London's gold market is heavily in backwardation, offering lucrative arbitrage opportunities that traders won't take because they fear that they won't be able to recover metal they sell short, London metals trader Andrew Maguire tells King World News today.
"This week the so-called 'risk-free' profit has been as high as $1.50 per ounce and has been averaging close to $1 per ounce," Maguire says. "I can sell 100,000 ounces right now and I get back my 100,000 ounces in just 30 days, and I scoop a so-called 'risk-free' profit of somewhere around $100,000 or $150,000. Why are the arbitragers not all over this trade to the point they equalize the price? That is how healthy markets work.
"It is because insiders are well-connected enough to the physical market to know that the recent price drop is a synthetic sham and that the real physical markets are extremely tight. They don't want to risk not receiving their bullion back in 30 days."
Maguire's interview is excerpted at the KWN blog here:
http://kingworldnews.com/andrew-maguire-we-ar...unning-behin...
