The Trade: Oil for Gold
Just after the president met with Lloyd and Jamie (the CEOs of Goldman Sachs and JP Morgan, respectively) on April 11, the stock market tanked alongside commodities, the volatility of Japanese government bond prices went through the roof, and paper gold futures traded far lower—in a hurry.
What was said in this triggering meeting is unknown, but opportunity for bank traders and the reaction of the public sure showed up. Central planners often poorly estimate changes in the actions and outlook of market participants; unintended consequences run wild. On this subject, Ross Norman, an ex-gold trader with NM Rothschild & Sons (Chair of the London Gold Fixing) cited Google search:
The chart above illustrates in another manner the massive news we and many otherContinue Reading →
Gold is lent by central banks to get gold into market, where the gold can then be lent against as many times as bankers decide, according to the London rules for pledging assets as collateral multiple times.