Friday, July 12, 2013

Paper Vs. Physical Gold: Picturing The COMEX/SGE Divide

http://www.zerohedge.com/news/2013-07-11/paper-vs-physical-gold-picturing-comexsge-divide

Chinese gold demand, from both individuals and central banks, garnered increasing attention as the gold price rose consistently in the last twelve years. When the gold price declined, many in the West declared the end of gold, but China (along with many other Asian nations) defiantly continued to buy gold and increase their imports.
Questions over the legitimacy and transparency of COMEX and the London Gold markets are now becoming louder, especially as increasing numbers of institutions are keen to know what actually backs those contracts. ‘Paper gold’ is on everyone’s lips.
When it comes to the SGE, there seems to be little concern over the presence of physical gold, given the increasing volumes of activity in the three largest contracts, two of which are available for immediate delivery. Delivery ratios are significantly higher than those on COMEX, showing the far higher of physical participation in this market.

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