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Tuesday, October 4, 2011

Tues Post#1: All that glitters... is shining brighter


You've heard the talk.

Gold, that barbarous relic, is in a bubble and is going to crash - hard.

And what good is it?  You can't eat it.  It doesn't pay interest.  Why own it?

Last year the CME Group Inc, the biggest operator of U.S. futures exchanges, announced that physical gold could be accepted from its clearing members as collateral.

And yesterday the CME Group Inc said it will more than double the amount of physical gold it could accept from its clearing members as collateral, increasing the amount of bullion its customers could post as collateral to $500 million from $200 million, effective Monday.

Analysts welcome the move because investors could now use physical gold instead of just cash to meet margin requirements of other market products.

So is gold as good as money?  The CME Group certainly thnks so.

The CME announcement made news the same day as the Qatari Royal family made it known they plan to spend up to $10 billion (£6.4 billion) buying stakes in gold producers through their sovereign wealth fund.

Funny how the media isn't jumping all over these two developments as massive mistakes.  Isn't the CME Group Inc. taking a huge risk accepting collateral valued at the top of the bubble?

Aren't the Qatari Royal family courting certain disaster buying into the gold market when it can only collapse from this point forward at the current near record prices?

These moves appear to solidify the belief that precious metals have a long run still in front of them.

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2 comments:

  1. Now would be a good time to buy in...

    ReplyDelete
  2. Now would be a good time to buy in...

    ReplyDelete