10 June 2014

Gold Daily and Silver Weekly Charts

Derivative: A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.

If collateral collected to protect against the risk of counterparty default has been rehypothecated, then it may not be readily available in the event of a default. This, in turn, may increase system interconnectedness and procyclicality, and could amplify market stresses. Therefore, when collateral is rehypothecated, it is important to understand under what circumstances and the extent to which the rehypothecation has occurred; or in other words, how long the collateral chain is.

The gold that left HSBC yesterday turned up in the storage vaults of Scotia Mocatta today.

There were no reports of deliveries or other movement in the warehouses.

The US markets, including the Comex, are almost like a showcase now I think, a kind of Potemkin village of value, a child of the corporate financial state.

Look at all the pretty bullion, see it trade. Look at the prices. But if you wish to buy some, go to Asia and be sure to take delivery.

Even with stocks, it seems to be a web of paper bets, of interconnecting obligations to deliver.  It is an exchange traded, derivative world.

Have a pleasant evening.