Reuters notes that central banks trade gold every day but doesn't grasp what it means


8a ET Wednesday, April 23, 2014

Dear Friend of GATA and Gold:

Reuters has produced a news report about the currency markets that acknowledges not only that gold is primarily a competitive form of money but also that central banks are trading it surreptitiously every day. But of course the report fails to perceive and explain what that means -- that central banks are surreptitiously rigging the gold market and, with it, all other markets. Excerpts from the Reuters story are appended.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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E-Trading Pulls Gold into Forex Units as Commodity Desks Shrink

By Clara Denina and Jan Harvey
Wednesday, April 23, 2014

LONDON -- The increasing use of technology on financial trading floors is driving a trend for banks to roll precious metals operations into their forex businesses as a separate unit from other commodities activities.

Barclays on Tuesday followed similar moves by rivals Deutsche Bank, UBS, JPMorgan Chase & Co., and Morgan Stanley by announcing that it would keep its gold trading business while hiving off most of its global commodities operations. ...

"If you were to look at the size of the banks' trading teams in foreign exchange (compared with) 10 years ago, they are a shadow of their former selves," one former banker said. "The machines have taken over. ... If you have gold, there is no reason at all why you wouldn't include that as another currency pair." ...

Trading gold alongside foreign exchange operations makes a lot of sense. The metal is often regarded as a dual asset, both a commodity and a store of value. Prices tend to be more sensitive to factors such as U.S. interest rate policy, inflation expectations, and forex rates than the supply and demand flows that exert a heavy influence on commodities such as oil or industrial metals. ...

The client base is also different from that for other commodities. For instance, banks that serve central banking customers with large bullion reserves to manage will have a greater need to offer gold trading and storage services. ...

... For the full story:


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