Taking gold as collateral, exchange acknowledges that it's money

Section:

ICE Says It Will Take Gold as Collateral

By Amanda Cooper
Reuters
Thursday, November 11, 2010

http://www.reuters.com/article/idUSLDE6AA12520101111

LONDON -- ICE Clear Europe has said it will accept gold bullion as collateral from Nov. 22 this year, as volatility picks up across the financial markets.

The company clears energy cash and futures transactions as well as European credit default swaps and is owned by exchange operator InterContinental Exchange.

"Acceptable collateral for ICE Clear Europe currently includes cash and government securities. Gold bullion will be permitted for initial margin only and will be accepted by the clearing house by electronic transfer in increments of 1 troy ounce, and will be priced daily using the London gold fixing price in U.S. dollars," InterContinental Exchange said in a statement dated Nov. 8.

Clearers collect cash or other assets in the form of collateral, or margin, on individual trades and default fund contributions, which they hold centrally to refund members left out of pocket in the event of a default.

... Dispatch continues below ...



ADVERTISEMENT

Prophecy to Become Coal Producer This Year
with 1.5 Billion Tonnes of Resource

Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen.

For Prophecy's complete press release about its production plans, please visit:

http://www.prophecyresource.com/news_2010_may11.php



Gold, which investors often resort to as a store of value in times of wider market turbulence, has gained prominence in the financial system this year, particularly when it emerged in July the Bank for International Settlements had taken on 346 tonnes of bullion of global investment demand via swap operations.

Rival clearer LCH.Clearnet said it has considered accepting gold as collateral for some time, although the London-based company has no timeframe yet in which to do so, a spokeswoman said on Thursday.

"In my understanding ... it's something we've been looking at and yes, from a risk perspective, it's something we are considering," Andrea Schlaepfer, a spokeswoman for LCH.Clearnet said, adding she did not have any firm dates or further details on such plans.

CME Group, which owns the COMEX exchange, said late on Tuesday it will increase the margin required to trade silver futures by 30 percent to $6,500 per 5,000-ounce contract, prompting an 8-drop in the most-active December silver futures contract at one point on Wednesday.

LCH.Clearnet, which is also the clearing house for the Euronext.liffe commodities exchange, on Tuesday said it will increase the margin required to trade Irish sovereign debt by 15 percent as of Thursday.

Spot gold prices in London were up nearly 0.6 percent on the day at $1,411.05 an ounce, but down from Tuesday's record high at $1,424.10.

* * *

Support GATA by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon:

http://www.goldrush21.com/

* * *

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16



ADVERTISEMENT

Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit,
Extending the Mineralization of the Southwest Vein on the Property

Company Press Release, October 27, 2010

VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:

-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.

-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.

-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.

Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."

For the company's full press release, please visit:

http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf