As Kid Dynamite comments in a FT Alphaville article on Maguire “a 10 ounce contract is worth well more than the average annual income in China, right? There was a stat recently that 40% of Americans couldn’t come up with $2k if they needed it for emergency bills… I wonder what % of Chinese can afford to buy 10 ounces worth of gold?” I tend to agree. While it is always positive to have more ways people can buy gold, if you think that “this new gold and silver exchange has flown under the radar” of the big short players like Andrew does, then you are severely underestimating them, at your cost.
It reminds me of the hype that circulated some time back about the new vault in Hong Kong (by the way, what happened to all that metal was that clients were supposedly going to pull out of London and move to Asia, bringing down the LBMA?) Anyway, the impression (meme?) given by that story and the spin on PAGE is that there are few exchanges/markets around the world apart from the “fake” COMEX and London. Certainly, the story is that there are few places where “real” prices for physical metal can be found. In respect of that, you may find this list of gold markets from Sharelynx a useful reality check:
US- New York Open Outcry; Electronic Trading CME
UK- London LBMA
China – Shanghai SGE; SHFE
Hong Kong CGSE; HKEX; HKMEX
India – Mumbai NCDEX; MCX; NMCE
Indonesia – Jakarta JFX; ICDX
Japan – Tokyo TOCOM
Pakistan – Islamabad NCEL
Turkey – Istanbul IGE
United Arab Emirates – Dubai DGCX
Europe EUREX
Nepal – Kathmandu MEX
Russia – Moscow RTS
Singapore SICOM
South Africa – Johannesburg JSE
Taiwan – Taipei TAIFEX
Thailand – Bangkok TFEX
Brazil BMF
Between these, the 25+ ETFs that Sharelynx also tracks daily, and retail bullion dealers, I’d say it isn’t too difficult for investors to buy gold these days. China certainly hasn’t had access to these methods of buying gold to-date, but by the amount of physical metal we’ve seen being shipped into China over the past few years, I don’t think Chinese investors (savers, more like) have had any problems getting all the gold they need.
“As Kid Dynamite comments in a FT Alphaville article on Maguire “a 10 ounce contract is worth well more than the average annual income in China, right?”
Well, this may sound like a reasonable argument on the face of it –except that 1% doesn’t really implicate “the average annual income” at all now, does it… To the top 1 to 3% –as everywhere else on the planet– a 10 ounce contract for gold or a 500 ounce contract for silver are entirely sensible investment options. This is particularly the case since the platform will be offered as already integrated with each person’s bank account.
I, myself bear in mind that Maguire has proved himself a highly credible whistleblower to the inner workings of the bullion market during the CFTC hearing’s last year –in addition to his 40 years of experience in the field of bullion trading and employment with Goldman Sacks. Labeling his current remarks as ‘hype,’ and quoting “kid dynamite” of all people, may be just a tad bit rash, don’t you think?
If only we could know how much real metal moves through each exchange!
“It reminds me of the hype that circulated some time back about the new vault in Hong Kong (by the way, what happened to all that metal was that clients were supposedly going to pull out of London and move to Asia, bringing down the LBMA?)”
I’ll tell you what happened. All that metal WAS pulled out, as verified by their current practices. This is a case of a surreptitious default masked by cash payments, wherein BOTH the LBMA and the COMEX have been forced to offer cash in lieu of physical delivery with enormous “premiums.” The minimum I’ve heard offered has been 125% of the contract value to buy off requests for delivery. Naturally, this has ironically become a “gold mine” for traders with clout, but hey, that’s the price of moral hazard…
Lore’s remark above is relevant to this. However, knowing how much metal is moving through each exchange is not nearly as important as knowing that the futures market is leveraged more than 100:1 –meaning they’ve sold 100 times more silver than actually exists. Think on this: It means that actual demand is 100 times greater than the physical supply!
This fraudulent fractional reserve selling of precious metals has of course worked as long as no one took physical delivery, but now that game is up. Soon though, the LBMA will have no stock left whatsoever and at that point a huge difference between the paper (spot) price and the actual price of silver will emerge. This is the primary implication of course, of the new Pan Asian Exchange. It will re-establishment the correct balance between supply and demand! So I’m telling you friend, you sure as hell better have some metal in your hands on THAT day.
And stop reading “kid dynamite” for crisssake
As I heard my father tell my mother one day, “Mabel, you’re going to hurt your brain!”