CME Group to allow physical settlement of weekly #gold options - MINING FINANCE / INVESTMENT - Mineweb.com

CME Group to allow physical settlement of weekly gold options


Chicago-based CME says it will amend the contract of its weekly gold options to let investors exercise into futures contracts effective July 1, pending approval from the U.S. CFTC.

Author: By Frank Tang
Posted: Tuesday , 19 Jun 2012


NEW YORK (REUTERS) -


CME Group is allowing investors in its short-term gold option contracts to take delivery of physical bullion in a bid to increase the product's appeal against over-the-counter gold options.


The biggest operator of U.S. futures exchanges said it will amend the contract of its weekly gold options to let investors exercise into futures contracts effective July 1, pending approval from the U.S. Commodity Futures Trading Commission, CME said in a notice late last week.


Prior to the change, the options, which were launched in July last year on CME's COMEX metals platform, were settled by cash only and physical delivery was not permitted.


Chicago-based CME is trying to make the options more attractive as some investors favor owning physical precious metals as a safe haven in market turbulence.


In a similar move to woo investors who favor physical metals in October last year, CME more than doubled the amount of physical gold it can accept from its clearing members as collateral.


Dealers said that the CME was trying to gain market share from the over-the-counter market, which offers investors gold options with a wide array of expiration dates.


Each of the short-term options has a five-business-day expiration period, and the exchange rolls out a new option contract with a new date of expiry on a daily, continuous basis.


COMEX floor traders said investors, however, have greeted the product with little interest, as the contract was rarely traded.


Anthony Neglia, president of Tower Trading and a COMEX gold options floor trader, said that market makers are reluctant to provide liquidity for the high-risk, short-term product, which has failed to garner interest from both institutional and retail investors.


"Statistically, 95 pct of the options go out worthless, so who's going to take the first step" to trade them, Neglia said. He added there was some interest for the product among trading houses.


In a sharp contrast to the weekly options, open interest of CME's popular monthly COMEX gold options currently totals at well over 1 million contracts as more investors are using options to bet on the upside in gold due to economic uncertainty.


© Thomson Reuters 2012 All rights reserved

CME Group to allow physical settlement of weekly gold options - MINING FINANCE / INVESTMENT - Mineweb.com

Metals News - The Incredible Collapse Of The Athens Stock Market

THE increíble shrinking Athens stock market:

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Australian exploration spending hits record US$1.09bn - EXPLORATION - Mineweb.com

Australian exploration spending hits record US$1.09bn

the first time more than a billion dollars has been spent on exploration in a single quarter.

Despite the levying of carbon pollution and mineral resources rent taxes, Australian mineral exploration spending achieved a record in the quarter ending March.

Author: Dorothy Kosich
Posted:  Monday , 18 Jun 2012RENO (MINEWEB) - 
Spending on mineral exploration in Australia reached a record A$1.09 billion (US$1.09bn) in the March quarter-the first time more than a billion dollars has been spent on exploration in a single quarter.
In his weekly Treasurer's Economic Note issued Sunday, Australian Treasurer Wayne Swan observed "In fact, exploration expenditure has risen by about 35% since a price on carbon pollution was announced, and nearly 80% since the Minerals Resources Rent Tax was announced."
"It's yet another reality check for those who try to talk down the outlook for our resources sector or make ridiculous claims that important economic reforms are hurting investment," he stressed.
Beginning on July 1, Australia will levy a controversial carbon tax on 294 firms for the A$23/tonne (US$22.96/tonne), with mining companies, steel makers and electricity generators among the largest polluters.
Australia is one of the world's largest per-capita carbon emitters due to its reliance on coal for 85% of electricity generation.
"What's often not appreciated is that Asia's rise will create demand for a lot more than just our iron ore and coal," said Swan. "That means there will be opportunities for more than just our resources sector."
Australia's economy grew 1.3% in the March quarter, double what economists had anticipated. A major driver was a 19.7% increase in engineering construction, mainly in mining. Planned investment in the resources sector reached A$500 billion (US$500bn).
Earlier this month, Swan noted the strong growth was achieved in spite of a cyclone disrupting iron ore exports from Western Australia. The region's economy grew by 13.6% during the period from March 2011 to March 2012.The Australian government forecast in May that the mining boom will lift economic growth from 3% in the current fiscal ending June 30 to 3.25% next fiscal year.

Australian exploration spending hits record US$1.09bn - EXPLORATION - Mineweb.com Mineweb