According To World Bank Statistics

According To World Bank Statistics

According To World Bank Statistics

Copyright © 2024 by Janice Fordyce

All rights reserved

TABLE OF CONTENTS

CHAPTER 1 : MARKET CREATORS

CHAPTER 2 : The Wise Man is not a negotiator.

CHAPTER 3 : The expansion of interstate

CHAPTER 4 : Mexico was forced to reduce government subsidies for

CHAPTER 5 : We had to improve our software to

CHAPTER 1 : MARKET CREATORS

Market-making members of the London market recognized by the LBMA are:

• Bank of Nova Scotia-CcotiaMocatta

• Barclays Bank PLC

• Bear Stearns Forex Inc.

• Deutsche Bank AG

• Goldman Sachs International

• HSBC Bank USA NA

• JP Morgan Chase Bank

• Mitsui & Co. Precious Metals Inc., London Branch

• Royal Bank Canada Limited

• Société Générale

• UBS AG

So just 11 names make up the bulk of the London market; the list also includes Bear Stearns, although there is little doubt that this case will have to wait much longer. This figure comes as a surprise to many people, who consider the gold market to be similar to the foreign exchange markets and in particular it is often mentioned along with the dollar, euro, yen and sterling as part of the market. mainly from central bank reserves. A few years ago, when turnover was low, daily turnover in the gold market was approximately equal to the turnover of Polish zloty or Taiwanese dollar. Now it is similar to the New Zealand or Canadian dollar. Times have changed but gold is still a relatively small market.

The Asian and American time zones have some similarities in terms of interbank market makers but there is no organization like the LBMA to codify this. The other important point in the list is that although the LBMA identifies these 11 institutions as market makers, a host of other institutions are willing to create markets for their customers but are price option recipients. (or market users) of the banks listed above.

HOW TO TRADE SPOT GOLD?

When a bank in Hong Kong trades with a bank in London, they trade on the London market. This transaction has nothing to do with where the bank is located or simply where the metal is exchanged. So for example similar to when Mitsui Busan (Hong Kong) trades with Barclays Bank (Singapore), they also trade on the London market. While I go into detail to clarify the latter concept, the simplest concept is where the accounts are settled – so gold trades on the London market in the same way that the dollar trades in the New York market and the yen trades in the Tokyo market.

The trading unit is troy ounces, not conventional measurement ounces. Common measurement ounces are the units of measurement that we are used to in everyday life while troy ounces are the units used for precious metals trading. A troy ounce is approximately 10% larger than a common measurement ounce (the exact calculation is that one troy ounce is equivalent to 1.09714 common measurement ounces). As mentioned before, whenever ounces are mentioned in connection with gold in this book, they are troy ounces.

While the LBMA refers to the minimum amount that customers trade as 1,000 ounces of gold, the interbank standard amount is 5,000 or 10,000 ounces. This basic unit is said to be the London Good Delivery standard bar – fully defined in Chapter 2, but in short is a bar weighing between 350 and 430 ounces, which is 0.995 gold (995/1,000 and so on). commonly called two nines one five). In reality, the bars vary in weight by a few ounces, around 400 ounces, and market shorthand calls for a bar to weigh exactly 400 ounces.

So when a trader trades at $975/$976, they are essentially talking at $975, they are willing to buy gold according to the specifications that LBMA proposed. However, 5,000 is not divisible by 400 and 12.5 gold bars is a difficult concept to use. It is practically impossible to have guarded trucks carrying gold speeding through the streets of London. Therefore, gold is generally traded undesignated, so the price of $975 is for an undesignated amount of 99.5% pure gold on the London market, etc. Note that that is an actual good ounce traded, because the gold you buy at $975 is the actual gold content rather than the total weight.

If you own a specified amount of gold, your statement from the custodian will detail the bar's reference number, its purity and its weight. Assuming you are allowed into the reserve, you can see your gold in its area (usually in a separate cage). However, if you own undesignated gold, your statement will simply detail the number of ounces in the account. Perhaps the best analogy is between a checking or checking account (not specified) and a safe deposit box (designated). If you put dollar bills in a safe deposit box, you know their serial numbers and they are differentiated, but if you put them in a checking account, it's a mess.

The exception to this generalization is central banks. Typically, when central banks trade (spot, futures or options), they are trading designated gold held in their accounts with the Bank of England. Since central banks and members of the LBMA are both allowed to have accounts here, it is a simple transfer from one location to another of gold bars (which have been identified and listed). However, for example, beyond the transaction level of 10,000 ounces of gold, the actual amount needs to be much more precise when it comes to the fine gold content of 25 gold bars (10,000 divided by 400), so it could be 10,006.145 ounces – gold is generally used to three decimal places.

While the normal interbank gold quantity may be 5,000 or 10,000 ounces, there are many other terms that may be used by traders and customers. Less common now, outside of gold pricing, is for someone to trade 5 or 10 gold bars (4,000 ounces is 10 400-ounce gold bars). However, it is normal to trade in tons; is given as 32,000 ounces, slightly different from the exact calculation of a cubic ton as 32,150.70 troy ounces. Similarly, a trader may be required to enter the market in terms of half tons, etc.

Therefore, the term differs very little between medieval weight, bars of gold and cubic tons (which is 1,000 kg). However, the market also often prefers to use the traditional Indian unit of measurement lakh (ten thousand, meaning 100,000). Therefore, when asked for gold in lakhs, it means someone is asking for a price for 100,000 ounces, which is the equivalent of one-half and one-fourth of ten thousand. While the official transliteration is lakh, in the market, it is often written as lac.

Therefore, depending on the circumstances, a trader may be asked for a price in ounces, gold bars, tons or lacs. This may seem difficult to use, but it quickly caught on and became widely accepted. Indeed, when it comes to the gold market, it is almost incomprehensible that someone can ask for a price in two hundred thousand ounces but it is very normal to have a request for a price in two lacs.

To clarify a point mentioned earlier, I note that on the OTC markets, this price is for one ounce of pure gold. Theoretically, if you pay $975 for an ounce of gold, the specific weight will be one ounce more for impurities. Another way to look at this is that if you buy a gold bar with a weight of 401.213 and a gold age of 0.9957, you will actually receive 499.488 ounces of gold, and the cost will be this weight multiplied by the spot rate. .

CREDITIAL

Through having 11 spot market makers in London, the largest global concentration, indeed, any price claim for a quantity of more than 50,000 ounces of gold becomes significant, the house said. The business offsets its risk by trading with 10 other entities. In reality, in today's erratic trading environment, almost any quantity can become difficult to control when prices increase rapidly. However, clients can still acquire markets that are much larger in size than the overall liquid market, and so the settlement strategies of interbank traders are enhanced by these Exchanges and limited market makers will only disclose their customer base or show efforts or make offers through brokers.

The method a trader uses to offset risk will vary, depending on the quantity being traded and the market environment. Traditionally, the only tool available to a market maker in London was to sell to other traders, as it was an OTC market. In contrast, in New York, a trader will be able to limit most of his or her risk by trading COMEX/NYMEX, and in Asia, it will be a combination of one of the local trading markets. (Tokyo Commodity Exchange or TOCOM is the largest) and direct OTC transactions with other market makers.

More recently, the advent of global photo exchanges operating approximately 24 hours has blurred such clear distinctions, so traders use a combination of OTC and exchanges for risk management - the operations of exchanges are covered in Chapter 7.

Just by outlining these methods, it is difficult to generalize even if I say that someone looking to trade a significant amount – specifically over 1 ton, over 32,000 ounces – how The simplest and/or fastest way to do this trade is on the OTC market.

In some cases, establishments want to trade at a standard price, a publicly recorded price. For the gold market, it is always London Gold Fixing (London gold pricing).

GOLD PRICE IN LONDON

By making the first gold valuation in 1919, I was able to use this as an opportunity to begin a historical perspective on mining. However, as I said in the introduction, this book does not tend to be a record of past practices except to the extent that they impact current market activity. For those who want a linear presentation, I recommend www.goldfixing.com. The longest gold valuation occurred on March 23, 1990, by a facility in the Middle East that sold a large amount of gold and bought sterling – the price of gold fell more than $20 over a period of time. 2 hours and 26 minutes long, but generally the valuation ends in about 5 to 10 minutes.

Additionally, gold pricing is conducted twice a day, at 10:30 and 15:00, London time – not GMT. Members include:

• Bank of Nova Scotia-ScotiaMocatta

• Barclays Bank PLC

• Deutsche Bank AG

• HSBC Bank USA NA

• Société Générale

While the names have changed over the years, there have always been five members, all of whom own equal shares in the company that manages the valuation, London Gold Market Fixing Ltd.

In previous years, representatives met at the London offices of NM Rothschild, which traditionally presides over these valuations. This may have worked extremely well for many of the past 90 years but as London's financial district expands, it becomes more disadvantageous for some organizations whose employees have to travel by train when they have to It took 15 minutes to get them from Canary Wharf to Rothschild's headquarters near the Bank of England.

Indeed, there is some discussion about the possibility of switching to a computer-based or telephone-based system. To some extent, progress may have been slow, but when Rothschild withdrew from the gold market in 2004 – citing a decline in the proportion of total income that commodity trading contributed to their total profits – the decision was made. intends to end the tradition of holding valuations at a specific location. Instead, it is conducted over the phone.

Barclays Bank was a newcomer to the valuation at that time, having acquired Rothschild's