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Gold/Mining/Energy : Gold Price Monitor

GDXJ 106.75

-0.5%

4:00 PM EST

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To: Bobby Yellin who wrote (41904)	10/3/1999 4:39:00 PM
From: PaulM	Read Replies (1) of 116791

"[COMEX] Brokers were still trying to reconcile a backlog of trades from the Bank of England's auction Tuesday of 25 tons of gold reserves, which met extremely strong demand." biz.yahoo.com B what do you make of this? Anyway, in the wake of this week's price rise I've been reading a number of interesting rumors and (supposed) first hand accounts about COMEX trading. People being told that should sell their long positions etc. True or no, it's worth noting that unlike London, COMEX requires no counterparty credit evaluation (either with respect to ability to deliver gold, or even cash). Instead, COMEX just requires that you put up a specified margin deposit, which is supposed to cover expected losses for a few day time period. If your loss begins to exceed the margin, you have to put up more. For those that can't, a clearinghouse makes up the difference. But what would happen if you had a violent, unexpected move in commodity for which there was a huge open interest? And the result was that lots of traders got margin calls all at once? Would COMEX have a problem making up the difference? Let me suggest that the CFTC in particular has egg all over its face right now.

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