{"id":50125,"date":"2019-12-15T13:17:51","date_gmt":"2019-12-15T18:17:51","guid":{"rendered":"https:\/\/olduvai.ca\/?p=50125"},"modified":"2019-12-15T13:17:57","modified_gmt":"2019-12-15T18:17:57","slug":"quantum-leap-for-banks-as-abn-amro-questions-gold-price-discovery","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=50125","title":{"rendered":"Quantum leap for banks as ABN AMRO questions gold price discovery"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/www.bullionstar.com\/blogs\/ronan-manly\/quantum-leap-for-banks-as-abn-amro-questions-gold-price-discovery\/#comments\">Quantum leap for banks as ABN AMRO questions gold price discovery<\/a><\/h3>\n\n\n\n<p>Earlier this week, an interesting article appeared on the website of the major Dutch bank ABN Amro, written by the bank\u2019s currency and precious metals strategist,&nbsp;<a href=\"https:\/\/insights.abnamro.nl\/en\/contact\/georgette-boele-3\/\" target=\"_blank\" rel=\"noreferrer noopener\">Georgette Boele<\/a>.<\/p>\n\n\n\n<p>The article, titled \u201c<a href=\"https:\/\/insights.abnamro.nl\/en\/2019\/12\/a-world-with-two-gold-prices\/\" target=\"_blank\" rel=\"noreferrer noopener\">A world with two gold prices?<\/a>\u201d, questions how, if gold is a safe haven asset, its price has not continued to reflect the ongoing crisis and stress in financial markets.<\/p>\n\n\n\n<p>Boele then seeks an explanation of this puzzle in terms of a framework which consists of both safe haven gold demand and speculative gold demand, one of which reflects the purchase of physical gold (safe haven demand), and the other which speculates on the gold price via paper and synthetic gold products (speculative demand) which are not physically backed by gold.<\/p>\n\n\n\n<p>This leads her to the observation that safe haven investors would not sell their physical gold in the midst of a crisis, as they \u201c<em>would think three times before parting ways with their gold<\/em>\u201d, and that it is speculative investors (those who are not invested in real physical gold) who are pushing the gold price around.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/static.bullionstar.com\/blogs\/uploads\/2019\/12\/ABNAmro.jpg\" alt=\"\" class=\"wp-image-22036\"\/><figcaption><strong>ABN AMRO Amsterdam \u2013 Enlightened about the gold price?<\/strong><\/figcaption><\/figure>\n\n\n\n<p><strong>One Small Step<\/strong><\/p>\n\n\n\n<p>While the ABN AMRO strategist fails to address the reality of how the international gold price is really established, i.e. via gigantic trading volumes of fractional-reserve London unallocated gold and COMEX gold derivatives, she does take a quantum leap, at least for a prominent investment bank, when the penny drops that there are two separate things being traded. Finite tangible physical gold on the one hand, and paper gold synthetics on the other. Shouldn\u2019t these two things have distinct prices? Boele then makes the jump:<\/p>\n\n\n\n<p>\u201c<em>Let\u2019s now go a step further. Suppose there are two gold prices: one for physical gold and one for all other non-physical gold products. How would these two gold prices behave?<\/em>\u201d<\/p>\n\n\n\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Quantum leap for banks as ABN AMRO questions gold price discovery Earlier this week, an interesting article appeared on the website of the major Dutch bank ABN Amro, written by the bank\u2019s currency and precious metals strategist,&nbsp;Georgette Boele. The article, titled \u201cA world with two gold prices?\u201d, questions how, if gold is a safe haven [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[23619,374,2533,21499],"class_list":["post-50125","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bullionstar","tag-gold","tag-price-discovery","tag-ronan-manly"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50125","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=50125"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50125\/revisions"}],"predecessor-version":[{"id":50126,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50125\/revisions\/50126"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=50125"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=50125"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=50125"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}