0
   

Did the ECB Save COMEX from Gold Default?

 
 
Reply Thu 2 Apr, 2009 01:54 pm
Did the ECB Save COMEX from Gold Default?

April 02, 2009

On Tuesday morning, gold derivatives dealers, who had sold short in the face of a fast rising gold price, faced a serious predicament. Some 27,000 + contracts, representing about 15% of the April COMEX gold futures contracts remained open. Technically, short sellers are required to give “notice” of delivery to long buyers. However, in reality, buyers are the ones who control the amount of gold to be delivered. They “demand” delivery of physical gold by holding futures contracts past the expiration date. This time, long buyers were demanding in droves.

In normal times, very few people do this. Only about 1% or less of gold contracts must be delivered. The lack of delivery demand allows the casino-like world of paper gold futures contracts to operate. Very few short sellers actually expect or intend to deliver real gold. They are, mostly, merely playing with paper. It was amazing, therefore, when March 30, 2009 came and passed, and so many people stood for delivery, refusing to part with their long gold futures positions.

On Tuesday, March 31st, Deutsche Bank (DB) amazed everyone even more, by delivering a massive 850,000 ounces, or 850 contracts worth of the yellow metal. By the close of business, even after this massive delivery, about 15,050 April contracts, or 1.5 million ounces, still remained to be delivered. Most of these, of course, are unlikely to be the obligations of Deutsche Bank. But, the fact that this particular bank turned out to be one of the biggest short sellers of gold, is a surprise. Most people presumed that the big COMEX gold short sellers are HSBC (HBC) and/or JP Morgan Chase (JPM). That may be true. However, it is abundantly clear that they are not the only game in town.

Closely connected institutions, it seems, do not have to worry about acting irresponsibly, in taking on more obligations than they can fulfill. Mysteriously, on the very same day that gold was due to be delivered to COMEX long buyers, at almost the very same moment that Deutsche Bank was giving notice of its deliveries, the ECB happened to have “sold” 35.5 tons, or a total of 1,141,351 ounces of gold, on March 31, 2009. Convenient, isn’t it? Deutsche Bank had to deliver 850,000 ounces of physical gold on that day, and miraculously, the gold appeared out of nowhere.

Continue to read:
http://seekingalpha.com/article/129128-did-the-ecb-save-comex-from-gold-default
  • Topic Stats
  • Top Replies
  • Link to this Topic
Type: Discussion • Score: 0 • Views: 922 • Replies: 0
No top replies

 
 

Related Topics

Obama '08? - Discussion by sozobe
Let's get rid of the Electoral College - Discussion by Robert Gentel
McCain's VP: - Discussion by Cycloptichorn
The 2008 Democrat Convention - Discussion by Lash
McCain is blowing his election chances. - Discussion by McGentrix
Snowdon is a dummy - Discussion by cicerone imposter
Food Stamp Turkeys - Discussion by H2O MAN
TEA PARTY TO AMERICA: NOW WHAT?! - Discussion by farmerman
 
  1. Forums
  2. » Did the ECB Save COMEX from Gold Default?
Copyright © 2025 MadLab, LLC :: Terms of Service :: Privacy Policy :: Page generated in 0.03 seconds on 04/30/2025 at 07:06:37