by Dave Kranzler of Investment Research Dynamics
The CME/LBMA latest paper derivative product – the Accumulated Certificate of Exchange aka “4GC” – is failing. Badly. After its introduction last week there has been zero trade activity in the contract: 4GC Settlement data. The contract fabricates a paper claim on 25% of an LBMA 400 oz bar for Comex participants seeking delivery of the 100 oz Comex bar. It’s an attempt to transfer LBMA gold in fractional derivative form to the Comex. The contract is an absolute farce, a fact confirmed by complete lack of interest in it from the market.
The effort by the western Central Banks in conjunction with the bullion banks to keep a lid on the price of gold is failing. It’s not the first time (see The London Gold Pool collapse). This failure is reflected in the historic spread between the spot price of gold as determined twice a day on the LBMA and the Comex gold futures curve.
Chris Marcus and I discuss the causes and implications of this market signal in our weekly conversation: