tag:blogger.com,1999:blog-6089228851855763774.post7329296269574164407..comments2024-02-05T17:24:09.663+08:00Comments on Gold Chat: How Eastern Gold Demand Is Transforming The Gold MarketBron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-6089228851855763774.post-36820131435977064422014-07-23T11:35:58.964+08:002014-07-23T11:35:58.964+08:00CME has penalties as well, they are not black and ...CME has penalties as well, they are not black and white but i do not recall a single instance of failure to deliver (but i have only been paying attention a handful of years)mikeyj80noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-88740522997927194732014-07-23T11:30:40.427+08:002014-07-23T11:30:40.427+08:00That is Kid's point, one will be able to buy b...That is Kid's point, one will be able to buy back their contract so no there isn't really a forced requirement to deliver.<br /><br />However, the lack of a significant penalty for not delivering allows for gaming, eg a short finds that the cost of closing out is high as longs aren't puking themselves so they strategically default. At 10% penalty that is unlikely to happen on the SGX.Bron Sucheckihttps://www.blogger.com/profile/00530576934994289879noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-66407410528751918162014-07-23T10:34:56.579+08:002014-07-23T10:34:56.579+08:00Bron, is there really a requirement to deliver in ...Bron, is there really a requirement to deliver in the sgx contract, meaning if I sell I have to deliver, i can't just buy my position back? That is not how i read the sgx rules.<br /><br />mikeyj80noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-76259835664975678692014-07-18T09:45:10.571+08:002014-07-18T09:45:10.571+08:00KD,
My brief notes probably didn't reflect th...KD,<br /><br />My brief notes probably didn't reflect the statement correctly, it was as fallingman said, contrasting to physical gold.<br /><br />Fair points re futures, seems I got a bit carried away there with goldbug hype myself - it will be interesting to see exactly how much of the SGX kilobar IO actually physically settles rather than be closed out. <br /><br />I would note the fact that the seven SGC contracts only go out to 1 week makes this a much more "physical" contact than Comex.<br /><br />I am still not entirely comfortable with such a low amount of actual physical trading, shouldn't there be a bit more balance between specs and actual users? I know a lot of legitimate industry users just use futures as a hedge and close out, but I'd still expect a lot more than a few percent physical delivery going on.<br /><br />I'm not aware of CME's rules on failure to deliver physical but doubt there is a 10% penalty. It may actually turn out with SGX that such a heavy penalty results in different dynamics around expiry. Will be one to watch.<br />Bron Sucheckihttps://www.blogger.com/profile/00530576934994289879noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-73947988251607496332014-07-17T22:26:47.477+08:002014-07-17T22:26:47.477+08:00I think you misunderstood what he meant,which is u...I think you misunderstood what he meant,which is understandable given the guy is a Chinese speaker and the statement is ambiguous.<br /><br />I'm pretty sure he meant that lending dollars isn't safe, but OWNING gold is.fallingmannoreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-6655508632770093502014-07-17T19:47:31.809+08:002014-07-17T19:47:31.809+08:00"no matter who you lend your dollars to it is..."no matter who you lend your dollars to it is not safe; not the same with gold"<br /><br />what does this mean? if you lend your gold out you have the same risk as if you lend out anything else...<br /><br />and it doesn't matter what % of the CME contracts are physically settled - it matters that the default is physical settlement. if they were cash settled, there would be no mechanism by which they would bear any resemblance to the price of gold. as they are currently - physically settled contracts, regardless of the fact that trading volume and open interest dwarf physical settlement - the price is arbed out vs global gold at all times.Kid Dynamitehttps://www.blogger.com/profile/17475987512856310577noreply@blogger.com