Jim Sinclair’s Commentary
Consider each example like this a gold upgrade as currency.
More physical gold to serve as collateral: CME
Oct. 3, 2011, 2:43 p.m. EDT
By Myra P. Saefong
SAN FRANCISCO (MarketWatch) — CME Group said its customers will be able to post more physical gold as performance bond collateral, raising the amount to $500 million from $200 million as of the close of business on Monday. Performance bonds, or margin requirements, are money investors must put up to be able to trade futures contracts. Bullion customers had asked the CME to raise the amount, according to Harriet Hunnable, managing director of metals products at CME Group. “A number of our clearing firms hold gold in London and want to utilize more of it for collateral,” she said. “The interest rate for gold is currently negative so this means that it is very cost efficient for a holder of gold to place it as collateral.”
Jim Sinclair’s Commentary
While the Sheeple sleep Lehman approaches again.
Banking crisis set to trigger new credit crunch
The global financial system is on the edge of a new credit crunch as the cost of insuring the bonds of banks across the world hits new highs, analysts have said.
By Harry Wilson, Banking Correspondent
8:39PM BST 02 Oct 2011
Credit default swaps on lenders as far afield as China and Australia, countries that until recently seemed immune to the chaos, have doubled in the last two months to levels not seen since the financial crisis.
In Europe, French and Belgian government officials are due to meet on Monday to discuss the crisis enveloping Dexia as speculation mounts about a possible break-up of the Franco-Belgian lender.
Last week, the cost of insuring Dexia bonds hit an all-time high of 900 basis points, nearly double the level just two months ago, meaning the annual cost to insure €10m (£8.59m) of the bonds is £900,000.
“The money ran out in June and what you are seeing now is the beginning of a new credit crunch, except this time it will be truly global, not Western,” said one senior London-based credit analyst.
Dexia, along with other European lenders, has been hard hit by the closure of the interbank lending markets and the continuing unwillingness of investors to buy the bonds of eurozone banks.
“Nothing is really working at the moment. None of the markets are functioning. Until Greece defaults it’s hard to see any resolution,” said one senior London-based credit analyst.
