Silver Levels of Interest

[slvrbck]

Nobody knows what they are!!! That's the problem

[Jonflyfish]

Price level structure update-



Cheers!

[Engineer]

Kinda useless without numbers...

[Jonflyfish]

Kinda useless without numbers...

I see a lot of numbers labelled along with horizontal lines as a reference. Has been plenty useful for me

Cheers!

[neilgin1]

JFF responded

Karma found Lehman.

"karma"........new age garbage.

We still have a free market system.

what flavor Kool-Aid?.............such a delusionary statement is on par with "We are still a vibrant Republic, that adheres to the Constitution and the Bill of Rights".

LIES!!!

You say it is a lie but there is not even anecdotal evidence to support this nonsense. Many flippantly and casually toss accusations without evidence.

get your grill out of the charts, and look around....for all I know, you could be an alphabet op, but probably just another greedhead, feasting off the last vestiges of a once FREE MARKET.

Fortune 500 companies are transacting and hedging against many input costs that the general public is not aware of but are benefitting from lower prices.

Now I can see how the French Revolution of the late 18th century was THE antithesis of our Revolution, with statements like that. Justice Roberts certainly helped with his "ruling" that "money is speech".......I certainly love the way hi cap tech and telecom companies bended over for the various alphabets, totally obliterating the Fourth Amendment, but why would you even care.....all you care about is price and profit....you're no better than an inner city crack slanging gangbanger....only difference is the scale and the appearance of propriety.

You don't know guys like me because you don't know me

bullshite....I grew up with guys like you........all stamped out in cookie cutter mold....the same drab dreary grey mold, that is leading this nation, this once fine Republic done the tubes, along with all the other "complexes"....banking, petrol, prison, military-industrial complex.

You simply don't know who I am

,

no, I don't......just a continuing record of your words, braying.....bragging....trolling.

Why is it so hard to have your own perspective without having to build it up by attacking others, preceded by the "I've been there and done that" dogmatism as a qualifier?

attack "others"?.........no....just you.....guys like you are killing this country.

Cheers!

yeh yeh, FU too.

[natsb88]

Kinda useless without numbers...

They get cut off if you have a narrow screen. Right click and "view image."

http://oi39.tinypic.com/e0l7p.jpg

[natsb88]

(COT report shows mismatch - http://www.cftc.gov/dea/bank/DeaSept13f.htm)

Am I reading that correctly? 10,075 long vs. 52,737 short? Or does that report only cover banks, not other participants?

This one (http://www.cftc.gov/dea/futures/deacmxsf.htm) shows 94,090 long vs. 101,754 short. But adding the 18,186 and 10,522 "non-reportable" positions brings them to an equal 112,276 each. What is a "non-reportable" position?

You are correct that it is a zero sum. A "non-reportable position" is another way of saying "small retail trader". Commercial positions, commonly used as a hedge, large speculators (portfolio managers) are required to report their positions to the CFTC. Small specs do not.

However, this is not to be confused with trades and how those positions are established. All of those trades cross the tape and clear through the exchange. All futures trades are visible and reflected in price, volume and Open Interest.
As seen in a prior chart posted here, the net positions of each of the three groups (commercials- blue, Large Speculators- green, Small Speculators- red) as expressed by subtracting each group's respective short positions from long. Total Open interest is also shown and matches the numbers reported.

Cheers!

So assuming I blindly trust the exchange's position report (which seems a bit like asking a fox to count hens without ever seeing the hens yourself, but whatever), and it truly is a zero sum game, that still doesn't resolve the very relevant issue Inflexion brought forth about futures and other derivatives tainting free market supply and demand characteristics. Those 112,276 positions represent 561,380,000 ounces of silver. Comex shows a total of 162,678,161 ounces in inventory, only 29% of what is being traded. More than two thirds of the future positions could never be physically delivered. How can more than tripling the actual inventory to play speculation/hedging games NOT affect the supply characteristics (and therefore price) of the market? Futures and derivatives are "supposed to" be a way to profit/lose from the prices of physical commodities, i.e. the futures and derivatives prices are driven by the buying and selling of the physical commodity. In actuality the speculatory/hedging trades overwhelmingly dwarf the real physical transactions, i.e. speculation/hedging drives the price of the physical commodity instead of the other way around. I'd love to see what would happen if the number of future positions was actually held to the physical inventory on hand. Once the physical inventory level was reached the exchange would no longer grant new positions out of thin air, but rather you would have to go buy somebody else out of their existing position. I think we would still see speculation drive physical prices to an extent, but it would stay much closer to the true/physical supply and demand characteristics of the market than what we have today. And not just with silver and gold, but oil, corn, wheat, copper, and everything else.

[Jonflyfish]

So assuming I blindly trust the exchange's position report (which seems a bit like asking a fox to count hens without ever seeing the hens yourself, but whatever), and it truly is a zero sum game, that still doesn't resolve the very relevant issue Inflexion brought forth about futures and other derivatives tainting free market supply and demand characteristics. Those 112,276 positions represent 561,380,000 ounces of silver. Comex shows a total of 162,678,161 ounces in inventory, only 29% of what is being traded. More than two thirds of the future positions could never be physically delivered. How can more than tripling the actual inventory to play speculation/hedging games NOT affect the supply characteristics (and therefore price) of the market? Futures and derivatives are "supposed to" be a way to profit/lose from the prices of physical commodities, i.e. the futures and derivatives prices are driven by the buying and selling of the physical commodity. In actuality the speculatory/hedging trades overwhelmingly dwarf the real physical transactions, i.e. speculation/hedging drives the price of the physical commodity instead of the other way around. I'd love to see what would happen if the number of future positions was actually held to the physical inventory on hand. Once the physical inventory level was reached the exchange would no longer grant new positions out of thin air, but rather you would have to go buy somebody else out of their existing position. I think we would still see speculation drive physical prices to an extent, but it would stay much closer to the true/physical supply and demand characteristics of the market than what we have today. And not just with silver and gold, but oil, corn, wheat, copper, and everything else.

Derivatives are derived from the underlying. We’ve discussed this concept many times. When it does come to delivery, the exchange functions as a clearing mechanism. It isn’t the physical supplier for those who are taking delivery. If someone is short a contract into expiration, they may be assigned delivery to someone who was long into expiration. In other words, if I was short into expiration and assigned delivery, I am then obligated to take my Comex deliverable bars and send them out for delivery. They are not known as reportable inventory by the exchange. So looking at inventory vs contracts outstanding doesn’t give you the available supply numbers for delivery in whole. Also, most FCM’s do not have a business model to physically handle commodities for delivery. They are obligated to make sure that the assignment is delivered, whether the customer has the bars or not. Because of those reasons, most FCM’s do not allow for physically settled contracts at expiration, which eliminates a vast majority of open interest that may look for delivery. Additionally, very few market participants use exchanges as a physical asset procurement supplier, and only a fraction of them would have been positioned favorably to take or give delivery at the executed position price. Generally speaking, market participants are not using futures contracts to locate commodity supply. They are trading to offset risk or directionally trading.

Cheers!

[Jonflyfish]

JFF responded

Karma found Lehman.

"karma"........new age garbage.

We still have a free market system.

what flavor Kool-Aid?.............such a delusionary statement is on par with "We are still a vibrant Republic, that adheres to the Constitution and the Bill of Rights".

LIES!!!

You say it is a lie but there is not even anecdotal evidence to support this nonsense. Many flippantly and casually toss accusations without evidence.

get your grill out of the charts, and look around....for all I know, you could be an alphabet op, but probably just another greedhead, feasting off the last vestiges of a once FREE MARKET.

Fortune 500 companies are transacting and hedging against many input costs that the general public is not aware of but are benefitting from lower prices.

Now I can see how the French Revolution of the late 18th century was THE antithesis of our Revolution, with statements like that. Justice Roberts certainly helped with his "ruling" that "money is speech".......I certainly love the way hi cap tech and telecom companies bended over for the various alphabets, totally obliterating the Fourth Amendment, but why would you even care.....all you care about is price and profit....you're no better than an inner city crack slanging gangbanger....only difference is the scale and the appearance of propriety.

You don't know guys like me because you don't know me

bullshite....I grew up with guys like you........all stamped out in cookie cutter mold....the same drab dreary grey mold, that is leading this nation, this once fine Republic done the tubes, along with all the other "complexes"....banking, petrol, prison, military-industrial complex.

You simply don't know who I am

,

no, I don't......just a continuing record of your words, braying.....bragging....trolling.

Why is it so hard to have your own perspective without having to build it up by attacking others, preceded by the "I've been there and done that" dogmatism as a qualifier?

attack "others"?.........no....just you.....guys like you are killing this country.

Cheers!

yeh yeh, FU too.

My perspectives have been pragmatic and respectfully given.
I also respect varying perspectives given by others.
However, for whatever reason you have the need to garner attention (albeit negative), you seem to enjoy flippantly spewing crass pathetic trash talk from the gutter. I will not join you down there. It is destructive. I will not communicate with you any further.
Cheers!

[InfleXion]

There is no mismatch with the COT report. I pull that data directly from the CFTC and plot it on my charts as seen in this thread. Every week the net position of all traders combined is zero.

Agreed, thank you for clarifying that for me. However, zero sum game or not, the contracts offsetting each other are still representing commodities that do not exist. There are 2 different dynamics here, and it was not my intent to focus on the former but rather the latter which you have chosen not to focus on.

JPM has liquidated their short position. I find it curious why you would expect people to keep re-hashing something that is no longer the case.

What short position and how could they unwind the rumored size without getting Amaranth'd? And how could they have rolled contracts forward without being exposed if it was such a mammoth position? And the masses who believed the one or two lieutenants leading the rumor did not experience anything that was promised if the position was true.
To say there was or wasn't a position and what happened to it is just speculation and supposition with less than anecdotal evidence with price history that suggests the exact opposite of what would have taken place in order to unwind such ridiculous size. If I recall correctly, mentioned some many many months ago that betting against JPM as if they were caught in a tenuous position, exposed and waiting for some small traders to show up and punish them would be futile and the wrong idea for trading or investing. One needs a plan, strategy, tactics and above all else, discipline to follow the plan.

It was the Bear Stearns short position, and there were threads about it here when they went long on SLV and dispersed their short position. I could dig the threads up for you or do a web search, but I will leave that to your own time and effort. No speculation involved except your own. I can say with certainty that the net short/long position has decreased dramatically, and what of it remains has been spread out among the major derivative holders.

[rsk1963]

slightly off topic, but JFF why is USLV today trading down .7ish % right now, while silver is up approx. .8%

thought uslv was suppose to run 3X to Ag?

thanks in advance

[Jonflyfish]

slightly off topic, but JFF why is USLV today trading down .7ish % right now, while silver is up approx. .8%

thought uslv was suppose to run 3X to Ag?

thanks in advance

Good question. Not sure because I just looked and it was basically flat, along with SLV.

Cheers!

[natsb88]

Derivatives are derived from the underlying. We’ve discussed this concept many times. When it does come to delivery, the exchange functions as a clearing mechanism. It isn’t the physical supplier for those who are taking delivery. If someone is short a contract into expiration, they may be assigned delivery to someone who was long into expiration. In other words, if I was short into expiration and assigned delivery, I am then obligated to take my Comex deliverable bars and send them out for delivery. They are not known as reportable inventory by the exchange. So looking at inventory vs contracts outstanding doesn’t give you the available supply numbers for delivery in whole. Also, most FCM’s do not have a business model to physically handle commodities for delivery. They are obligated to make sure that the assignment is delivered, whether the customer has the bars or not. Because of those reasons, most FCM’s do not allow for physically settled contracts at expiration, which eliminates a vast majority of open interest that may look for delivery. Additionally, very few market participants use exchanges as a physical asset procurement supplier, and only a fraction of them would have been positioned favorably to take or give delivery at the executed position price. Generally speaking, market participants are not using futures contracts to locate commodity supply. They are trading to offset risk or directionally trading.

Cheers!

Which is basically my point. These derivative markets don't contribute anything to the physical markets except price influence. They don't produce physical goods, they don't consume physical goods, they just trade imaginary shares of said goods and consequently skew the real supply and demand curves. Derivatives are "supposed to" follow the supply and demand of real goods, but the volume of speculatory trading is so much greater than physical trading that they are no longer derivative but are instead the driving force.

Not unlike betting on sports games. Low value and low volume bets (let's call them non-reportable positions) don't often influence the game. The participants and stakes are small enough that the desire/ability to influence the score of the game just isn't there. The betting is simply a derivative of the game. But if you jack up the size and volume of the bets to the point where certain participants stand to gain or lose amounts greater than the combined salaries of all the players playing the game, then surely those gamblers will look for ways to influence the game and better their odds of personal gain. The true dynamics of the game (player and team skills, or physical production and consumption) become susceptible (if not completely secondary) to players or teams getting paid off, profit sharing agreements, and so on. Disproportionate speculatory activity makes the "game" vulnerable to influences that are not natural market forces. And to think that trading futures is not a game or that Wall Street is somehow more noble than professional athletes seems rather naive to me.

[Frank t]

and the quality of your living depends entirely on your ability to play the game

[Frank t]

and im still learning the rules

[Jonflyfish]

Derivatives are derived from the underlying. We’ve discussed this concept many times. When it does come to delivery, the exchange functions as a clearing mechanism. It isn’t the physical supplier for those who are taking delivery. If someone is short a contract into expiration, they may be assigned delivery to someone who was long into expiration. In other words, if I was short into expiration and assigned delivery, I am then obligated to take my Comex deliverable bars and send them out for delivery. They are not known as reportable inventory by the exchange. So looking at inventory vs contracts outstanding doesn’t give you the available supply numbers for delivery in whole. Also, most FCM’s do not have a business model to physically handle commodities for delivery. They are obligated to make sure that the assignment is delivered, whether the customer has the bars or not. Because of those reasons, most FCM’s do not allow for physically settled contracts at expiration, which eliminates a vast majority of open interest that may look for delivery. Additionally, very few market participants use exchanges as a physical asset procurement supplier, and only a fraction of them would have been positioned favorably to take or give delivery at the executed position price. Generally speaking, market participants are not using futures contracts to locate commodity supply. They are trading to offset risk or directionally trading.

Cheers!

Which is basically my point. These derivative markets don't contribute anything to the physical markets except price influence. They don't produce physical goods, they don't consume physical goods, they just trade imaginary shares of said goods and consequently skew the real supply and demand curves. Derivatives are "supposed to" follow the supply and demand of real goods, but the volume of speculatory trading is so much greater than physical trading that they are no longer derivative but are instead the driving force.

Not unlike betting on sports games. Low value and low volume bets (let's call them non-reportable positions) don't often influence the game. The participants and stakes are small enough that the desire/ability to influence the score of the game just isn't there. The betting is simply a derivative of the game. But if you jack up the size and volume of the bets to the point where certain participants stand to gain or lose amounts greater than the combined salaries of all the players playing the game, then surely those gamblers will look for ways to influence the game and better their odds of personal gain. The true dynamics of the game (player and team skills, or physical production and consumption) become susceptible (if not completely secondary) to players or teams getting paid off, profit sharing agreements, and so on. Disproportionate speculatory activity makes the "game" vulnerable to influences that are not natural market forces. And to think that trading futures is not a game or that Wall Street is somehow more noble than professional athletes seems rather naive to me.

I respect your opinion but don't agree with it. There is a lot of value to the consumer and the producer by way of hedging cost or revenue, depending on which side of the equation one is on. An example would be Southwest Airlines in 2008. They were hedged at a very low jet fuel consumption cost As such they were able to keep airfares for their customers below the competition, didn't add fuel surcharges, nor any baggage fees. They didn't have the industry-wide "frills". Additionally, had fuel costs that were fixed with an offset in a rising market and had earnings visibility as a result. The other major domestically based international carriers either went bankrupt and/or were forced to merge with a competitor for survival, which is anti-competitive to remove marketplace choices.
I won't argue the value of the financial markets beyond this post. It's under constant attack by those who believe that one market adds value while another doesn't etc, which isn't a valid argument because one can think of many reasons why one is better than the other and who adds or takes away value i.e. saying the physical market dealers add no value they simply stand in between a buyer and seller, while extracting a lot of value from both sides. People can argue for or against any/all markets and market mechanisms. In my opinion it is a moot point because participants find value in both (physical and/or financial) markets otherwise they wouldn't participate. Keep in mind as well that there is a very liquid physical market in London (LBMA). If arbitrage existed between Comex and LBMA, that gap would quickly be siphoned off, but it doesn't exist for this very reason. It is efficient.

Beyond these points, if the futures market wasn't of value, the coin dealers, whom all the most widely known, wouldn't freely chose to leverage the Comex price as their price + marketing differential (dealer profit). If it wasn't a good pricing mechanism or if it wasn't of value they wouldn't universally depend on it as their source.

Cheers!

[Jonflyfish]

Agreed, thank you for clarifying that for me. However, zero sum game or not, the contracts offsetting each other are still representing commodities that do not exist. There are 2 different dynamics here, and it was not my intent to focus on the former but rather the latter which you have chosen not to focus on.


It was the Bear Stearns short position, and there were threads about it here when they went long on SLV and dispersed their short position. I could dig the threads up for you or do a web search, but I will leave that to your own time and effort. No speculation involved except your own. I can say with certainty that the net short/long position has decreased dramatically, and what of it remains has been spread out among the major derivative holders.

Thank you for the kind reply. Apologies that I missed this post earlier. I have addressed both issues that you mention. The "latter" was on a different post and didn't address it to you. Please consider it to have been- Derivatives are derived from the underlying...Exchanging for physical i.e. taking delivery is certainly an option and you don't know who has what physical supply for delivery. It is not a requirement to file your inventory position if you choose to sell(short) a contract but if assigned at expiration you are required to deliver so it is not knowable.

Bear Stearns went defunct in 2008, 5 yrs ago. The "mother of all squeezes" story reported and spread in the blogosphere was to have taken place against Blythe and her operation at JPM following the Jimmy Cayne and co demise. Be careful with web searches however. You are likely to find something false about why-you-must buy-silver-now dot com sites. They will say the darnedest things and that what they say is true because it's on the internet so it must be true. And you can confirm that it must be true by reading that the internet. For the last several years they pumped this notion of "punishing the evil banksters" by squeezing their shorts to the moon. Then, as it didn't happen support rhetoric continued as they fought price- the truth. Eventually this among other stories have gone silent. People are drawn by emotion and seek validation for their feelings. There is no shortage of those who will falsely feed what people seek as validation for their actions and position, beliefs etc. However, that is the poorest of all investment decisions.

Cheers!

[natsb88]

I respect your opinion but don't agree with it. There is a lot of value to the consumer and the producer by way of hedging cost or revenue, depending on which side of the equation one is on. An example would be Southwest Airlines in 2008. They were hedged at a very low jet fuel consumption cost As such they were able to keep airfares for their customers below the competition, didn't add fuel surcharges, nor any baggage fees. They didn't have the industry-wide "frills". Additionally, had fuel costs that were fixed with an offset in a rising market and had earnings visibility as a result. The other major domestically based international carriers either went bankrupt and/or were forced to merge with a competitor for survival, which is anti-competitive to remove marketplace choices.
I won't argue the value of the financial markets beyond this post. It's under constant attack by those who believe that one market adds value while another doesn't etc, which isn't a valid argument because one can think of many reasons why one is better than the other and who adds or takes away value i.e. saying the physical market dealers add no value they simply stand in between a buyer and seller, while extracting a lot of value from both sides. People can argue for or against any/all markets and market mechanisms. In my opinion it is a moot point because participants find value in both (physical and/or financial) markets otherwise they wouldn't participate. Keep in mind as well that there is a very liquid physical market in London (LBMA). If arbitrage existed between Comex and LBMA, that gap would quickly be siphoned off, but it doesn't exist for this very reason. It is efficient.

Beyond these points, if the futures market wasn't of value, the coin dealers, whom all the most widely known, wouldn't freely chose to leverage the Comex price as their price + marketing differential (dealer profit). If it wasn't a good pricing mechanism or if it wasn't of value they wouldn't universally depend on it as their source.

Cheers!

I can see the value of hedging. At least with hedging the buyer/shorter is typically also a producer or consumer of the physical commodity. But I tend to think the financial market is largely responsible for the price swings that make hedging beneficial in the first place. Was the desire to hedge a driving force behind the initial development of the financial commodity markets? Or was the primary motive creating a mechanism to profit from speculation? Something I'd like to research more at some point. Subjectively it sure feels like financial markets serve to exaggerate price fluctuations brought about by disruptions/discoveries in physical supply and demand, not stabilize them as is often cited as justification for the existence or even "necessity" of financial markets. I always hesitate to use the term "greed" because I don't think the desire to make money is a bad thing, but there is certainly a bandwagon/snowball effect facilitated by the financial markets and easy leveraging that allow for faster and more severe price fluctuations that simply wouldn't exist if the market were purely physical. I'd be very interested to know what percentage of financial positions is hedging versus what percentage is naked speculation. Of course there's really no way to measure that.

As for coin dealers using Comex pricing, that's a perfect example of my earlier point about financial derivatives dwarfing the true market characteristics of a physical commodity, rather than actually being a derivative. It's like the cart driving the horse. You can't tell me that the real value of an ounce of silver sitting on my desk fluctuates up and down 5-10% several times during a trading day. Does the physical supply and demand of silver change that frequently and severely? Does the usefulness of the metal fluctuate throughout the day? Of course not. These kind of abrupt price fluctuates are driven by the financial markets and speculators, the vast majority of which never touch an ounce of physical silver. Big dealers are tied into it. They hedge and make a predictable profit on the spread regardless of what speculators do to the price. Smaller dealers are basically forced to follow suit with fluctuating prices because that's what the big competition does, but they don't have the means to hedge and therefore take on much greater risk. The same can be said for any other commodity traded in futures. The financial markets naturally favor big businesses with lots of working capital over (and often force out) smaller players. And big businesses naturally have more ability to influence investors, regulators, and the like. The existence of financial markets is largely responsible for corporatism in this country. But I'm beginning to digress...

Again, I have nothing against wealth and profit when it is earned in real and free markets. But to me the financial market is artificial. The term "derivative" is misleading since the modern market functions the other way around. Speculators neither produce nor consume, they just play games among themselves with imaginary goods and, thanks to astronomical trading volumes, drag the physical prices up and down with them. Just because one can observe, analyze, play, and profit from a market does not make it a real and free market.

[Bigsarge]

and im still learning the rules

Don't worry Frank, Apparently, I can't even read the rule book..... Maybe if it had pictures like the old "G.I. Combat!" comics. ..

Interesting thread, nonetheless

[natsb88]

Derivatives are derived from the underlying...Exchanging for physical i.e. taking delivery is certainly an option and you don't know who has what physical supply for delivery. It is not a requirement to file your inventory position if you choose to sell(short) a contract but if assigned at expiration you are required to deliver so it is not knowable.

That bothers me a great deal. Where else, other than the financial markets, can you sign a contract agreeing to deliver a physical commodity, without having any proof that you actually own said physical commodity? I can't get a mortgage without proving there's a house, I can't rent an apartment without a cash deposit, but I can short 5000 ounces of silver without any need to prove I can deliver? Obviously the majority of contracts are settled in cash, and I would suspect the majority of those selling shorts don't have the physical silver. That just seems like a ridiculous system. If you are going to have a derivative commodities market, call it what it is - taking bets on the price of commodities. No delivery option, no delivery requirement. Just bets. This quasi-link between the derivative financials and the physical markets (intentionally, I suppose) leaves a lot of room for funny business. Futures should be fully backed by all players, in which case they would closely follow the physical market but have less influence on the supply and demand characteristics, or be a true derivative and be completely disconnected from the physical market with no options for delivery. This half-assed connection, where you have to posses the silver, but not really, is what allows the financial market to drive the physical market and speculators to play spectacular games while more often than not the true physical producers and consumers, tiny in comparison to the speculators, get the short end of the stick.

[68Camaro]

By another name, it's called gambling. Except that in the real world of gambling if you fail to pay, they shoot you in the kneecap, then kill your family, before they tie an anchor to your ankles and throw you in the bay.

[neilgin1]

watch out for this guy JFF.....and before I say "why", let me tell what this whole thing is really about

the petrodollar. This is not REALLY about the price of silver or gold, its all about maintaining the illusion of the GLOBAL PRIMACY of the petrodollar.

ask yourself this question; why is it, that a man who purports to operate in the upper echelons of the financial industry spends inordinate amounts of time REFUTING the primacy of precious metals as currency over the petrodollar....or serving as a de facto apologist for a completely corrupted market?....(and all I need to as evidence for this corruption is the fact that Jon Corzine walks a free man, after blowing up MF Global with customer segregated funds to the tune of 1.6 bln)

so why would a man, in these ranks, spend time crafting well written refutations OR....."telling us" 'short at 23.57'? (if you read between the lines, he does not regard PM's as ANY kind of coherent currency.

so why does he, so tenaciously post?

I can only think of two reasons; 1.....he's a lonely man, needs something to do.....and please don't tell me, he's "here to help us".

or 2. he's either tasked or paid to do this.....don't laugh. It's a real world "program". The Net is unique, its a totally FREE form of communication between citizens. Think about that. People from all walks of life, who would normally never have ANY discourse, can communicate intimately, without any hindrance...or until recent revelations, without any fear. The men, who just lately have been unmasked, as conducting absolute TOTAL surveillance over EVERY form of domestic communications, recognized the potency of the internet, which is why POTUS was given the "kill switch" over the net in "case of national emergency.

an ongoing program targeting social media, especially discussion forums, is to place operatives on such social media, either to co-opt the underlying logos of a forum...or to serve as agitators, on some of the more potentially seditious, violent forums, media, so as to draw them into a honey trap. The forms and missions of these ops vary.....but it is a real program.

i'm not saying JFF IS such an op, but there's something about him, that doesn't ring RIGHT......or authentic.

I, myself have lowered my net profile by 95%, this is the last forum I have participated in, and now I will NICELY ask the Mods and owner to completely wipe my account within 48 hours please...i'm asking nicely. Thanks, God bless the Republic.

[beauanderos]

the black hole of non-participation. First Thogey, now Neil... who's next?

[Jonflyfish]

That diatribe about me was most epic and hilarious. There are some serious intolerance and hate issues, not to mention the previously admitted substance abuses.
Was a tremendous effort there by someone who spins and twists words of others. Non-factual, jovial frolic by someone who posts the most lengthy dwarfing posts of all members here, regularly with little to no relevant subject content. Most everything posted could be reversed like a mirror and sent back to the source. I do wonder how much he gets paid to attack others, especially after joining this forum nearly two full years after i did and yet have more posts than I by 200+. Now that ill minded campaign is at a near total loss. Some serious issues with that intolerant troll.

Cheers!

[Jonflyfish]

I respect your opinion but don't agree with it. There is a lot of value to the consumer and the producer by way of hedging cost or revenue, depending on which side of the equation one is on. An example would be Southwest Airlines in 2008. They were hedged at a very low jet fuel consumption cost As such they were able to keep airfares for their customers below the competition, didn't add fuel surcharges, nor any baggage fees. They didn't have the industry-wide "frills". Additionally, had fuel costs that were fixed with an offset in a rising market and had earnings visibility as a result. The other major domestically based international carriers either went bankrupt and/or were forced to merge with a competitor for survival, which is anti-competitive to remove marketplace choices.
I won't argue the value of the financial markets beyond this post. It's under constant attack by those who believe that one market adds value while another doesn't etc, which isn't a valid argument because one can think of many reasons why one is better than the other and who adds or takes away value i.e. saying the physical market dealers add no value they simply stand in between a buyer and seller, while extracting a lot of value from both sides. People can argue for or against any/all markets and market mechanisms. In my opinion it is a moot point because participants find value in both (physical and/or financial) markets otherwise they wouldn't participate. Keep in mind as well that there is a very liquid physical market in London (LBMA). If arbitrage existed between Comex and LBMA, that gap would quickly be siphoned off, but it doesn't exist for this very reason. It is efficient.

Beyond these points, if the futures market wasn't of value, the coin dealers, whom all the most widely known, wouldn't freely chose to leverage the Comex price as their price + marketing differential (dealer profit). If it wasn't a good pricing mechanism or if it wasn't of value they wouldn't universally depend on it as their source.

Cheers!

I can see the value of hedging. At least with hedging the buyer/shorter is typically also a producer or consumer of the physical commodity. But I tend to think the financial market is largely responsible for the price swings that make hedging beneficial in the first place. Was the desire to hedge a driving force behind the initial development of the financial commodity markets? Or was the primary motive creating a mechanism to profit from speculation? Something I'd like to research more at some point. Subjectively it sure feels like financial markets serve to exaggerate price fluctuations brought about by disruptions/discoveries in physical supply and demand, not stabilize them as is often cited as justification for the existence or even "necessity" of financial markets. I always hesitate to use the term "greed" because I don't think the desire to make money is a bad thing, but there is certainly a bandwagon/snowball effect facilitated by the financial markets and easy leveraging that allow for faster and more severe price fluctuations that simply wouldn't exist if the market were purely physical. I'd be very interested to know what percentage of financial positions is hedging versus what percentage is naked speculation. Of course there's really no way to measure that.

As for coin dealers using Comex pricing, that's a perfect example of my earlier point about financial derivatives dwarfing the true market characteristics of a physical commodity, rather than actually being a derivative. It's like the cart driving the horse. You can't tell me that the real value of an ounce of silver sitting on my desk fluctuates up and down 5-10% several times during a trading day. Does the physical supply and demand of silver change that frequently and severely? Does the usefulness of the metal fluctuate throughout the day? Of course not. These kind of abrupt price fluctuates are driven by the financial markets and speculators, the vast majority of which never touch an ounce of physical silver. Big dealers are tied into it. They hedge and make a predictable profit on the spread regardless of what speculators do to the price. Smaller dealers are basically forced to follow suit with fluctuating prices because that's what the big competition does, but they don't have the means to hedge and therefore take on much greater risk. The same can be said for any other commodity traded in futures. The financial markets naturally favor big businesses with lots of working capital over (and often force out) smaller players. And big businesses naturally have more ability to influence investors, regulators, and the like. The existence of financial markets is largely responsible for corporatism in this country. But I'm beginning to digress...

Again, I have nothing against wealth and profit when it is earned in real and free markets. But to me the financial market is artificial. The term "derivative" is misleading since the modern market functions the other way around. Speculators neither produce nor consume, they just play games among themselves with imaginary goods and, thanks to astronomical trading volumes, drag the physical prices up and down with them. Just because one can observe, analyze, play, and profit from a market does not make it a real and free market.

Silver isn't any more volatile than it has ever been over hundreds of years. Physical markets ultimately drive derivatives. That's why derivatives are derived. If you are a producer, nobody can force you to sell at unfavorable prices, unless you have agreed and contracted to do so. I don't see silver fluctuating 5-10% several times/day on any regular basis. It is a relatively illiquid market compared to other commodities. If there were not a futures market you wouldn't have a stable price. It's simple to understand this by looking at what silver did before futures were traded. You don't need to ever touch a physical ounce of silver in order to realize a gain or loss in parity with the value of the physical. With the barrage of attacks against the financial markets coming from the physical dealers (inherent conflict of interest as they would like to make a commission on selling something that they have and discourage someone from investing elsewhere. In all fairness, the financial broker would have the same conflict with his offerings) I do find it fascinating that they freely choose to anchor their prices with the futures. At some point people will realize the inter-market relationship between the Comex and LBMA and why this makes sense (and of their own choosing). Peace.

cheers!