
"Adrian Douglas, a professional commodity analyst and member of the Board of Directors of the Gold Anti-Trust Action Committee (GATA), published an analysis Saturday revealing his discovery why the COMEX gold market reports on trading activity and the movement of metals were not making sense. In addition to being able to settle COMEX contracts by either delivering physical metal or paying cash, a gold contract can be settled by "substantially the economic equivalent" of gold. What has happened is that many COMEX gold contracts are being settled with shares of gold exchange-traded funds (ETFs). In theory, these ETFs own physical gold covering all of the outstanding shares, typically 1/10th ounce of gold per share. However, there are so many loopholes in the ETF contracts that allow the managers of the fund to effectively hold paper contracts rather than physical metal that there is significant doubt that the ETF could deliver gold to redeem outstanding shares. The rules of the COMEX silver market do not (yet) allow contracts to be settled with ETF shares.
"This strategy of delivering "potentially paper gold" to satisfy contracts requiring delivery of physical gold has now been adopted by the Tokyo Commodity Exchange and Tokyo Stock Exchange."
|
Login
Register
FAQ
Search
