Khurram wrote:
>Exchange providors make money on selling gold at a higher price then
they bought it at.
>Since the price of gold has been recently dropping, G&SR bought bars
at a higher price then what >they would be redeaming it at. Lets
conside the above.
>G&SR buys 10 bars at spot price of 272 which is highly unlikely but
anyway.
>$272 x 400 x 10 = $1088000
>Now G&SR bails in 10 bars at the spot price now of 262 and pays
e-gold the 1% premium that it >charges.
Always assuming that the powers that be at e-gold were REALLY STUPID
people! They have control of the spot price of e-gold. Why would they
be so foolish as to buy gold when it was expensive and then sit on it
for weeks till the price dropped before bailing it in?
If I was G&SR, I would do the deal all on one day, order the gold,
prepare the payment at a certain price, then pay for the gold and bail
it in all within a short period, while holding the e-gold spot price
fixed at a certain level till all was completed. No problem with
fluctuating values at all.
Of course the e-gold that G&SR owned after the deal may take a while
to sell, during which time they may be selling at a loss in a falling
market, but I guess that is why they don't seem to buy huge amounts at
any one time....
This is my take, have I missed something??
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