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  #111  
Old 23-02-2008, 07:15 PM
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aurictaurus aurictaurus is offline
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Originally Posted by pupshock View Post
GB5k
i dont think it will necessarily work out that way. Its called liquidity risk.
http://en.wikipedia.org/wiki/Liquidity_risk
in that situation the market will not clear, the asset cannot be priced,
the Clearing house will close the market. Disaster for all.

But long before this, the Clearing House will post higher margin rquirements
to unblock the situation, the price will fall, the market gets going again.
Remember what happened ~Jan06 with the japanese gold market?

Good to remind everyone to include the probability of liquidity risk calculation
into one's overall risk management.
Hi Pupshock,

"Higher margin requirements" is the kind of wringer Nelson and Bunker Hunt got their nuts caught in when they tried to corner silver all those years ago. It surely can clear a market and get it moving again, but what about the non-margined OTC market?

What about over the counter trades? Nobody knows exactly how much gold clears in the LBMA each day - the participants only report net positions, not volume. It might be far in excess of the major exchanges and not directly affected by margin requirements?

The suspicion is that COMEX would always adjust long margins to the advantage of the shorts if a liquidity crisis began to unfold and threaten morph into a delivery default crisis. I imagine the uncertainty alone would torpedo the futures market and gold lease rates.

The LBMA market is real gold, full chain-of-integrity London Good Delivery physical, any margin in this market is in the initial financing to participate, not in the vault itself. The COMEX pm is a mixture of real and imaginary money and metal, with everyone wringing the last 0.00001% arbitrage from whatever leverage they can get.

So yes, COMEX and TOCOM could rejig their margins to keep their markets moving. If this was done in such a way that the (allegedly) naked shorts were bailed out from their folly, there may develop a widespread perception of exchange delivery default risk.

I believe that there may in future be a risk premium differential between NY Spot and London fix to reflect the divergent risks of a bird in the hand vs two in the bush. At that time custodial title to numbered bars on no margin will be immune to margin calls on promissory notes for future delivery.
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  #112  
Old 24-02-2008, 01:06 AM
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Originally Posted by aurictaurus View Post
what about the non-margined OTC market?.....
Nobody knows exactly how much gold clears in the LBMA each day - the participants only report net positions, not volume. It might be far in excess of the major exchanges and not directly affected by margin requirements?


LBMA statistics might not have full transparency for you & me,
but some people do know. Eddie George certainly knew:
"We looked into the abyss if the gold price rose further. A further
rise would have taken down one or several trading houses, which might
have taken down all the rest in their wake."

In other words, if the LBMA does not clear, the Central Banks
will step in to save all of us. After that, I am sure they will
take some participants into a room for a good spanking.
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  #113  
Old 24-02-2008, 11:11 AM
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aurictaurus aurictaurus is offline
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Quote:
Originally Posted by pupshock View Post
LBMA statistics might not have full transparency for you & me,
but some people do know. Eddie George certainly knew:
"We looked into the abyss if the gold price rose further. A further
rise would have taken down one or several trading houses, which might
have taken down all the rest in their wake."

In other words, if the LBMA does not clear, the Central Banks
will step in to save all of us. After that, I am sure they will
take some participants into a room for a good spanking.
Yup, I'm sure "Steady Eddie" regretted being quoted about 'staring into the abyss' - it certainly lent weight to those who believe gold markets are manipulated by central banks.

I don't see how the LBMA could not clear - the gold is already there. AFAIK there is no such thing as a LBMA derivative, short sale, or futures contract. Much more likely is a default risk, (or the perception of a possible default risk) at COMEX as the naked shorts get squeezed and offer cash settlements.
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  #114  
Old 24-02-2008, 12:01 PM
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Quote:
Originally Posted by aurictaurus View Post
I don't see how the LBMA could not clear - the gold is already there. AFAIK there is no such thing as a LBMA derivative, short sale, or futures contract. Much more likely is a default risk, (or the perception of a possible default risk) at COMEX as the naked shorts get squeezed and offer cash settlements.

LBMA is where the Central Banks, Bullion Banks, producers, do their gold
swap, loans, & carry trades. The risk is counterparty default. ie the gold
is not there when it is needed.
Most all of the trades that go on are settled in cash, or electronically
between the clearing banks' accounts. you wont see security trucks
moving back & forth.



.
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  #115  
Old 24-02-2008, 04:14 PM
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Quote:
Originally Posted by pupshock View Post
LBMA is where the Central Banks, Bullion Banks, producers, do their gold
swap, loans, & carry trades. The risk is counterparty default. ie the gold
is not there when it is needed.
Most all of the trades that go on are settled in cash, or electronically
between the clearing banks' accounts. you wont see security trucks
moving back & forth.



.
OK, I stand corrected. Sure, there are not so many trucks zipping about between vaults in London, but I thought they just moved pallets of bars about inside the one vault, (or switched the labels). I thought whatever else, LBMA was all about real good delivery bars, that settlement was by transfer of title of these identifiable LGD numbered gold bars, not cash, that any swaps, leasing or lending and borrowing was done outside the LBMA.

Now I find out about GOFO - the LBMA's very own futures contracts. Oy vay, if even the LBMA clearing system is obscured by derivatives, I know where to hide - gotta hold physical gold. Trust no one.
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  #116  
Old 24-02-2008, 09:29 PM
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pupshock pupshock is offline
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now that you have visited their website
you will also see they have unallocated accounts,
and the clearing statistics.
Just compare the clearing 25M ounces a _day_,
with world production 80M ounces a _year_.
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  #117  
Old 28-02-2008, 02:01 PM
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Probably one or two more buying chance before US$1000 I hope...
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  #118  
Old 28-02-2008, 04:55 PM
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amadan amadan is offline
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Cool Hi from a new guy

I first started investing in gold early last year. I told my friends and family about it and aked the to take a good look at gold as an investment vehicle. They were too polite to say much but 'looked at me one kind.' Over the rest of the year, I've been preaching about it and only managed to convert 1 person - my partner. What I'm trying to say is this, I am ecstatic to have finally found a community this side of the world with a similar passion and know so much about the yellow metal. I'm from Malaysia but nevermind, Singapore is close enough.

On bullion over here, we can only get the Kijangs nuggets and maples. Last time I checked, the S'pore lions have not been available for the past 4 years and have not seen eagles anywhere.

If you have information on dealers with a larger selection of bullion coins, I would be grateful for the information. Anyway, it's great reading the postings and see you at 1,000.
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  #119  
Old 28-02-2008, 05:30 PM
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GoldBull5000 GoldBull5000 is offline
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Default Welcome to the forum!

great to have a new forum member from Malaysia! This gold bull market is a generational global bull. Your family will be converted in time! Wait for $2K/oz to happen and they will all beg you to teach them how to buy gold.

If you can convince your partner to convert all your assets into gold and silver, that would make a big difference in your financial future.
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  #120  
Old 28-02-2008, 08:39 PM
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et2cetera et2cetera is offline
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Quote:
Originally Posted by amadan View Post
I... I'm from Malaysia but nevermind, Singapore is close enough.

... see you at 1,000.
Welcome, welcome to this lil' fraternity. The more the merrier. Since S'pore is close enough, why not join us for the 1K party
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