Equity and bond analysts have had to grapple with the issue of what market leads what for decades. Mere volume alone does not in and of itself make a market dominant. Although larger, the dominance of spot OTC trading in London makes its influence harder to grasp. Thus, analysis of the ‘gold market’ can be reduced, in so far as that is possible, to analysis of these two markets.įrom this it is clear, first, that the main markets remain London and New York and second, that it is unclear who ‘leads the dance’. And while the other main markets are growing they still account for just over 3% of turnover. While more than eight times smaller, America’s options and futures exchanges are vastly more transparent with a constant flow of prices and daily volumes information inherently lacking in the London OTC market. Table 1 shows the dominance of London as a trading centre for gold with 86% of business occurring there, approximately 90% of which are spot transactions. And yet, it remains in many ways bipolar. The gold market worldwide is itself diffuse, with trading taking place on organised exchanges in dozens of locations.
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