Parrot,With respect to the points you raised:1. When dealing on...

Parrot,

With respect to the points you raised:

1. When dealing on CME, the clearing house guarantees settlement on contract. That is a legal contract. I have to ask myself which I have more confidence in: A clearing house guarantee in the US, or a title in China. I am more confident in the former because it is tested and found to work.

2. I am more concerned with the integrity of a legal system (the likelihood that a court will rule according to the intentions of the law) rather than the strength of the punishments. The Chinese are very good at making examples of miscreants who are small and powerless. There are too many cases were foreigners have been disadvantaged in the courts and it has subsequently become obvious that the judge has accepted a bribe from the local party. I would not be confident of my chance at enforcing title in that jurisdiction.

3. I think commented previously on the relationship between exchange traded metals and the OTC swaps and how that causes the appearance of unbacked transactions. There is no point repeating myself.