QUOTE(GoldChan @ Dec 12 2011, 10:14 PM)
1. from legal point of view, you need to look at the contract for gold saving a/c. in most if not all occasion, it is unavailable for common people lah.
2. it is clearly stated in the term and condition that there may be some losses if U invest in gold.
3. default scenario.
1. U buy for Bank XXX in malaysia.
Bank XXX hedge the paper gold with Trader YYY at COMEX.
Trader YYY at COMEX screw up, cannot deliver the paper gold to Bank XXX.
How does Bank XXX going to pay U? put the blame on Trader YYY.
so nothing to do with Bank XXX reputation etc, it all has to do with the contract signed between Bank XXX and trader YYY.
2. U buy for Bank XXX in malaysia.
Bank XXX hedge the paper gold with BAnk YYY at COMEX.
bank YYY at COMEX screw up, cannot deliver the paper gold to Bank XXX.
Bank YYY will continue to print $$$ to pay Bank XXX lah.
then, U may see this announcement in the future.
a) to prevent manipulation, market loss to exchange etcc... spread of paper has to be higher.
then come a day, due to current scenario, we have to stop trading on Monday. Price is USD3000/oz
settlement price will be based on Monday.
then they will background print more $$$ then pay U USD3000/oz. irregardless on when U redeem it.
then when U get the USD3000. price of physical on Tuesday is USD4000/oz then on Friday it USD6000/oz
but U still have USD3000/- 1/2 of your $ is robbed.
to prevent all this scenario, get the real physical then nobody can steal it from U lah.
1) Yes, this can occur, defaulted.
But, this scenario, mostly Bank will suck up the loss incurred. Gold deposit is just small portion of entire bank liabilities.
No bank want to default paper gold obligation that screw up the entire bank trust. Bank can exist and survive based on trust. No trust no bank.
It can cause "bank run".
2) This scenario will not affect the paper gold investor, more money printed, paper gold price shoot up further.
Forget that physical gold price is based on paper gold?
Gold quoted is based on or use gold futures as benchmark.
Physical gold exchange based on how much paper gold is.
Paper gold, yes, it has its risk associated with banks.
Yes, I can understand why some prefer physical,
but physical risk can be greater than paper gold for some or for some scenario/situation (especially in term of theft and fake/purity issue, as not all people know how to verify purity of gold, especially those buy a few ten up to hundred gram one).
Also majority people bought gold to earn money from it, spread can be the key.
Paper gold stop trading due to market loss to exchange, to prevent manipulation? Paper gold has been trading for decades long, want to stop manipulation, just simply increase margin for it, you see gold price plunge straight away, ain't we see last time when COMEX raise margin, straight away plunge a few ten USD.
When COMEX price plunge, so does physical valuation out there.
Dec 13 2011, 10:45 AM
Quote
0.0273sec
0.26
6 queries
GZIP Disabled