Quote:
Originally Posted by Selene
Silverman, I respect your fears, BUT......
Willie says "When December contracts in gold & silver are demanded to be satisfied via delivery of the metal, we could easily see the COMEX fail in delivery. A default is highly likely."
Ummm, with all due respect for Jim Willie's degree in statistics, speaking as a former (Refco) commodities trader myself - oils and gold - you should note that his critical thesis here is factually flawed and historically incorrect.
Better that 99.999% of all futures contracts never take delivery. They are not intended for that. Never. Ever. (What would you do if someone delivered 2,000 lbs of frozen pork bellies...on your lawn? )
The beauty of trading futures contracts on paper is that they remain entirely on paper. They're (hello?) speculative.
Sure, if everybody - or even some traders - decided to take delivery there'd be some mighty raised eyebrows. Especially because the entire contract would first have to be settled in cash in full....real bucks instead of just the deposit leverage you put down to open the contract. That would be impressive. And if you wanted the metal, why would you bother to trade the futures if you just wanted to buy in cash? The futures market can move against you bigtime, too. Trust me on that one, kiddies.  If you wanted to buy bullion, you'd wait for a good (cheap) day in the cash market and place an order. There's no odds in waiting for a futures contract to get cheaper. (Son, that 's what 's called a "Texas Hedge": you buy the physicals and go long on the futures....truly dumb.)
And the drop in open interests? Puleeze - equal drop in technical trending. Any experienced trader knows to wait until a tradeable trend takes hold. About 80% of the time, most markets are "nontrending". And when cash is at a premium, any sane trader will put his money into the trending markets.
And it goes without saying that Kitco - which sponsors that blog - sells gold and silver coins, bullion, etc. Their bias has to be relentlessly bullish - buy now! Don't wait! etc. etc. They do have an interest here.
Read with caution. Don't get stampeded. Ain't likely to happen on this planet. (Which is not to say that the price of gold could not ever go up, but not for the reasons cited here by Willie.)
Sleep well tonight, my friends.
Cheers,
Selene
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Hi Selene,
thanks for your reply.
Lets start with the "frozen pork bellies"-arguement. Yes you are right this is not something somebody wants to get delivered but it is definitely not what some central bank might still have in their vaults.
I believe you missed some news and I believe you don't have a single physical ounce of gold and silver. You definitely didn't try to buy some ounces the last couple of weeks otherwise you would not argue to wait for cheaper cash / spot etc....
The idea behind go long silver or gold @ comex and then exercise is because US government / FED together with JP Morgan and Goldman Sachs heavily manipulate the price of gold and silver...and of course to the downside to make all investors believe, that precious metals are no alternative in a financial crisis....
They prefer desperate investors to purchase FED funds and treasuries...
Fact is that world wide it is getting more and more difficult to buy real physical silver and gold....
Fact is that investors are already willing to pay for one ounce gold Kruergerrand a premium of more than 10% for one ounce of Silver Britannia or other 1 ounce silver coins premiums are between 50 to 100%..
If a US citizen intends to purchase US liberties or buffalos he won't get any since US mint stopped to deliver, same in Canada and Australia...
I am Swiss and all major banks which offered precious metals are getting delivery problems. One the biggest player is Zurich Kantonalbank. They have ETF's on all precious metals and an investor can exercise them and gets then the physical metals. The same bank just announced that they cannot deliver 1 kilogramm silver bars this year anymore. Probabely in January again.
Same situation is with the biggest independent precious metals dealer called
www.proaurum.de. The don't have anything anymore to sell.....
So please tell me:
Why is gold and silver price falling, when there is no physical material available anymore?
I once learned in my life, that when something is getting rare or almost not available anymore but many individuals wants to buy or get it, the price goes up? Do you agree?
Do you believe crude oil price will drop, if we don't get crude oil delivered anymore? Probabely not isn't it?
Why does COMEX intend to change rules to avoid to deliver physical gold and silver?
Why does US government together with JP Morgan and Goldman Sachs manipulate the price? Why did they block short selling on financial stocks and not as well on gold and silver? Since funny enough US still seems to have the biggest gold reserve of all!
Since many blind centralbankers and wallstreeters believe that gold and silver is for nothing, why don't they let go up the price? Ok I tell you why, because gold is STILL money, this will never change, never, Illuminatis, Bushs, Freemasons, Paulsons, Bernankes can do what they want.....Gold will always be money as well
....and this is their big problem! They can devalue the US Dollar and come up with the AMERO, US can and will soon go bankrupt. Gold will not go bankrupt never!
So please, don't blame anybody, who goes long gold or silver futures at COMEX and exercises for physical delivery, BECAUSE
WHAT COMEX, JP, GS, FED, BEN, PAUL, GEORGE AND SO ON ARE DOING IS HIGHLY CRIMINAL AND THIS HAS TO BE STOPPED AS SOON AS POSSIBLE!
But the good thing about all the crisis is, that the above mentioned guys are running out of amunition and soon, they won't have the money, the power, the time to "take care" to pressure precious metal prices.....
And maybe you know, that gold and oil have a sort of positive correlation. I believe crude oil will go up big time very soon.
Now since you have not a single physical ounce of precious metals in your pocket I bet the following with you:
1. COMEX WILL DEFAULT UNTIL 31 MARCH 2009
2. CRUDE OIL PRICE WILL TRADE ABOVE USD 100 BEFORE X-MAS 2008
3. GOLD WILL TRADE ABOVE USD 1'000 BEFORE X-MAS 2008
Each time I am wrong you get 1 silver ounce (please click on link to see the picture of the coin).
http://www.proaurum.de/edelmetallsho...pe=productlist
Greetings,
silverman