Analyzing the semi-annual report on gold derivatives published by the Bank for International Settlements, Golden Sextant Internet site proprietor Reg Howe finds evidence that the gold exchange-traded fund, GLD, has replaced direct central bank gold sales and leases as a major mechanism for gold price suppression.
Howe writes:
… the design of GLD is a distinct improvement upon the [gold] carry trade as a vehicle for blunting upward pressure on gold prices from rising investment demand. Gold moves in and out of GLD in ‘baskets’ of 10,000 ounces created by ‘authorized participants.’ The list of authorized participants includes all the major bullion banks, which as noted appear free to create baskets with gold loaned or swapped to them by central banks and then to transfer those baskets to GLD in return for shares to be sold to investors.
Continue reading Reg Howe: Gold derivatives — GLD And Ass Backwardation
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Gold Derivatives: GLD and Ass Backwardation
Golden Sextant (24 May 10)
