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Friday, March 29, 2024

Goldman Explains How Big China’s Rehypothecation Problem Is (Hint: Very)

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The highlighted text below, from Goldman Sachs, explains it all.

Step 4: Repeat Step 1-Step 3 as many times as possible, during the period of LC (usually 6 months, with range of 3-12 months). This could be 10-30 times over the course of the 6 month LC, with the limitation being the amount of time it takes to clear the paperwork. In this way, the total notional LCs issued over a particular tonne of bonded or inbound copper over the course of a year would be 10-30 times the value of the physical copper involved, depending on the LC duration.

And in context:

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