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COMEX owner tries to lure more gold out for bullion bank leasing
Gold? Sure, We’ll Take More of That, Says CME
By Rhiannon Hoyle
The Wall Street Journal
Monday, October 3, 2011
http://blogs.wsj.com/marketbeat/2011/10/03/cme-boosts-limit-for-gold-use...
CME Group will today increase to $500 million the amount of physical gold its U.S. clearing members can post as collateral for margin requirements, from the existing $200 million.
The step is the latest in a string of moves by exchanges and other financial services firms to increase the use of gold as collateral, which essentially places the precious metal in the top tier of asset classes.
CME said that by increasing the cap on the use of gold, it aims to help traders "manage their risk while allowing them to take advantage of increasingly attractive gold lease rates."
The new limit will initially just apply for members of the exchange's U.S. clearing house, which has allowed firms to post up to $200 million worth of gold as performance bond collateral since late 2009. However, managing director of metal products Harriet Hunnable said the exchange is working on similar arrangements for its European clearing division, and expects this to be in place well before the end of the year.
... Dispatch continues below ...
Golden Phoenix Signs Definitive Agreement to Acquire and Reopen Santa Rosa Gold Mine in Panama
Company Press Release
Monday, September 19, 2011
SPARKS, Nevada -- Golden Phoenix Minerals Inc. (OTC Bulletin Board: GPXM) has signed a definitive agreement to acquire a 60 percent interest, with an option to buy an additional 20 percent interest, in the Santa Rosa gold mine in Panama, now owned by Silver Global S.A., a Panamanian corporation.
Santa Rosa produced more than 100,000 ounces of gold from 1996 to 1998 before being closed in part to low gold prices, which are now more than five times higher.
Golden Phoenix intends to acquire its initial 60 percent interest in Santa Rosa by acquiring 60 percent of the share capital of a recently created company under the name Golden Phoenix Panama S.A., formed to hold and operate the mine.
Tom Klein, CEO of Golden Phoenix says: "The agreement establishes a solid framework from which we can advance Mina Santa Rosa to production-ready status."
For Golden Phoenix's complete statement, please visit:
http://goldenphoenix.us/press-release/golden-phoenix-signs-definitive-ac...
"We have had a number of clients asking us to raise the collateral level above $200 million," she told Dow Jones Newswires in an interview Monday. "There is a lot of gold activity at the moment, and this form of collateral is highly attractive for bullion banks."
The change to the collateral levels for CME's U.S. clearing members will take effect from close of business Monday, the exchange said.
It was back in October 2009 that the CME Group announced it would allow physical gold to be used as collateral for margin requirements. Rival IntercontinentalExchange Inc. followed suit in November 2010.
Then last February, J.P. Morgan Chase & Co. also said it would start accepting physical gold as collateral in some financial transactions.
Meanwhile, the World Gold Council also is gaining traction in its push to have the Basel Committee on Banking Supervision accept the precious metal as a Tier-1 asset for banks, along with government bonds and currencies.
Market participants say such moves are re-establishing gold's role as a monetary and financial asset.
However, Hunnable didn't rule out the possibility that other commodities may be considered for use as collateral in the future.
"Gold is a widely held metal, and it is the material for which we have been asked to increase our collateral provisions. But would we look at other assets? Never say never," she said.
"The world is changing, so we will have to see what comes next. Our risk management group does a lot of work to make sure we are ready to meet the next areas of high demand," Hunnable added.
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