Alt Investments
Bullion Dealer Licenses Benchmarks

The firm has licensed gold and silver forward rates showing how much interest comes with a loan secured against the metals.
Bullion brokerage Sharps Pixley has
licensed the Monetary Metals gold
forward rate and silver forward rate, which are produced by
US-headquartered Monetary Metals.
The Gold Forward Offered Rate is the swap rate for a gold-to-US
dollar exchange. It is not the price to lease gold but rather the
price to swap gold for US dollars. Effectively it is the interest
rate on a US dollar loan secured against gold. As such, it may be
interpreted as the difference between the US dollar rate (Libor)
and the gold lease rate. These charts on info.sharpspixey.com are
updated daily by Monetary Metals’ data science platform. Monetary
Metals has developed a proprietary method of calculating
indicative rates with high accuracy, based on public market
data. Usually, the Gold Forward Offered Rate is positive,
which means that the price of gold for delivery in the future is
higher than the spot price, i.e., there is contango in the
bullion market. Meanwhile a negative GOFO indicated a shortage of
metal liquidity for leasing and tended to precede rallies in the
gold price.
“Gold users need GOFO, but the London Bullion Market Association
stopped publishing it in January 2015,” Keith Weiner, CEO of
Monetary Metals, said.
The licensing agreement is an example of how investor interest in
holding precious metals continues to develop. (This publication
has examined developments around gold dealing and modern
tech here.) Sharps Pixley opened offices in St James’s
Street, London, in 2016 and is owned by Germany-based Degussa.
(See
an article here.)
Monetary Metals compares its gold forward rate to the LBMA data
series between 1996 and 2015. Its six-month GOFO has better than
0.99 correlation. (See here for an interview with Weiner about
his
business.)
Among other recent developments, in November last year, this
publication reported
that the Royal Mint has launched a digitised gold trading
platform using blockchain technology.