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Equity skittishness amid the bond rout has put a bid back into gold, the metal gaining 1% and...

Equity skittishness amid the bond rout has put a bid back into gold, the metal gaining 1% and nearing $1,400/ounce again. In the meantime, Asian demand from April to June will hit a quarterly record and take up the slack from ETF sales, according to the World Gold Council. Indian gold imports are expected at 350-400 tons, up 200% Y/Y. GLD +0.8% premarket.
Comments (4)
  • I wonder where all that gold keeps on coming from. The Asians can't be pleased with paper promises, can they ?
    29 May 2013, 08:15 AM Reply Like
  • Take the time to learn all you can about the phenomenon, "Failure To Deliver". I think it will be well worth the time you spend on the subject.

     

    "Whenever a trade is made, both parties in the transaction will have to transfer the cash and assets before the settlement date. Subsequently, if the transaction is not settled, one side of the transaction has failed to deliver. Failure to deliver also can occur if there is a technical problem in the settlement process carried out by the respective clearing house.

     

    For forward contracts, a party with the short position's failure to deliver can cause significant problems for the party with the long position, because these contracts often involve significant volumes of commodities that are pertinent to long position's business operations.

     

    Failure to deliver is also important when discussing naked short selling. When naked short selling occurs an individual agrees to sell a stock that they neither own nor have borrowed. Subsequently, the failure to deliver creates what are called "phantom shares" in the market which may dilute the price of the underlying stock."
    Investopedia
    http://bit.ly/174G30g
    29 May 2013, 09:17 AM Reply Like
  • That's great and all, except for the fact that this buying "replacement" still hasn't actually caused prices to rise. Gold prices are still within a hair's distance of their 2 year-low. What does that tell you about the effectiveness of Asian buying replacing ETF demand?
    29 May 2013, 12:42 PM Reply Like
  • And we're just going to send a bunch of gold to Asia in exchange for virtual currency - yeah, right. There are only 4 options:
    1) We don't deliver.
    2) We deliver, but have master plan to get it back
    3) Gold becomes worthless and virtual money prevails
    4) The U.S. forfeits its sovereignty
    While I suppose any of the 4 could happen, 1) and 2) seem far more likely than 3) or 4).
    29 May 2013, 12:54 PM Reply Like
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