Silver @ 27 & a half....

[Jonflyfish]

I love to read the blogosphere stories about why the prognosticating crystal ball rubbing crowd was "scammed" and "duped" by the "big boy club" whenever their ideas i.e. "let's all take physical delivery of a few rolls of war nickels and squeeze JPM shorts into submission and make silver fly to infinity and beyond" bellyflop. What cartoonish rubbish these fools propagate. What story will they think of next time their investments get halved while they remain delusional with the "If you liked it at X, you'll love it at 0.5X" nonsense? "Um, Let's blame Jon Corzine. That'll make us feel better". The market has been in a decline for quite some time and quite simple and easy to recognize and trade, even though most just ignored it and said "Buy the F'ing dip" because that's what the youtube cartoon said to do. At some point the "dip" wipes out the dips that fell for such foolishness, then market finds a floor and carries on as usual. You don't need to read any story about manipulate this, squeeze that, Buy the F'ing dip, MFG, etc etc. Turn off all the noise that suckers and fools the mASSes and trade what the market offers...Truth in price.

Cheers!

What cartoonish rubbish you just wrote.

Truth in price???? Kind of like the residential housing market over the past decade??? There was never anyone that got "scammed", "duped" by the "big boy club" or anyone else. GS never created structured products with any material misrepresentations with the intent to deceive their own clients. There was never any cover up when Tres Sect. Paulson spoke to Congress to tell them all was well with the GSE's and then two weeks later told 20 plus hedge fund manages that they were going to collapse, and he never worked for GS either, RIGHT????????? Truth in price...............................

No, China never banned the free trading of gold and silver it was never a felony to hold more that five ounces of gold bullion in the US.

My advice to you is read some history on the monetary system - maybe you should start with Genesis - read about Joseph, silver and his brothers.

More importantly, understand supply and demand. Maybe get a grasp on some basic fundamentals - I don't even know where to begin with you. You remind me of some South African tool I worked with from Arthur Anderson. Maybe if you opened your eyes a little more and read people's thoughts who have more exposure to things than you (Harvey Organ for example) you would learn to take a cross section & consensus of what others have found and come to an educated conclusion - instead you just spew garbage out - as noted above - and noted below when you fail to control your self and respond with more spew.

You know not what you speak. Nothing you said has anything to do with truth in price and what I'm talking about- just unrelated drivel. Your ire has a stench.
I don't care what you think about residential housing or China. But since you mention it, don't you think Joe Sixpack, who insisted on a neg am interest only mortgage at 100% LTV no doc with a 680 fico score had anything to do with the truth in the price of the property once it foreclosed? Did the property not really close at the price he paid, nor the price paid by the new resident after the foreclosure or short sale? I don't care who worked at GS or your strip bar. Flush out your headgear new guy!

The settlement price is market to market daily. Those prices are credited and debited at the close.
You may know everything there is to know and dogmatically pontificate 'till you are blue as pappa smurf but I assure you that the funds settled based on the transaction price is realised and I regularly wire those funds out and pay for real estate, autos, physical precious metals, fishing trips to Alaska, Aruba and Maui. Mre importantly understand supply and demand? Are you suggesting that bids and offers that are crossed are not real? Do you know anything about how markets function and the actual financial consequence of transactions at specific prices? Do you not believe that silver is bought and sold at COMEX + differential? Do you not believe the dealer when he quotes you a price? Do you not believe that such a PRICE is executable? Are you a troll? U mad bro?
BTW- It's Arthur Andersen, not Anderson and I happen to know quite a few folks who worked there and Enron etc etc. so what? I like your comment about spew and spew. That's all you've done. Not one salient relevant fact just troll spew.

Cheers!

[camtender]

I regularly wire those funds out and pay for real estate, autos, physical precious metals, fishing trips to Alaska, Aruba and Maui.


Cheers!

Competence is knowing what you know, knowing what you don't know and the discernment to know the difference. You clearly lack discernment.

[Jonflyfish]

You know not what you speak. Nothing you said has anything to do with truth in price and what I'm talking about- just unrelated drivel. Your ire has a stench.
I don't care what you think about residential housing or China. But since you mention it, don't you think Joe Sixpack, who insisted on a neg am interest only mortgage at 100% LTV no doc with a 680 fico score had anything to do with the truth in the price of the property once it foreclosed? Did the property not really close at the price he paid, nor the price paid by the new resident after the foreclosure or short sale? C'mon man. Flush out your headgear new guy!

The settlement price is market to market daily. Those prices are credited and debited at the close.
You may know everything there is to know and dogmatically pontificate 'till you are blue as pappa smurf but I assure you that the funds settled based on the transaction price is realised and I regularly wire those funds out and pay for real estate, autos, physical precious metals, fishing trips to Alaska, Aruba and Maui. Mre importantly understand supply and demand? Are you suggesting that bids and offers that are crossed are not real? Do you know anything about how markets function and the actual financial consequence of transactions at specific prices? Do you not believe that silver is bought and sold at COMEX + differential? Do you not believe the dealer when he quotes you a price? Do you not believe that such a PRICE is executable? Are you a troll? U mad bro?


Cheers!

Competence is knowing what you know, knowing what you don't know and the discernment to know the difference. You clearly lack discernment.

How prophetic. I think I'll take that to the bank and cash it. You are the sage of the markets.
No need to reply. I'll just stick to the signature line under my post. You win in the gutter.
Cheers!

[Jonflyfish]

No wonder-

Re: a lot of silver rolls on Ebay
by camtender Fri Nov 11, 2011 11:28 am

" I hope we do go up (I don't "hope" I expect we WILL go up, if not for the manipulation of TPTB). I'm not adding to my physical, as I have enough, but I have some heavy bets on USLV (triples the movement of silver). If silver goes parabolic, would the miners (especially juniors) out perfor..."

Personal Truth In Price SHTF?
Cheers!

[camtender]

No wonder-

Re: a lot of silver rolls on Ebay
by camtender Fri Nov 11, 2011 11:28 am

" I hope we do go up (I don't "hope" I expect we WILL go up, if not for the manipulation of TPTB). I'm not adding to my physical, as I have enough, but I have some heavy bets on USLV (triples the movement of silver). If silver goes parabolic, would the miners (especially juniors) out perfor..."

Personal Truth In Price SHTF?
Cheers!

Either, 1) you cannot competently copy a forum post or 2) manipulate things, as I suspect, in an attempt and get some level of lost credibility, and if true, need to be banned.

[Jonflyfish]

No wonder-

Re: a lot of silver rolls on Ebay
by camtender Fri Nov 11, 2011 11:28 am

" I hope we do go up (I don't "hope" I expect we WILL go up, if not for the manipulation of TPTB). I'm not adding to my physical, as I have enough, but I have some heavy bets on USLV (triples the movement of silver). If silver goes parabolic, would the miners (especially juniors) out perfor..."

Personal Truth In Price SHTF?
Cheers!

Either, 1) you cannot competently copy a forum post or 2) manipulate things, as I suspect, in an attempt and get some level of lost credibility, and if true, need to be banned.

1- it's all about mind over matter. I no longer mind because you no longer matter. You've already sold yourself out after having silver lost 1/3 of it's price from where you were triple leveraged.
It's no wonder you troll after getting wiped out. You still deny truth in price. You've been owned. Ban yourself. Nobody needs your troll spew.
Cheers!

[Jonflyfish]

Your troll spew continues to fail disproving truth in price. You should be banned

[camtender]

.................

1- it's all about mind over matter. I no longer mind because you no longer matter. You've already sold yourself out after having silver lost 1/3 of it's price from where you were triple leveraged.
It's no wonder you troll after getting wiped out. You still deny truth in price. You've been owned. Ban yourself. Nobody needs your troll spew.
Cheers!

[Jonflyfish]

Nope. I don't care about that. Can you not read? You have not disproven any truth in price from which you came blasting in like an idiot on heroin about GS, China and Joe Sixpack and his foreclosure. Something tells me there is more to your past since your market knowledge is clearly absent. Trolling spew and fire has proven nothing.
Truth In Price

Cheers!

[Jonflyfish]

Nope. I don't care about that. Can you not read? You have not disproven any truth in price from which you came blasting in like an idiot on heroin about GS, China and Joe Sixpack and his foreclosure. Something tells me there is more to your past since your market knowledge is clearly absent. Trolling spew and fire has proven nothing.
Truth In Price

Cheers!

You are pissed off? Lose your house?
You mad bro?

Cheers!

[Jonflyfish]

Again, you win in the gutter because you have nothing of substance to substantiate your ire. Let's face it. You lost your money your house and now you troll to feel good. Feel the troll rush?
Again, you win in the gutter. Hard for me to compete there since that is not my turf.
Cheers!

[Jonflyfish]

Can you not read???????? You are talking about Beauandros.

Beuandros, how do you feel about his take on your triple leverage potion???

Why don't you get someone else pissed off at you.

1- it's all about mind over matter. I no longer mind because you no longer matter. You've already sold yourself out after having silver lost 1/3 of it's price from where you were triple leveraged.
It's no wonder you troll after getting wiped out. You still deny truth in price. You've been owned. Ban yourself. Nobody needs your troll spew.
Cheers!

Look you can edit this 4, 5 or 6 times for all I care. Beuandros is not part of this and I apologize to him as his post was accidentally mentioned but he is wise and knows how to trade and cut out quick. No need to troll and hope to stir the pot. You already proved you are the champion of the gutter and fail at anything higher.

Cheers!

[Jonflyfish]

I love to read the blogosphere stories about why the prognosticating crystal ball rubbing crowd was "scammed" and "duped" by the "big boy club" whenever their ideas i.e. "let's all take physical delivery of a few rolls of war nickels and squeeze JPM shorts into submission and make silver fly to infinity and beyond" bellyflop. What cartoonish rubbish these fools propagate. What story will they think of next time their investments get halved while they remain delusional with the "If you liked it at X, you'll love it at 0.5X" nonsense? "Um, Let's blame Jon Corzine. That'll make us feel better". The market has been in a decline for quite some time and quite simple and easy to recognize and trade, even though most just ignored it and said "Buy the F'ing dip" because that's what the youtube cartoon said to do. At some point the "dip" wipes out the dips that fell for such foolishness, then market finds a floor and carries on as usual. You don't need to read any story about manipulate this, squeeze that, Buy the F'ing dip, MFG, etc etc. Turn off all the noise that suckers and fools the mASSes and trade what the market offers...Truth in price.

Cheers!

What cartoonish rubbish you just wrote.

Truth in price???? Kind of like the residential housing market over the past decade??? There was never anyone that got "scammed", "duped" by the "big boy club" or anyone else. GS never created structured products with any material misrepresentations with the intent to deceive their own clients. There was never any cover up when Tres Sect. Paulson spoke to Congress to tell them all was well with the GSE's and then two weeks later told 20 plus hedge fund manages that they were going to collapse, and he never worked for GS either, RIGHT????????? Truth in price...............................

No, China never banned the free trading of gold and silver it was never a felony to hold more that five ounces of gold bullion in the US.

My advice to you is read some history on the monetary system - maybe you should start with Genesis - read about Joseph, silver and his brothers.

More importantly, understand supply and demand. Maybe get a grasp on some basic fundamentals - I don't even know where to begin with you. You remind me of some South African tool I worked with from Arthur Anderson. Maybe if you opened your eyes a little more and read people's thoughts who have more exposure to things than you (Harvey Organ for example) you would learn to take a cross section & consensus of what others have found and come to an educated conclusion - instead you just spew garbage out - as noted above - and noted below when you fail to control your self and respond with more spew.

Again with all the troll spew and dogmatic pontificating, nothing you said means anything relevant to the price not being the price. There was nothing of substance to substantiate anything to disprove price, only Troll spew with ire hatred. Take the Troll Occupy movement elsewhere i.e. back to your hiding place in the gutter.

Cheers!

[Lemon Thrower]

jonflyfish, i largely agree with you but i'm a bit more skeptical of the comex.

first of all, i wouldn't be in futures now because of the hypothecation. even if you have a broker you like, they clear through some scumbag outfit like MF.

ditto with equity positions in margin accounts. all you have is a book entry and your counterparty is your broker, not SIPC or the exchange.

the leverage on the comex is well known. the amount of metal in inventory has been declining steadily for some time now. as the metal disappears, the futures contracts get increasingly divorced from reality and you are basically trading paper betting slips. thats fine if you trust the house.

i suspect that its either a lack of confidence in the comex and/or a premium being paid for phyiscal that has caused the continual shrinkange in inventory. if you disagree, i would be interested to know your ideas why the amount of metal on the comex has been declining.

LT- You have some very valid remarks. Hypothecation has been an immediate concern for many. Metal inventory is interesting. Physical assignment and delivery, while being an option, has never been the primary activity of the futures market for many reasons. With prices having soared earlier during the last few years, more have been taking physical delivery. The primary dealers with approved warehouses for COMEX also tend to have the same affiliation in London, which is centered around physical dealing. If/when silver inventory needs to be moved from London to NY, it ships via vessel and not air. Hence, such logistics do require time. Also, if physical delivery is chosen in the COMEX, many parties are farther away than NY which creates added expense. The parties can (and often do) mutually agree to taking delivery at alternate locations as well. To your last point, there has been some backwardation, which suggests the small premium for front dated contracts. This is usually short lived and I wouldn't be surprised if it goes away ratherquickly. Silver has been a poor investment for 2011. Window dressing and allocation shifts both financial and physical tend to shift regularly regarless of some folks' strong desire to believe they should be handsomely rewarded for their ideas that they are married to for a while.

Best to you all and a happy New Year- Cheers!

JF - understood. however, there are two core facts. first, the amount of metal - both gold and silver - backing the comex contracts has been gradually but steadiliy declining for 2-3 years. second, there is some practical amount of metal that has to back the futures contracts, and its some number greater than zero. i say this because beyond a certain point greater than zero, say 30 million ounces, people realize that the contract they hold will never be satisfied. they'll get jobbed like the MF'ers with segregated accounts who are going to get 70 cents on the dollar. they'll realize that what they have is a piece of paper which is worth as much as the credit of the biggest and most leveraged player on the exchange, whether that is AIG, Bear etc. yes, the futures have always been part physical and part paper/derivative, but to many folks its now essentially entirely a derivatives contract. which is fine for some, but not all. i think that explains why folks are pulling their metal out of comex storage, not relatively short term shipping delays.

i will concede that another possibility is that the increasing demand for quasi-investment fabrication - coins and bars - has tapped the comex supply - directly or indirectly. but this only makes the same point above albeit indirectly. the metal is gone from the comex becuase the market prefers to hold it as an ASE off the comex. its not coming back.

in closing, i won't try to discredit your skill or what you have accomplished. i will question whether you are aware of all the risks. i'll use an analogy. you seem to me to be like the MIT math professor who invented card counting. yes it worked despite the skeptics. but you don't realize or care that you are playing in mob-controlled vegas. yes you have increased the size of the pile of chips in front of you. but do you think the pit boss is going to let you walk away from the table with them (without them breaking your legs)? I think a lot of the smart money has figured out that the house is crooked and is not playing at this casino any more. A lot of other money went bust and can't afford to play at the casino (mutual fund withdrawals) or already got fleeced (MF Global). The little old lady who brings her bag lunch to the casino and is careful to cash out is the one who will win this game.

[Jonflyfish]

jonflyfish, i largely agree with you but i'm a bit more skeptical of the comex.

first of all, i wouldn't be in futures now because of the hypothecation. even if you have a broker you like, they clear through some scumbag outfit like MF.

ditto with equity positions in margin accounts. all you have is a book entry and your counterparty is your broker, not SIPC or the exchange.

the leverage on the comex is well known. the amount of metal in inventory has been declining steadily for some time now. as the metal disappears, the futures contracts get increasingly divorced from reality and you are basically trading paper betting slips. thats fine if you trust the house.

i suspect that its either a lack of confidence in the comex and/or a premium being paid for phyiscal that has caused the continual shrinkange in inventory. if you disagree, i would be interested to know your ideas why the amount of metal on the comex has been declining.

LT- You have some very valid remarks. Hypothecation has been an immediate concern for many. Metal inventory is interesting. Physical assignment and delivery, while being an option, has never been the primary activity of the futures market for many reasons. With prices having soared earlier during the last few years, more have been taking physical delivery. The primary dealers with approved warehouses for COMEX also tend to have the same affiliation in London, which is centered around physical dealing. If/when silver inventory needs to be moved from London to NY, it ships via vessel and not air. Hence, such logistics do require time. Also, if physical delivery is chosen in the COMEX, many parties are farther away than NY which creates added expense. The parties can (and often do) mutually agree to taking delivery at alternate locations as well. To your last point, there has been some backwardation, which suggests the small premium for front dated contracts. This is usually short lived and I wouldn't be surprised if it goes away ratherquickly. Silver has been a poor investment for 2011. Window dressing and allocation shifts both financial and physical tend to shift regularly regarless of some folks' strong desire to believe they should be handsomely rewarded for their ideas that they are married to for a while.

Best to you all and a happy New Year- Cheers!

JF - understood. however, there are two core facts. first, the amount of metal - both gold and silver - backing the comex contracts has been gradually but steadiliy declining for 2-3 years. second, there is some practical amount of metal that has to back the futures contracts, and its some number greater than zero. i say this because beyond a certain point greater than zero, say 30 million ounces, people realize that the contract they hold will never be satisfied. they'll get jobbed like the MF'ers with segregated accounts who are going to get 70 cents on the dollar. they'll realize that what they have is a piece of paper which is worth as much as the credit of the biggest and most leveraged player on the exchange, whether that is AIG, Bear etc. yes, the futures have always been part physical and part paper/derivative, but to many folks its now essentially entirely a derivatives contract. which is fine for some, but not all. i think that explains why folks are pulling their metal out of comex storage, not relatively short term shipping delays.

i will concede that another possibility is that the increasing demand for quasi-investment fabrication - coins and bars - has tapped the comex supply - directly or indirectly. but this only makes the same point above albeit indirectly. the metal is gone from the comex becuase the market prefers to hold it as an ASE off the comex. its not coming back.

in closing, i won't try to discredit your skill or what you have accomplished. i will question whether you are aware of all the risks. i'll use an analogy. you seem to me to be like the MIT math professor who invented card counting. yes it worked despite the skeptics. but you don't realize or care that you are playing in mob-controlled vegas. yes you have increased the size of the pile of chips in front of you. but do you think the pit boss is going to let you walk away from the table with them (without them breaking your legs)? I think a lot of the smart money has figured out that the house is crooked and is not playing at this casino any more. A lot of other money went bust and can't afford to play at the casino (mutual fund withdrawals) or already got fleeced (MF Global). The little old lady who brings her bag lunch to the casino and is careful to cash out is the one who will win this game.

Hi LT. Thanks again for the kind reply. Your excellent post deserves a lengthy reply. However, I'll have to be brief for now.
The exchange does not require the contracts to be fully backed by physical becasue the futures market was not designed to be a procurement vehicle. Not only that but it would rarely make sense to use it as such. It is costly to exercise this transaction through the exchange and there are a lot of restrictions and terms that you must agree to. It is far costlier than closing out a position financially and arranging to make a purchase via your favorite large dealer. Also, only a few transactions would even qualify to take delivery. If you used the futures market as a hedge, there isn't any reason, also, if you were a spec short it would make no sense. So, there is already a large number of transactions that get removed from even considering delivery.

If you were a spec long and the price went up, what is the benefit of using the costly exchange brokered delivery assignment/matching at the maturity date? Let's say you are speculating that prices rise. You post your margin and go long some contracts. It rises. Now you decided that you no longer want to trade financial products with a certain % of your capital and want physical. You must make sure that you have 100% of the purchase value in your account. What have you gained by going through the costly exchange transaction instead of elsewhere and why would you want to take delivery now instead of when the metal was cheaper? If you are long contracts and the price goes up your account is reflected mark to market at each settlement. There is nothing generally speaking that makes purchasing physical silver at the time a contract matures more beneficial than not. I know one can come up with any number of reasons to answer the above questions in a way that makes sense to take delivery and rarely that happens but on the whole, there are a lot of costly restrictive reasons NOT to take delivery along with determining why to do so at that point in time vs any other. You don't get the metal cheaper via the exchange. It is a costlier transaction. With the contracts you are not buying below the market even though you may have gone long several points below the current market. That difference is already financially credited to your account daily on a mark to market basis.

As far as risks go- the exchange is there to match buyers and sellers. It is a liquid auction. Do crooks jump in the ring from time to time and make headlines? Of course and usually some new rules are established to prevent whatever crime from taking place again, or at least making it more difficult.

Is buying physical always a safe risk free bet? Are there physical thieves just the same as there are financial thieves and do you always get what you paid for? Is entering a business venture with your neighbor or relative safe?

I will not argue that your points are not valid. They are! You are savy and sharp.
There is risk in practically anything we do as humans. The presence of risk may stop some folks from checking the mailbox while others will line up for a chance to take a spacecraft to the moon.

Cheers!

[neilgin1]

A few hours later and we're under $27... I may get my buying opportunity sooner than I think!

Neil, I thought of you when I read this thread the other day, post #8 specifically, which gets revisited later in the thread.
http://www.thetreeofliberty.com/vb/showthread.php?t=154938
I don't reveal a lot about myself on here, but I think from what you've revealed about yourself that you would enjoy that forum quite a bit.

THANK YOU JJ! just paid that thread and forum a visit, great place, and no, that aint me the poster was talking about! (lol) i dont do "boilers"...and i dont reveal a lot to guys i just met. Thankfully, i got some kin and friends up here, and with care and respect, am making more friends. True friendship is a slow careful process, like building a brick wall, you do it brick by brick. This guy over here needs help on something, i'm there, i need some help, he comes over, we get done, sit up on the porch, have some lemonade or beer, get to talking. thats how i try and post here, with care and respect, as if we were sitting up on my porch, face to face.

thanks for the link, neil

[theo]

Hi LT. Thanks again for the kind reply. Your excellent post deserves a lengthy reply. However, I'll have to be brief for now.
The exchange does not require the contracts to be fully backed by physical becasue the futures market was not designed to be a procurement vehicle. Not only that but it would rarely make sense to use it as such. It is costly to exercise this transaction through the exchange and there are a lot of restrictions and terms that you must agree to. It is far costlier than closing out a position financially and arranging to make a purchase via your favorite large dealer. Also, only a few transactions would even qualify to take delivery. If you used the futures market as a hedge, there isn't any reason, also, if you were a spec short it would make no sense. So, there is already a large number of transactions that get removed from even considering delivery.

If you were a spec long and the price went up, what is the benefit of using the costly exchange brokered delivery assignment/matching at the maturity date? Let's say you are speculating that prices rise. You post your margin and go long some contracts. It rises. Now you decided that you no longer want to trade financial products with a certain % of your capital and want physical. You must make sure that you have 100% of the purchase value in your account. What have you gained by going through the costly exchange transaction instead of elsewhere and why would you want to take delivery now instead of when the metal was cheaper? If you are long contracts and the price goes up your account is reflected mark to market at each settlement. There is nothing generally speaking that makes purchasing physical silver at the time a contract matures more beneficial than not. I know one can come up with any number of reasons to answer the above questions in a way that makes sense to take delivery and rarely that happens but on the whole, there are a lot of costly restrictive reasons NOT to take delivery along with determining why to do so at that point in time vs any other. You don't get the metal cheaper via the exchange. It is a costlier transaction. With the contracts you are not buying below the market even though you may have gone long several points below the current market. That difference is already financially credited to your account daily on a mark to market basis.

As far as risks go- the exchange is there to match buyers and sellers. It is a liquid auction. Do crooks jump in the ring from time to time and make headlines? Of course and usually some new rules are established to prevent whatever crime from taking place again, or at least making it more difficult.

Is buying physical always a safe risk free bet? Are there physical thieves just the same as there are financial thieves and do you always get what you paid for? Is entering a business venture with your neighbor or relative safe?

I will not argue that your points are not valid. They are! You are savy and sharp.
There is risk in practically anything we do as humans. The presence of risk may stop some folks from checking the mailbox while others will line up for a chance to take a spacecraft to the moon.

Cheers!

I understand that the futures market is an inefficient mechanism for trading physical metal, but shouldn't every participant be confident that they could obtain the physical asset IF THEY WANTED.

There is a contradiction in what I'm hearing from you. How can a market that is not sufficiently backed by the physical metal post a price that accurately reflects the supply and demand for that same physical metal?

[Lemon Thrower]

JF - then what do you make of the decling inventory of both gold and silver on the comex? also, to me the bad actors is the exchange itself, not the guy sitting next to you at the table. of course for all you know its the same person or their cousin. to me the declining inventory is a vote of no confidence, and while i cant be certain of it the fact that it continues and grows makes that viewpoint all the more likely.

if you are big enough to buy comex size bars, the beauty of buying them on the comex is you can take delivery without them leaving the warehouse. you dont' need a brinks truck. and you can sell them without a brinks truck either. its all very convenient, if not cost free. but folks are foregoing that convenience to avoid the risks associated with the operator of the exchange and various other counterparties.

[neilgin1]

I understand that the futures market is an inefficient mechanism for trading physical metal, but shouldn't every participant be confident that they could obtain the physical asset IF THEY WANTED.

yes Theo, that has been the explicit agreement since the Board of Trade started in the 1860's, that if you wanted to stand for delivery, you could rest confident as a user that you COULD take delivery of the commodity in question. or as we did use the markets to hedge the physical commodity, but it had to be in exchange approved warehouses, cold storage, or grain elevators. But i've also many a time held in my hand warehouse or elevator receipts from other houses.

say Kellog or Nestle, will use Minneapolis to take delievery on hard red spring wheat, or the BOT, for corn. the reason Southwest survived and THRIVED post 9/11, was that they used the board, NYMEX, to hedge most, if not all of their fuel requirements. They had a robust hedging operation, whereas the legacy carriers were slow to the party and paid. Speculators have always been the "oil", that kept the market liquid...hedgers and USERS as well, but MF has really torn the fabric of trust, bad. i've talked to many old buds of mine, traders, and they are freaked and pissed. We ALL understand "moral hazard" really well, coz if we blow out, there's no bailouts for any trader...professional traders, but we all grew up knowing that our equity, locked into 'segregated funds" was the holy of holies. We had enough trouble dealing with the markets, our trading, ourselves, to start worrying if this explicit agreement that the exchange would be on top of every clearing house in relation to segregated funds. Its become completely and starkly evident, this is no longer the case.

theo, and everybody, i didnt come onto this forum, to bore yall with futures related chatter. i came here, coz i like it, i like the mindset and knowledge of 'stackers'. i only spoke about futures coz that was a part of my world, not to have a go around with some anonymous feckless cur, all that BS aside, let me give you the link to a really good Frontline about a great Commodity Futures Trading Commision head by the name of Brooksley Born, that as you know is the regulatory body over futures trading, who had the wisdom to warn in the mid 90's about the dangers posed by deriatives, but was shouted down by yet another set of feckless curs by the names of Greenspan, Rubin and Summers, you'll be both entertained and enraged, neil
http://www.pbs.org/wgbh/pages/frontline/warning/view/

seems as if PBS cut the 'watch" link to this so here ya go
http://www.youtube.com/watch?v=bXUQZP4mmwU

[Jonflyfish]

Hi LT. Thanks again for the kind reply. Your excellent post deserves a lengthy reply. However, I'll have to be brief for now.
The exchange does not require the contracts to be fully backed by physical becasue the futures market was not designed to be a procurement vehicle. Not only that but it would rarely make sense to use it as such. It is costly to exercise this transaction through the exchange and there are a lot of restrictions and terms that you must agree to. It is far costlier than closing out a position financially and arranging to make a purchase via your favorite large dealer. Also, only a few transactions would even qualify to take delivery. If you used the futures market as a hedge, there isn't any reason, also, if you were a spec short it would make no sense. So, there is already a large number of transactions that get removed from even considering delivery.

If you were a spec long and the price went up, what is the benefit of using the costly exchange brokered delivery assignment/matching at the maturity date? Let's say you are speculating that prices rise. You post your margin and go long some contracts. It rises. Now you decided that you no longer want to trade financial products with a certain % of your capital and want physical. You must make sure that you have 100% of the purchase value in your account. What have you gained by going through the costly exchange transaction instead of elsewhere and why would you want to take delivery now instead of when the metal was cheaper? If you are long contracts and the price goes up your account is reflected mark to market at each settlement. There is nothing generally speaking that makes purchasing physical silver at the time a contract matures more beneficial than not. I know one can come up with any number of reasons to answer the above questions in a way that makes sense to take delivery and rarely that happens but on the whole, there are a lot of costly restrictive reasons NOT to take delivery along with determining why to do so at that point in time vs any other. You don't get the metal cheaper via the exchange. It is a costlier transaction. With the contracts you are not buying below the market even though you may have gone long several points below the current market. That difference is already financially credited to your account daily on a mark to market basis.

As far as risks go- the exchange is there to match buyers and sellers. It is a liquid auction. Do crooks jump in the ring from time to time and make headlines? Of course and usually some new rules are established to prevent whatever crime from taking place again, or at least making it more difficult.

Is buying physical always a safe risk free bet? Are there physical thieves just the same as there are financial thieves and do you always get what you paid for? Is entering a business venture with your neighbor or relative safe?

I will not argue that your points are not valid. They are! You are savy and sharp.
There is risk in practically anything we do as humans. The presence of risk may stop some folks from checking the mailbox while others will line up for a chance to take a spacecraft to the moon.

Cheers!

I understand that the futures market is an inefficient mechanism for trading physical metal, but shouldn't every participant be confident that they could obtain the physical asset IF THEY WANTED.

There is a contradiction in what I'm hearing from you. How can a market that is not sufficiently backed by the physical metal post a price that accurately reflects the supply and demand for that same physical metal?

Actually the futures market is very efficient as a central pricing mechanism. The market is very liquid and you can transact in milliseconds. How do you suppose PM dealers price their bullion? Call a large dealer .i.e. Tulvng or Apmex and tell them you would like to sell to them. Ask them what the quote is and how they determined that price. COMEX.

To the other point, COMEX is not a procurement conduit for physical metal. It is not designed to be a physical marketplace futures are derivatives (derived from the underlying). Transaction costs and terms generally make no sense to look at COMEX for physical metal. I only speak from experience. People trading on the exchange are risking many thousands and millions, not a few rolls of junk here and there so they must understand a few of these points instead of surmising what they think the exchange should be but isn't nor was it intended.

Cheers!

Cheers!

[Jonflyfish]

I understand that the futures market is an inefficient mechanism for trading physical metal, but shouldn't every participant be confident that they could obtain the physical asset IF THEY WANTED.

yes Theo, that has been the explicit agreement since the Board of Trade started in the 1860's, that if you wanted to stand for delivery, you could rest confident as a user that you COULD take delivery of the commodity in question. or as we did use the markets to hedge the physical commodity, but it had to be in exchange approved warehouses, cold storage, or grain elevators. But i've also many a time held in my hand warehouse or elevator receipts from other houses.

say Kellog or Nestle, will use Minneapolis to take delievery on hard red spring wheat, or the BOT, for corn. the reason Southwest survived and THRIVED post 9/11, was that they used the board, NYMEX, to hedge most, if not all of their fuel requirements. They had a robust hedging operation, whereas the legacy carriers were slow to the party and paid. Speculators have always been the "oil", that kept the market liquid...hedgers and USERS as well, but MF has really torn the fabric of trust, bad. i've talked to many old buds of mine, traders, and they are freaked and pissed. We ALL understand "moral hazard" really well, coz if we blow out, there's no bailouts for any trader...professional traders, but we all grew up knowing that our equity, locked into 'segregated funds" was the holy of holies. We had enough trouble dealing with the markets, our trading, ourselves, to start worrying if this explicit agreement that the exchange would be on top of every clearing house in relation to segregated funds. Its become completely and starkly evident, this is no longer the case.

theo, and everybody, i didnt come onto this forum, to bore yall with futures related chatter. i came here, coz i like it, i like the mindset and knowledge of 'stackers'. i only spoke about futures coz that was a part of my world, not to have a go around with some anonymous feckless cur, all that BS aside, let me give you the link to a really good Frontline about a great Commodity Futures Trading Commision head by the name of Brooksley Born, that as you know is the regulatory body over futures trading, who had the wisdom to warn in the mid 90's about the dangers posed by deriatives, but was shouted down by yet another set of feckless curs by the names of Greenspan, Rubin and Summers, you'll be both entertained and enraged, neil
http://www.pbs.org/wgbh/pages/frontline/warning/view/

seems as if PBS cut the 'watch" link to this so here ya go
http://www.youtube.com/watch?v=bXUQZP4mmwU

Interestingly Southwest doesn't use many exchange traded NYMEX contracts. The hedging is done primarily with OTC fixed for float swaps and OTC strips and collars. I only know this because I spent the majority of my summer 2009 updating and implementing their model. The other carriers have largely been unable to hedge because they are not good counter parties. Unlike Southwest that maintains $1 on deposit for every $1 hedged, the other carriers are cash poor and can't compete with the "no frills" approach of being a fuel hedging consumer that happens to fly planes.
I suspect most people don't appreciate lower airfare due to hedging, let alone the lack of hidden fees i.e. no baggage fees.
I wonder if someone will do the same to beat out traditional bullion dealers.......

As a side note- the YouTube links are not about futures. The futures market did not cause the economic meltdown (one can argue it was the fed, HUD, Fannie /Freddie, Dodd, Frank, Billary Clinton etc). The "derivatives" they surmise caused the meltdown were OTC MBS and CDS markets. In fact the outcry since has been to make them visible by creating standardized ( very difficult to do) fungible exchange traded contracts whereby they may be monitored and regulated.
Cheers!

[JJM]

JFF, my "blood in the streets" word play above was more of an attempt to see if you still felt the overall trend for silver was down or not. A reference to the old saying of "when there's blood in the streets, its time to buy", or something to that effect. I'm sure you're busy both going long and short intra-day, just curious if you see the overall trend heading south still - if even possible to say at this point. Obviously you nailed this movement pretty well - from an inter-season standpoint.

Neil, I didn't think that poster was referring to you, but figured you would enjoy reading about it. Others may as well.

Barry, your analogy about the MIT professor and the mob was superb!

Back to the topic of $27 silver - personally, it seems we may be laying down some resistance for the time being. I'll go on record and say $23.61 is my "buy buy buy" target, not buying any .999 online until that point is reached. Still buying silver on the F2F market when it avails itself @ sub-spot however.

[beauanderos]

JFF, my "blood in the streets" word play above was more of an attempt to see if you still felt the overall trend for silver was down or not. A reference to the old saying of "when there's blood in the streets, its time to buy", or something to that effect. I'm sure you're busy both going long and short intra-day, just curious if you see the overall trend heading south still - if even possible to say at this point. Obviously you nailed this movement pretty well - from an inter-season standpoint.

Neil, I didn't think that poster was referring to you, but figured you would enjoy reading about it. Others may as well.

Barry, your analogy about the MIT professor and the mob was superb!

Back to the topic of $27 silver - personally, it seems we may be laying down some resistance for the time being. I'll go on record and say $23.61 is my "buy buy buy" target, not buying any .999 online until that point is reached. Still buying silver on the F2F market when it avails itself @ sub-spot however.

http://www.gotgoldreport.com/2011/12/go ... vels-.html

[Jonflyfish]

JFF, my "blood in the streets" word play above was more of an attempt to see if you still felt the overall trend for silver was down or not. A reference to the old saying of "when there's blood in the streets, its time to buy", or something to that effect. I'm sure you're busy both going long and short intra-day, just curious if you see the overall trend heading south still - if even possible to say at this point. Obviously you nailed this movement pretty well - from an inter-season standpoint.

Neil, I didn't think that poster was referring to you, but figured you would enjoy reading about it. Others may as well.

Barry, your analogy about the MIT professor and the mob was superb!

Back to the topic of $27 silver - personally, it seems we may be laying down some resistance for the time being. I'll go on record and say $23.61 is my "buy buy buy" target, not buying any .999 online until that point is reached. Still buying silver on the F2F market when it avails itself @ sub-spot however.

I'm with ya JJM. Just sure posting such here is the proper conduit. A lot of folks grow angry about this. It is sensitive. Typical replies were" I don't care if silver goes down. I'm in it for the long haul" to something more concerning now as the price has ripped nearly 50% from the peak. It's concerning to me that so many folks have not managed their risk but that is their choice. I never invest or trade without first determining the risk then position size. I'll be happy to share trades with you elsewhere however. Just shoot a PM if interested.

Cheers!

[Jonflyfish]

JFF, my "blood in the streets" word play above was more of an attempt to see if you still felt the overall trend for silver was down or not. A reference to the old saying of "when there's blood in the streets, its time to buy", or something to that effect. I'm sure you're busy both going long and short intra-day, just curious if you see the overall trend heading south still - if even possible to say at this point. Obviously you nailed this movement pretty well - from an inter-season standpoint.

Neil, I didn't think that poster was referring to you, but figured you would enjoy reading about it. Others may as well.

Barry, your analogy about the MIT professor and the mob was superb!

Back to the topic of $27 silver - personally, it seems we may be laying down some resistance for the time being. I'll go on record and say $23.61 is my "buy buy buy" target, not buying any .999 online until that point is reached. Still buying silver on the F2F market when it avails itself @ sub-spot however.

http://www.gotgoldreport.com/2011/12/go ... vels-.html

Unfortunately that COT data was from a week ago last Tuesday. Look what's happened since...if you liked silver then, you'll love it now

Cheers!