Comments

  • tomartotomarto Posts: 102 Copper ✭✭
    @GoldMatters ....great find..thanks :) :)
  • SpontaneousOrderSpontaneousOrder Posts: 245 Bronze ✭✭✭
    Fascinating. It reinforces my belief that when it comes to gold and silver the Comex is not where the action is - it's just "book keeping" or the "Registry of Deeds" for the various players. The most important players are the Bullion Banks, who are basically running a fractional reserve system for precious metals.

    As Keith Weiner has pointed out, futures markets are supposed to be for commodities such as wheat and corn that are only directly available at certain times of the year, requiring warehousing. Obviously that doesn't apply to gold and silver, so the only possible purpose for a futures market on those is to support speculation (derivative side bets) on the prices of the metals.

    For every naked seller of a future who has no metal, there's a naked buyer who has no cash. Virtually none of the participants want delivery. As long as everyone continues to have confidence in the system, it's a convenient way to have exposure to the price of metal without all the bother of storage fees, insurance, "collectibles" tax rates, etc. The futures market siphons off demand that otherwise might have gone to physical metal. But if sentiment changes and a critical mass of people say to themselves "maybe just to be safe I should go get my metal," look out below.
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