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Is China Intentionally Making It Harder To Manipulate Gold? – Rory Hall/Dave Kranzler

  • Is China Intentionally Making It Harder To Manipulate Gold? – Rory Hall/Dave Kranzler
    by Rory Hall/Dave Kranzler, https://www.sprottmoney.com/
    A new gold futures contract is being introduced by the Hong Kong Futures Exchange (two contracts actually). The two contracts will be physically settled $US and CNH (offshore renminbi) gold futures contracts. The key to this contract is that it requires physical settlement of the underlying gold, which is a 1 kilo gold bar.

    The difference between this contract and the Comex gold futures contract is that Comex contract allows cash (dollar aka fiat currency) settlement. The Comex does not require physical settlement. In fact, there are provisions in the Comex contract that enable the short-side of the trade to settle in cash or GLD shares even if the long-side demands physical gold as settlement.

    With the new HKEX contract, any entity that is long or short a contract on the day before the last trading day has to unwind their position if they have not demonstrated physical settlement capability.

    The new contract also carries position limits. For the spot month, any one entity can not hold more than a 10,000 contract long/short position. In all other months, the limit is 20,000 contracts. A limit like this on the Comex would pre-empt the ability of the bullion banks to manipulate the price of gold using the fraudulent paper gold contracts printed by the Comex. It would also force a closer alignment between the open interest in Comex gold/silver contracts and the amount of gold/silver reported as available for delivery on the Comex.

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May 18, 2017 - Posted by | Economics, GeoPolitics | , , , , , , , , ,

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