Anyone have any thoughts on the new ABX exchange?

[Bumble]

Has anyone tried out the new ABX exchange? For those who missed the announcement, it is a newly launched precious metals exchange, based in Australia, with a dozen international hubs, that allows buyers and sellers to trade electronically, and includes audited storage of individually allocated physical metal. Unlike the big exchanges in London and NY, it does not permit paper trades or derivatives, and is fully transparent.

Andrew Maguire gave an interesting interview in which he is positive on it - he thinks it will create a new price discovery mechanism that is more sensitive to physical delivery.  

[JB3]

How is it different than the Singapore Precious Metals Exchange?

[JB3]

Other than being in Australia, I mean

 

[KDave]

Because it does not permit paper trades or derivatives it should prove very successful. In reality I fear traders and speculators like their paper too much for it to be anything more than a sideshow. I hope I am proved wrong! 

[Bumble]

I expect the big question will be whether the miners are willing to use it to sell their product. If they think they are being stiffed by a manipulated paper fix price in London and NY, they may start to see ABX as a viable alternative. If that happens, it could make a huge difference to the way gold is traded.

[JB3]

2 hours ago, KDave said:

Because it does not permit paper trades or derivatives it should prove very successful. In reality I fear traders and speculators like their paper too much for it to be anything more than a sideshow. I hope I am proved wrong! 

Hmm. Shanghai and Singapore also require, as I understand it, deposition of physical metal for sale at their exchanges.

 

I don't see what this adds particularly, but happy to watch this space!

[KDave]

Yes the only one that really matters is the one that sets the price. Perhaps one day it will where the majority of the actual metal is traded but I do not hold my breath either.

[HighlandTiger]

Apart from it's boast that it is the largest of its type in the world, I can't see much difference between it and Bullion Vault and Goldmoney etc. Tried looking for its fee structure on its website and couldn't find a thing. .................................Never keen on anything that tries to hide its prices. 

[Bumble]

It is an exchange, and you will need to use a broker. I know of two brokers, Andrew Maguire's Goldstar Global, and Goldvu. The difference compared with Bullion Vault and Goldmoney is that those are pool allocated, whereas ABX is individually allocated, i.e. you buy bars with serial numbers that are your personal property, they are stored in a box with your name on it, and you have the right to visit and inspect them, or take delivery.

[GoldVu]

There are 3 primary ground breaking mechanisms that ABX has brought to the physical precious metals trading arena:

1.  The Allocated Bullion Exchange (ABX) was designed primarily to facilitate institutional access to the global wholesale precious metals markets by electronic means. Up to the launch of the ABX institutions / brokers etc could only really access one PM market at a time (unless you were something like a bullion bank and could afford to plug into more than one).

The ABX set-up now allows any institution / broker to access over 16 physical bullion markets through a single on-line interface. The modern ABX way of being able to access 16 markets vs the traditional single market approach, is one of the revolutions that this has brought to trading physical precious metals.

GoldMoney & BullionVault primarily buy their bullion from a single precious metals market - London. ABX has been created for companies such as GoldMoney & BullionVault to plug into the ABX, thereby allowing them to easily locate & source the cheapest priced local bullion from PM markets around the world. The ABX is not a competitor to them, but a primary global exchange for all institutions to plug into (all brokers on the ABX are the equivalent of what GoldMoney and BullionVault are).

2.  All bullion traded is only physical and is 100% allocated. This means that there will only ever be 1:1 ratio of claims to physical metal. This is unlike the Comex which has 540:1 paper claims to physical metal. This maintains integrity of the global exchange and ensures true price discovery without synthetic gold / silver paper distortions.

You also get the ability to choose from a wide variety of bullion products on the ABX, where companies such as GoldMoney & BullionVault will only offer you a single investment type into gold, silver or platinum which is a pooled holding. You don't get the option to buy a 10oz bar or coins, which are then vaulted for you. If you try to take delivery from GoldMoney or BullionVault you get whacked with a big minimum amount as they are limited by the types of bars they hold in their vaults (LBMA size). With the ABX if you buy a 10oz bar you can withdraw that 10oz bar.

3.  The other major revolution, is the real-time price discovery generated by ABX's central clearing facility. Traditionally the price of gold and silver gets 'fixed' twice a day, which is done by a small selection of people/banks. ABX generates prices at a local market level based on purely supply and demand forces - how all things should be priced.

The Singapore Precious Metals Exchange is a local market and it's prices are based only on local supply & demand in Singapore. Trading the Singapore PME doesn't give you access to markets such as Shanghai, Dubai, Zurich etc.

Fees aren't advertised on the ABX website as they are only the exchange. Their fees are between the exchange and their brokers and therefore not advertised - no different to the way that you will not find trading fees listed on the Comex / LBMA websites. For end-user investor fees, you need to visit a broker of the ABX to see their retail fees, same way you visit GoldMoney & BullionVault's websites to see their fees.

I hope the above helps.

[HawkHybrid]

http://www.bulliondesk.com/gold-news/update-china-plans-to-launch-yuan-denominated-gold-fix-april-19-sources-109581/

 

HH