Thomas Tooke

Trading of Cash bar and fictitious bar of Gold in the 1930s in China

In Uncategorized on April 28, 2013 at 12:17 pm

It is the purpose of this blog to show with specific examples how history rhymes. To that end here is a piece that Frank Tamagna wrote back in 1942.

“Dealing in silver coins and bullion and in gold represented an important activity of the native banks, for both exchange and speculative purposes. Dealing in silver was very active from 1933 to 1935, but it was brought to a standstill by the nationalization of the metal and the stabilization of the currency in 1935. Dealing in gold was basically a speculative activity; operations covered “cash” gold bars if actual delivery was contracted for, and “fictitious” gold bars if the transaction was to be settled at a later data by either paying or receiving differences in accordance with price variations. Usually the cash bar commanded a premium over the fictitious bar, which constituted the bulk of speculative activity. Operations in the gold market were sharply reduced after the stabilization of the exchanges and the Shanghai Gold Stock Exchange ceased operations in August 14th, 1937 after almost two years of inactivity and financial losses.”

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