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World Gold Council to CFTC: Don't mess with paper gold
11:28p ET Monday, March 28, 2011
Dear Friend of GATA and Gold (and Silver):
Thanks to Zero Hedge's pseudonymous Tyler Durden tonight for unearthing the long statement submitted this month by World Gold Council CEO Aram Shishmanian to the U.S. Commodity Futures Trading Commission in opposition to the commission's proposal to impose limits on traders' positions in the precious metals futures markets:
The council's objection to position limits involves to a great extent their potential to interfere with the derivative instruments that have diverted monetary demand for gold away from real metal and into paper promises of metal that suppress gold's price but can't be fulfilled, and the potential for position limits to interfere with hedging by gold miners, another price-suppressive practice.
In essence, the council's statement is a defense of an unlimited supply of paper gold issued by the several big international banks that control the gold and silver markets, paper gold being the enemy of real metal priced in a free market as well as the enemy of accountability for government currencies.
... Dispatch continues below ...
Prophecy Resource Spins Off Platinum/Palladium Venture:
World-Class PGM Deposit in Yukon
Company Press Release, January 18, 2011
VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY)and Pacific Coast Nickel Corp. announce that they have agreed that PCNC will acquire Prophecy's Nickel PGM projects by issuing common shares to Prophecy.
PCNC will acquire the Wellgreen PGM Ni-Cu and Lynn Lake nickel projects in the Yukon Territory and Manitoba respectively by issuing up to 550 million common shares of PCNC to Prophecy. PCNC has 55.7 million shares outstanding.
Following the transaction:
-- Prophecy will own approximately 90 percent of PCNC.
-- PCNC will consolidate its share capital on a 10 old for one new basis.
-- Prophecy will change its name to Prophecy Coal Corp. and PCNC will be renamed Prophecy Platinum Corp.
-- Prophecy intends to distribute half of its PCNC shares to shareholders pro-rata in accordance with their holdings.
Based on the closing price of the common shares of PCNC on January 17, $0.195 per share, the gross value of the transaction is $107,250,000.
For the complete announcement, please visit:
Shishmanian tells the CFTC:
"The current proposed definition of 'deliverable supply' includes the quantity of the commodity meeting a contract's delivery specifications that a market participant could, with 'prudent planning,' procure during the relevant time period from available local supply, deliverable non-local supply, and comparable supply (based on factors such as product and location). The World Gold Council believes that the CFTC should update its definition of 'deliverable supply' to account for changes in the commodity markets over the last 20 years which have increased the complexities and products within the commodity markets.
"For example, 'exchanges for related positions' ('EFRPs') are transactions used by market participants in the futures exchanges to accommodate more flexible settlement options for physically settled commodity transactions. An EFRP consists of two discrete but related simultaneous transactions. One party to the EFRP must be the buyer of (or the holder of the long market exposure associated with) the related position and the seller of the corresponding exchange contract. The other party to the EFRP must be the seller of (or the holder of the short market exposure associated with) the related position and the buyer of the corresponding exchange contract. The related position (cash, OTC swap, OTC option, or other OTC derivative) must involve the commodity underlying the exchange contract, or must be a derivative, byproduct, or related product of such commodity that has a reasonable degree of price correlation to the commodity underlying the exchange contract.
"In the majority of circumstances, EFRPs (particularly exchange for physical transactions) make physical settlement of exchange-traded commodity futures and option contracts unnecessary, and therefore increasingly less common. Additionally, the exchange for physical transaction makes a commodity's futures contract substantially less vulnerable to a corner or squeeze because, in effect, the exchange for physical transaction has introduced flexibility to an otherwise limited physical settlement process.
"The World Gold Council encourages the CFTC to update the proposed definition of deliverable supply to reflect the more flexible settlement options for physically settled commodity transactions, and thereby expanding the definition of deliverable supply (and increase the applicable spot-month position limits). Furthermore, an updated definition of deliverable supply which accurately reflects the manner in which the current commodity markets function will reduce the threat of price volatility and manipulation, while promoting liquidity and encourage effective risk management.
"The CFTC's proposal to recalculate the position limits annually based on changes in open interest potentially may reduce the participation of market participants in the more deferred delivery months, particularly for long-term contracts that include positions in relatively illiquid deferred months.
"For example, a market participant may be wary of entering into a long-term transaction if the position limit that makes the trade permissible at one point in time may be reduced in the future. In order to secure financing for many mining projects, the World Gold Council’s members must be able to hedge price risk many years into the future. However, the uncertainty associated with floating position limits may inadvertently discourage market participants from providing the requisite long-term hedges which, in turn, would make it difficult for the World Gold Council's members to finance investments for crucial infrastructure projects. In general, the annual recalculation will make it difficult to hedge long-term transactions. This, in turn, likely will lead to more price volatility due to reduced liquidity."
The World Gold Council's letter to the CFTC has been posted at GATA's Internet site here --
-- but apparently not at the council's own Internet site. One has to wonder here whether the council is representing mining companies or their bankers instead.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit,
Extending the Mineralization of the Southwest Vein on the Property
Company Press Release, October 27, 2010
VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:
-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.
-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.
-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.
Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.
"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."
For the company's full press release, please visit: