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.
To be sure, the contract specifications of the new HKEX contracts
leave the door open to a limited degree of manipulation. But at the end
of the day the physical settlement requirement and position limits
greatly reduce the ability to conduct price control via naked contract
shorting such as that permitted on the Comex and tacitly endorsed by the
Commodity Futures Trading Commission.
You can read about the new HKEX contract here –HKEX Physically Settled Contract– and there’s a link at the bottom of that article with the preliminary term sheet.
Will this new contract help moderate the blatant price manipulation
in the gold market by the western banking cartel? Maybe not on a
stand-alone. But several developments occurring in the eastern
hemisphere – as discussed in today’s episode of the Shadow of Truth –
and among the emerging bloc of eastern super-powers will begin to close
the window the ability of the west’s efforts to prevent the price of
gold from transmitting the truth about the decline of the U.S. dollar’s
reserve status and the rise of geopolitical instability:
Rory Hall, Editor-in-Chief of The Daily Coin, has written over 700 articles and produced more than 200 videos about the precious metals market, economic and monetary policies as well as geopolitical events since 1987. His articles have been published by Zerohedge, SHTFPlan, Sprott Money, GoldSilver and Silver Doctors, SGTReport, just to name a few. Rory has contributed daily to SGTReport since 2012. He has interviewed experts such as Dr. Paul Craig Roberts, Dr. Marc Faber, Eric Sprott, Gerald Celente and Peter Schiff, to name but a few. Visit The Daily Coin website and The Daily Coin YouTube channels to enjoy original and some of the best economic, precious metals, geopolitical and preparedness news from around the world.
Dave Kranzler spent many years working in various Wall Street jobs. After business school, he traded junk bonds for a large bank. He has an MBA from the University of Chicago, with a concentration in accounting and finance, and graduated Oberlin College with majors in Economics and English. Dave has nearly thirty years of experience in studying, researching, analyzing and investing in the financial markets. Currently he co-manages a precious metals and mining stock investment fund in Denver and publishes the Mining Stock and Short Seller Journals. Contact Dave at firstname.lastname@example.org.
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