Timmins Gold Corp T.TMM

Banks to trade Gold Swaps through China's Singapore Exchange

[aude]

On Monday, November 25, banks will be able to trade Gold Swaps through China's Singapore Exchange.
 

• Only physical gold or cash will be transacted through Singapore, which should reduce the influence of derivatives.
• This will result in arbitrage trading* - buying on COMEX and selling in Singapore resulting in a more efficient gold market.
• Arbitrage activity should improve the COMEX price due to more efficient markets.

* Arbitrage trading: The simultaneous purchase and sale of an asset in order to profit from a difference in the price. It is a trade that profits by exploiting price differences of identical or similar financial instruments, on different markets or in different forms. Arbitrage exists as a result of market inefficiencies; it provides a mechanism to ensure prices do not deviate substantially from fair value for long periods of time.

[pdcon1]

does this mean the one with the larger volume will regulate the price of gold . those selling paper gold today are probably selling at a loss so the banks can buy real gold cheaper . jmo

[bob4977]

There was a trade whereby the banks force the price down in the West and buy it for a cheaper price. Then they sell it to Asians at a premium when their markets are open. The arbitrage allows more players to play this game which cuts down the margins due to market forces. That trade will lose its profitability very shortly. Bob