Market action this week only further demonstrated the need for a new, global pricing mechanism for physical gold and silver. As stated by Ned Naylor-Leyland, the current system allows the "futures tail to wag the spot dog". I believe this collusive, manipulative nonsense will soon come to an end with the introduction of the Pan Asia Gold Exchange later this year. If you haven't already, please go back and read this before you continue:
After writing the note above, I was placed in contact with a very important gentleman through the serendipitous intervention of an internationally-connected Turdite. He asked if I'd "like to speak with one of the guys responsible for setting up the PAGE". I, of course, said "YES!".
Graham Newall of Power Capital Global was recently appointed Senior Vice President of the PAGE. Below is the complete text of the questions I submitted to him last week. Graham's responses are printed in capital letters, directly below each question. I hope that all Turdites find this information helpful in developing an understanding and appreciation of the impact the PAGE will have on the global precious metals markets in the years to come.
Thanks again for allowing me the opportunity to visit with you. I am very much looking forward to seeing the impact the PAGE will have on the international spot metals markets. I firmly believe that the LBMA/Comex/BullionBank system is outdated and that the PAGE is going to usher in a new era of transparency in price discovery.
I have a short list of questions below. Would it be OK to present to my readers the list of my questions with your answers? My hope is to continue to draw international attention to the PAGE and present it as a viable alternative to the LBMA status quo.
1) Graham, can you please describe your role and the role of PCG in building and/or managing the PAGE?
I HAVE BEEN APPOINTED SENIOR VICE PRESIDENT OF THE PAN ASIA GOLD EXCHANGE RESPONSIBLE FOR STRATEGY AND REPRESENTING THE EXCHANGE INTERNATIONALLY . POWER CAPITAL WILL BE THE FIRST MARKET MAKER IN THIS CONTRACT
2) PAGE is already trading a 10-ounce gold contract. Are there plans to issue a silver contract, as well?
THE 10OZ DEFERRED SETTLEMENT WILL START TRADING SHORTLY OF THE MOON FESTIVAL THIS MONTH. THE SILVER CONTRACT IS PLANNED FOR LATE 4TH QUARTER 2011
3) I understand that Chinese citizens can buy the 10-ounce contract through the Agricultural Bank of China. Do global retail and/or institutional investors have the same access to this contract? If not, will this access be allowed in the future?
CHINESE CITIZENS ARE REQUIRED TO LODGE MARGIN IN AN ACCOUNT WITH AGRICULTURAL BANK OF CHINA AND TRADE DIRECTLY WITH THE MARKET MAKER ONLINE. GLOBAL RETAIL/INSTITUTIONAL INVESTORS MAY TRADE THROUGH THE MARKET MAKERS APPROVED BROKER IN HONG KONG DETAILS OF WHICH WILL BE RELEASED SHORTLY
4) Many are anxiously awaiting the PAGE to begin trading their 90-day, rolling spot gold contract. Several questions here:
a) What are the key differences between the 10-ounce contract and the spot contract?
THE 10OZ CONTRACT ROLLS EVERYDAY AND IS A MARGINED TRADE. THE 90 DAY CONTRACT IS A RECEIPT FOR A PHYSICAL BAR OF GOLD WHICH WILL BE FULLY FUNDED AND ON MATURITY CAN BE "ROLLED" AND ANOTHER RECEIPT ISSUED OR EXCHANGED FOR THE PHYSICAL GOLD.
I BELIEVE THAT THE CONTRACT WILL BEGIN TRADING IN EARLY DECEMBER
THE GOLD WILL BE HELD IN TRUST BY AN EXTERNAL ADMINISTRATOR WITH A CHINESE BANK REGULATED BY THE PEOPLES BANK OF CHINA ACTING AS TRUSTEE ENSURING THAT THE REQUIRED 1:1 ALLOCATION IS MET AT ALL TIMES
AS THE PRICE OF GOLD APPRECIATES THE CASH REQUIREMENT WILL PROVE PROHIBITIVE FOR MOST RETAIL INVESTORS MAKING A MICRO CONTRACT TRADING ALONG SIDE THE MAIN CONTRACT A PRACTICAL NECESSITY IN MUCH THE SAME WAY AS THE COMEX MICRO CONTRACT.
THE TRUST WILL HOLD GOLD STORED IN APPROVED VAULTS WORLDWIDE
NOT AT THIS STAGE
5) This also seems to be a conduit through which the Chinese government is allowing the global distribution of renminbi. For example, if I buy gold in London for $ and sell it on PAGE, do I receive renminbi for my gold?
THE PROVINCE OF YUNNAN HAS BEEN DESIGNATED AS A FREE TRADE ZONE OF RMB. THE RECEIPT MATURES IN RMB.
Again, Graham, thanks in advance for any assistance you can provide. My readers and I greatly value your input. TF
I HOPE THIS IS USEFUL PLEASE EMAIL ME ANY TIME IF YOU HAVE FURTHER QUESTIONS - I WILL KEEP YOU INFORMED AS THE FINAL DETAILS ARE WORKED OUT.
Out of respect for Graham's time, I'd tried to keep the list of questions relatively short. However, as you can see, Graham has graciously offered to answer follow-up questions, as well. Again, I will not inundate him but, dear reader, if you have a burning question for Graham, please include it in the comments below and I will pass a few along to Graham early next week.
Thanks again to Graham and all Turdites everywhere for your contributions to TFMR!