gold 2013 sydney - how the gold market works, what's changing and how to benefit
DESCRIPTION
Presentation at the 2013 Gold Investment Symposium in Sydney, 16-17 October 2013. Presentation given by Bullion Capital's Chief Executive Officer, Thomas Coughlin.TRANSCRIPT
How the Gold Market works, what’s changing and how to benefit
- Presented by Thomas Coughlin
Major Gold Markets
London - OTC Wholesale Market
• Spot, Forwards, Options & Swaps
• 90% Spot
COMEX - Exchange Traded Market
• Futures & Options
Loco London Gold Market
LBMA London Bullion Market
Association
Trade Association
Gold & Silver
Good Delivery List
Member List
Arrange Conferences
The Fix London Gold Fixing
Benchmark Price
Price Set Twice Daily
Five Members
LPMCL London Precious Metal
Clearing Limited
Unallocated Clearing
Vaulting
Six Members
BOE Bank of England
Allocated Clearing
Vaulting
Central Bank Custodian
Market Makers 1. ScotiaMocatta 2. Barclays Bank 3. Deutsche Bank 4. HSBC Bank 5. JP Morgan Chase 6. Goldman Sachs 7. Mitsui & Co 8. Societe Generale 9. UBS
Members 1. ScotiaMocatta 2. Barclays Bank 3. Deutsche Bank 4. HSBC Bank 5. Societe Generale
Members 1. ScotiaMocatta 2. Barclays Bank 3. Deutsche Bank 4. HSBC Bank 5. JP Morgan Chase 6. UBS
What’s Changing? A Global Repatriation & Hoarding
Total Gold Demand, 2009 Q1 and 2013 Q2. Gresham's Law:
"When a government overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation." "Bad money drives out good".
HOARDING!
What is the “Bad Money”?
Unallocated Paper Gold
35.06% 72.94%
Global Repatriation Hoarding
Global Repatriation
London COMEX
Partial Fungibility
EFP Exchange Futures for Physical
The Wholesale Market - Present Physical Flow of Gold
LONDON
U.K. Gold Shipments Climb Eightfold as Metal Seen Moving to Asia
- Bloomberg
UK gold exports surge tenfold this year - Financial Times
Gold flows from Britain to Switzerland surge
in H1-Macquarie - Reuters
797 tonnes exported from London in the first half
of this year.
An Estimated 10,000 tonnes total sits in London
At this rate all gold will have disappeared from London vaults in just over 6 years!
COMEX
A Proposed New Global Marketplace
A Global Loco Trading Hub Market with a Unified Vaulting Network for Allocated Bullion
One Global Market
London
Zurich
New York
Singapore
Hong Kong
Sydney
Dubai
Toronto
Market Price
•Global Price Flattened
•Perfect arbitrage between hubs.
Refiners, Mints & Vaults
•Worldwide
•America
•Europe
•Asia
•Africa
•Middle East
Delivery Mechanisms: •Worldwide
•COMEX
•TOCOM
•CGSE
•SFE
•DGCX
•SMX
Clearing Banks & Central Banks
•Worldwide - all time zones
•America
•Europe
•Asia
•Africa
•Middle East
Wholesale Market Comparison
- Presented by Thomas Coughlin
London Market Global Market London price Global market connecting local physical markets
Unallocated True global price + True local prices + Flattened Global Price
Effective unlimited supply - Part of fractional banking system Allocated – difficult to manipulate
Investor holds counterparty risk against custodian Finite supply – placing upward pressure on gold prices
Expensive transportation costs Investor holds legal title
Only trading and clearing during London time Negligible counterparty risk
Only wholesale lot sizes – Market not available to private investors Can store gold locally in home region
Organically dying market Minimal transportation costs
Organically evolving market
What is Bullion Capital Doing?
Bullion Capital Limited (BCL) offers a loco trading hub physical bullion market, with an online trading platform for precious metal traders and investors.
BCL – Similar to above proposal
ABX – Same as the above proposal
Australia Global Global
OTC Wholesale
Soon! Late 2014 – Early 2015 Live!
Affiliated
Are we mucking around?
Name Position
William Purpura Managing Director, Great Lakes Global Limited and Chairman of COMEX, Boards of Governors
Dale Zhu Deputy Head of Global Commodities, Bank of China International
David Govett Head of Precious Metals, Marex Spectron
Grant Williams Portfolio and Strategy Advisor, Vulpes Investment Management
Paul Burton Consultant to Hinde Capital
Ned Naylor-Leyland Investor Director and CSI, Cheviot Asset Management Limited
Michael Hadley Managing Director, John Galt Trading Consultants
Christopher Olson President and CEO, Treasure Island Coins Incorporated
ABX Advisory Committee
• We’ve spent three years collaborating with industry specialists. • We’ve liaised and done board room battle with over 500 bullion market participants from the top down. • We’ve internally developed the unique systems, mechanics and technology to bring this market together. • We’ve got brokers, dealers, platform providers and SMSF administrators already utilising the BCL platform. There is overwhelming support for this Global Market.
BCL Australian Market Offering
1) A Private Client Service – Closing Soon! 2) Introducing Broker Service Allocated Physical Bullion Stored in Australian vaults, not a paper contract. Withdraw your bullion at any time. Retain complete ownership and control over your investment. Unimaginable Security Locally stored and insured by Armaguard, verified by Inspectorate, audited by BDO. Simply the most secure physical bullion investment solution. Cost Effective With prices provided by multiple market participants, avoid dealer spreads and benefit from MetalDesk's exchange based trading platform.
Opportunity – How to Benefit • Sign up as a client or Introducing Broker and Support us with our mission of implementing this revolutionary new allocated
global bullion market and help pave the way of the future.
• Should we collectively succeed, there will be an abandoning of the current archaic London paper system and a conversion to
a highly efficient allocated system.
• This will place enormous upward pressure on the gold price and all precious metal investors will benefit.
• Further, simply enjoy all the other benefits BCL has to offer through highly efficient online exchange trading platform.