Looks like BIS swaps relieved gold market squeeze

Izabella Kaminska: Looks like BIS swaps relieved gold market squeeze

Submitted by cpowell on Thu, 2010-07-22 20:22. Section: Daily Dispatches

4:22p ET Thursday, July 22, 2010

Dear Friend of GATA and Gold:

Gold market blogger Izabella Kaminska has examined data for the New York Commodities Exchange's gold inventory and finds that while inventory is nominally high, the metal actually available for sale is relatively low on a historical basis. Recent negative gold lease rates, she writes, have signified tightness in the physical market.

"That is to say," Kaminska explains, "we used to pay for borrowing money from the bank -- pledging gold as collateral. Now we get paid for borrowing money from the bank -- pledging gold as collateral. We wonder why. In which case, the Bank of International Settlements getting involved in the 'cash for gold' market might make perfect sense -- especially if its real aim was to reset the stakes. We note that three-month lease rates, for example, did coincidentally go positive over the supposed gold swap action."

Kaminska's commentary is headlined "The Story of the Gold Curve So Far" and you can find it at FT Alphaville here:

http://ftalphaville.ft.com/blog/2010/07/21/287566/the-story-of-the-gold-...

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