Tag - Derivatives

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Thursday, February 23 2017

London Metal Exchange cuts deal with banks to propel gold futures

The London Metal Exchange has reached a 50:50 revenue-sharing deal with a company founded by a group of banks to promote trade in its new gold futures contracts, sources said, aiming to overcome market scepticism surrounding their launch in June.

Usually, exchanges merely consult potential users about their needs when planning new financial and commodity contracts. But in this case, the LME has opted for a radical departure from normal practice as it tries to grab a piece of London's $5 trillion-a-year gold market.

Sources close to the matter told Reuters that the five banks and a proprietary trader which are shareholders in the new company have undertaken to bring guaranteed minimum levels of trade in the gold futures.

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Wednesday, February 8 2017

Lukewarm start for new London Gold Futures Contracts

The second half of 2016 saw announcements by three exchange providers for plans to compete in the London Gold Market through offerings of exchange-traded London gold futures contracts.

With neither the CME nor the ICE gold futures contracts registering any trades as of yet (according to their websites), it will be interesting to see how this drama pans out. Will they be dud contracts, like so many gold futures contracts before them that have gone to the gold futures contracts graveyard, or will they see a pick up in activity? All eyes will also be on the LME contract from 5 June onwards.

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Monday, January 30 2017

Gold COMEX Trading Popularity on the Rise Compared to OTC

Based on GFMS calculations, Over the Counter (OTC) transactions nudged up slightly in 2016, but in general remain in a sideways trend when considered over the last decade. Gold trading on COMEX on the other hand has gained considerable traction over the years, jumping last year by 38% to represent almost one third of annual OTC trading activity; its highest on record.

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Monday, January 23 2017

LME's pitch for share of gold market faces bumpy ride

Fears of inflexibility and rising costs are sapping enthusiasm for the London Metal Exchange's new suite of gold contracts, potentially leaving the exchange reliant on the threat of an increasing regulatory burden to drive uptake.

LME brokers say the specifications are restrictive and the contracts, though physically deliverable, appear to be designed for finance professionals and not the physical market.

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Thursday, January 5 2017

CME Group average daily metals trading volume up 34% in 2016

For the quarter, gold futures and options average daily volume was up 51% year on year to 279,000 contracts, while silver futures and options average daily volume was up 45% to 80,000 contracts, CME said.

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Tuesday, September 20 2016

CME - New Contract Listings

Initial Listing of Gold/Silver Ratio Futures, Gold/Platinum Spread Futures and Platinum/Palladium Spread Futures Contracts

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Tuesday, July 12 2016

Gold miners expand hedge book by another 50 tonnes in first quarter

In their quarterly Global Hedge Book Analysis, Societe Generale and GFMS analysts at Thomson Reuters said the global hedge book total stood at 270 tonnes at the end of March.

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Tuesday, September 15 2015

LME to initiate gold and silver trading contracts

London Metal Exchange (LME) plans to initiate gold and silver trading contracts on its trading platform in 2016, reports say. The LME noted that it is considering beginning trading in the precious metals for the first time, and introduce new way to attract more traders, reports add. It noted it has the support of its strong clearing house and technology towards the new contracts and is in talks with the London Bullion market for a 2016 launch, reports add.

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Tuesday, August 4 2015

Comex On The Edge? Paper Gold "Dilution" Hits A Record 124 For Every Ounce Of Physical

While on its own, gold open interest - which merely represents the total potential claims on gold if exercised - is hardly exciting, as we have shown previously it has to be observed in conjunction with the physical gold that "backs" such potential delivery requests, also known as the "coverage ratio" of deliverable gold.

It is here that things get a little out of hand, because as the chart below shows, all else equal, the 43.5 million ounces of gold open interest and the record low 351,519 ounces of registered gold imply that as of Friday's close there was a whopping 123.8 ounces in potential paper claims to every ounces of physical gold.

This is an all time record high, and surpasses the previous period record seen in January 2014 following the JPM gold vault liquidation.

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Saturday, August 1 2015

The Gross Mispricing in the Gold Market Risks the Global Financial System - A Fraud Too Far

A paper exchange cannot default when cash settlement in paper can be enforced. Rather, I am talking about a 'break in confidence' that finally persuades the rest of the world that the Anglo-American financial markets are a long con. Let's call it 'a fraud too far.'

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Saturday, May 30 2015

Currency Wars, Gold Pools, and Comex Potential Claims Per Deliverable Ounce

Clearly the paper markets, involving associated trades in ETFs, mining company stocks, derivatives, and so forth are much broader than the futures market alone. But the futures market is what one might call the locus of execution for our drama.

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Thursday, May 14 2015

Comex Gold Rises To A Near Record 107.7 Claims Per Registered Ounce

As you may have noticed from my postings of the Comex Warehouse Gold inventories, lately there has been a significant drop in the level of 'registered' or deliverable gold held there. And since the open interest or number of contract held by punters and investors is not dropping commensurately, the number of claims per deliverable ounce has risen. Quite a bit actually.

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Monday, October 27 2014

Futures markets keep precious metals prices depressed

The premise, according to Murrell, is as follows: “The West (America & Europe) produces very little of the commodities that they need and consume, but have managed to more than compensate for this by having both a printing press (to print trillions of paper dollars on demand) and a futures market with which they can set the price of the commodities that they want, in the currencies that they print.

“On the other hand the producing countries, which actually own the resources, are forced to sell their commodities to the West at the prices – and on the terms – dictated by the futures markets. In other words, since the inception of futures markets in the West, the poor producing countries have been forced to sell their scarce and valuable commodities in exchange for the West’s freshly printed paper.”

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Thursday, October 23 2014

Gold miners' outstanding forward sales jump 61 pct in Q2

In their quarterly Global Hedge Book Analysis, released on Wednesday, Societe Generale and GFMS analysts at Thomson Reuters said they are predicting net hedging for the year of 40 tonnes, the most since 1999.

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Wednesday, October 22 2014

Top bullion consumer China works on first gold forwards, options

The Shanghai Gold Exchange (SGE) is working on plans for China's first forwards and options in gold, sources say, potentially putting China ahead in the race to set an Asian pricing benchmark that might eventually rival the London gold fix.

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Wednesday, October 8 2014

Banks rewrite derivatives rules to cope with future crisis

The world’s biggest banks have agreed to tear up the rule book on derivatives to make it easier to resolve a future failing institution like Lehman Brothers.

People familiar with the matter said 18 bank “dealers”, ranging from Credit Suisse to Goldman Sachs, have agreed to give up the right to pull the plug on derivatives contracts with a crisis-stricken institution.

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Thursday, October 2 2014

Deleveraging, What Deleveraging?

The world has not yet begun to deleverage its crisis-linked borrowing. Global debt-to-GDP is breaking new highs in ways that hinder recovery in mature economies and threaten new crisis in emerging nations – especially China. This column introduces the latest Geneva Report on the World Economy. It argues that the policy path to less volatile debt dynamics is a narrow one, and it is already clear that developed economies must expect prolonged low growth or another crisis along the way.

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Friday, September 26 2014

5 U.S. Banks Each Have More Than 40 Trillion Dollars In Exposure To Derivatives

When is the U.S. banking system going to crash? I can sum it up in three words. Watch the derivatives. It used to be only four, but now there are five "too big to fail" banks in the United States that each have more than 40 trillion dollars in exposure to derivatives.

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Wednesday, July 23 2014

Credit Suisse to wind down commodities trading

Credit Suisse said on Tuesday it was winding down its commodities trading to focus its resources on more profitable areas of its business.

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Monday, July 7 2014

Gold market to return to net hedging in 2014

Gold producers will return to net hedging for the first time since 2011 this year, GFMS analysts at Thomson Reuters said on Friday, after Polyus Gold this week announced a two-year progamme to sell gold forward.

Hedging, or selling future gold production, allows miners of the metal to lock in prices for their output. While it can protect producers when prices are falling, it can also stop them capitalising on a rising market.

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