Okay, I'm ready for a lesson on Bullion Banks. In some Barrick documents I read several months ago, they said they use their Bullion Bank to facilitate sale of gold in the cantango program. I not sure whether they set up their own Bullion Bank, or used an independent one.
Someone must take the other side of the short sell contract, and apparently the Central Banks don't do it directly. The Bullion Banks do. I assume this is to lower risk to the Central Banks from defaults of producers or speculators. Someone with deep pockets must act as an intermediary.
If that is the case, then all the existing markets I mentioned do have a replacement for the Bullion Bank, because someone, a manufacturer, a private individual, a broker, a supplier or someone else takes the other side of a short selling contract to the seller. How else could you short one of those commodities or investments. Someone must have a inventory of the commodity or investments, to allow it to be sold.
What other functions does a Bullion Bank serve? I am ready for input (gggggggg). |
