Submitted by Tyler Durden on 12/15/2011 09:42 -0500
LIBOR
One of the more curious dynamics for those who follow the gold market closely, has been the relentless grind lower (or higher if looked at on an absolute value basis), of gold lease rates (defined as Libor - GOFO), which recently hit all time record lows (i.e., negative), for the 1 month version, although the more traditional 3 Month (as it is based on the benchmark 3M USD Libor) was also quite close to breaching historic low levels. And while we have discussed the nuances of Libor-GOFO, or the gold lease rate extensively before, a good summary was presented by Jesse's Cafe Americain yesterday, who correctly suggested that record lease rates are a primary driver for the near historic sell off we experienced yesterday. In a nutshell, negative lease rates mean one has to pay for the "privilege" of lending out one's gold as collateral - a prima facie collateral crunch. The lower the lease rate,
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one comment...........
Hugh_Jorgan
Hugh_Jorgan's picture
The fundamental factors for a skyrocketing gold price are unchanged, worse in fact. The truly stratospheric rise will happen at some point, but not until physical is priced by it's own market, free from the ETF puppet show. The problem is that none of the current power brokers in the PM markets want to let physical run wild. It will be interesting to see how this all transpires...
http://www.zerohedge.com/news/negative-gold-lease-rates-collapse-gold-sell-likely-coming-end?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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