You are here

CME Clearing Europe will take gold as collateral

Section: Daily Dispatches

Looks like gold is as good as gold again -- that is, money.

* * *

By Nandini Sukumar and Nicholas Larkin
Bloomberg News
Friday, August 17, 2012

http://www.bloomberg.com/news/2012-08-17/cme-clearing-europe-to-accept-g...

CME Clearing Europe will accept physical gold as collateral, extending the list of assets it is prepared to receive as regulators globally push more derivatives trading through clearing houses.

CME Group Inc.'s European clearing house, based in London, appointed Deutsche Bank AG, HSBC Holdings Plc, and JPMorgan Chase & Co. as gold depositaries. There will be a 15 percent charge on the market value of gold deposits and a limit of $200 million or 20 percent of the overall initial margin requirement per clearing member based on whichever is lower, Andrew Lamb, chief executive officer of CME Clearing Europe, said today.

"We started with a narrow range of government securities and are now extending that," Lamb said in an interview today. "We recognize there will be a massive demand for collateral as a result of the clearing mandate. This is part of our attempt to maintain the risk-management standard and to offer greater flexibility to clearing members and end clients."

... Dispatch continues below ...



ADVERTISEMENT

Fred Goldstein and Tim Murphy open All Pro Gold

Longtime GATA supporters Fred Goldstein and Tim Murphy have brought their many years of experience in the precious metals and numismatic coins to All Pro Gold as metals brokers who specialize in the delivery of gold and silver bullion bars and coins as well as numismatic gold and silver coins. Fred and Tim follow these markets closely and are assisted by a team of consultants in monitoring market trends. All Pro Gold offers GATA supporters competitive pricing on all bullion products and welcomes inquiries. Tim can be reached at 602-299-2585 and Tim@allprogold.com, Fred at 602-799-8378 and Fred@allprogold.com. Ask about their ratio strategy and the relationship of generic $20 dollar gold pieces to 1-ounce gold bullion coins. Visit their Internet site at http://www.allprogold.com/.



CME Clearing Europe, which started on May 6 last year, plans to offer interest-rate swaps and more commodities later this year, he said. In the U.S., the Dodd-Frank Act means more derivatives than ever will be processed at a clearing house while the European Markets Infrastructure Regulation is doing the same in the region. JPMorgan in February last year said it will allow gold to be used as collateral for trading, following similar moves by CME Group and Intercontinental Exchange Inc.

Investors and central banks are expanding gold holdings on demand for a protection of wealth and alternative to currencies. Gold held in bullion-backed exchange-traded products reached a record 2,417.3 metric tons on Aug. 10, data compiled by Bloomberg show. Central banks bought 254.2 tons in the first half of 2012 and may add close to 500 tons for the year as a whole, the London-based World Gold Council said yesterday.

Gold for immediate delivery traded at $1,616.77 an ounce by 1:40 p.m. in London. Prices are up 3.4 percent this year, extending 11 consecutive annual gains.

Derivatives clearing in Europe is dominated by LCH.Clearnet Ltd., owner of the world’s largest interest-rate-swap clearinghouse, and Intercontinental Exchange (ICE), which processes trades in European-based credit-default swaps and energy commodities such as Brent oil futures.

A clearinghouse reduces the potential harm from a member firm’s default by acting as the buyer to every seller and the seller to every buyer. Most futures-exchange operators, including Deutsche Boerse AG (DB1), its Eurex Clearing, CME and ICE own clearinghouse and don't permit similar contracts traded on competing venues to be processed with theirs.

* * *

Join GATA here:

Toronto Resource Investment Conference
Thursday-Friday, September 27-28, 2012
Toronto Sheraton Centre Hotel
Toronto, Ontario, Canada
http://www.cambridgehouse.com/event/toronto-resource-investment-conference

New Orleans Investment Conference
Wednesday-Saturday, October 24-27, 2012
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
http://www.neworleansconference.com/

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16


ADVERTISEMENT

Prophecy Platinum Announces Wellgreen Preliminary Economic Assessment:
38% Pre-Tax IRR, $3.0 Billion NPV, and a 37-Year Mine Life

Company Press Release

VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) reports the results of an independent NI 43-101-compliant preliminary economic assessment for its fully owned Wellgreen nickel-copper-platinum group metals project in the Yukon Territory.

The independent assessment, prepared by Tetra Tech, evaluated a base case of an open-pit mine (with a mining rate of 111,500 tonnes per day), an on-site concentrator (with a milling rate of 32,000 tonnes per day), and an initial capital cost of $863 million. The project is expected to produce (in concentrate) 1.959 billion pounds of nickel, 2.058 billion pounds of copper, and 7.119 million ounces of platinum, palladium, and gold during a mine life of 37 years with an average strip ratio of 2.57.

The financial highlights of the preliminary economic assessment, shown in U.S. dollars, are as follows:

Payback period: 3.55 years
Initial capital investment: $863 million
IRR pre-tax (100% equity): 38 percent
NPV pre-tax (8% discount): $3 billion
Mine life: 37 years
Total mill feed: 405.3 million tonnes
Mill throughput: 32,000 tonnes per day

Prophecy Chairman John Lee says: "We are pleased with the preliminary economic assessment results. The numbers indicate that Wellgreen is one of most exciting mineral projects in the Yukon. The company is drilling to upgrade and expand the resource base. The infrastructure is excellent as the project is only 1,400 meters in altitude and 14 kilometers from the paved Alaska Highway, which leads to the Haines deep seaport. Discussions are under way with support from local stakeholders regarding permitting and logistics."

For the complete press release, please visit:

http://prophecyplat.com/news_2012_june18_prophecy_platinum_announces_res...