Comex / défaut de livraison / delivery failure par g.sandro Mer 29 Oct 2008 - 3:32 | |
| Comex / défaut de livraison / delivery failure a delivery failure at the COMEX means what? www.lemetropolecafe.com
a delivery failure at the COMEX means what?Hi Bill! I think it is accurate to state that the gold market has split into one market for those who trade the futures, which are basically promises to deliver gold, and one market for physical bullion. The quoted price for gold is still the spot market price based on paper gold. But I think there is a philosophical divergence at work too. The people who are playing futures and ETFs for bullion are looking for a quick flip for a trading opportunity. Very few of them expect to take physical delivery of the metal. Instead they hope to capture leverage on their little pieces of paper, and exchange their promises of real gold for dollars. Those who are anxiously trying to buy the dwindling supply of real bullion are less concerned about the trading profits they may realize, and are seeking security of ownership and preservation of wealth in uncertain times. [/b][/b][/b] [b]Those gamblers and traders that are playing the spec futures can be easily be spooked out of their positions and they are routinely played for chumps by bullion banks running the short scam. But stop to think for a minute in the event of a delivery failure. Lets just consider a big, reputable state lottery that has attracted the interest of gamblers looking to win big. What if that lottery decided they were not going to pay? How many people would choose to play that lottery the following week? [/b] [b]About 2 years ago, the LME defaulted on nickel futures. What was disgusting about the whole issue is the way that the longs were treated. If my memory is correct, instead of long position holders being allowed to cash in on their fairly earned profits in a short squeeze, the regulating agency declared that all contracts would be frozen within 10% of spot and the settlement would be paid in cash only. And to add insult to injury, the longs were forced to make available their metal surplus to be shorted against them. This enforcement basically marked the top for the nickel market and the price has been in a downtrend ever since. Keep in mind that there is no retail demand for nickel, no line ups in front of nickel bullion stores, and no central bank holdings of nickel. The shorts were allowed to keep their profits when nickel prices were slammed, but when the longs were in the drivers seat, the rules were changed and the winnings were not properly paid out. [/b] [b]So this is where the significance of the diverging markets for gold and silver become a factor. If we do get a delivery failure in the COMEX, gone forever will be the illusion of infinite supply of the metals, and the concept that the bullion banks are in complete control. And with that exposed for once and for all, then the demand to own the real metals will skyrocket beyond what we have seen so far. Those who buy real metal are less likely to puke it out in forced selling from margin calls, or through stop losses. Those who buy bullion are more aggressive to buy when the prices fall and less likely to be induced to sell. So the two biggest weapons for the crooks at the paper market are less of a factor to control the physical market. This is being proven in real time at local bullion retail outlets worldwide. And with every small retail bar that is sold and gone from the inventory, the demand for larger 'wholesale' bullion to drawdown the COMEX increases. The day of the delivery failure is coming. [/b] [b]I would not play the paper markets. I have all the volatility I can stand just putting up with the PM junior mining stocks. But if I did, I would be concerned that even if I was on the right side of the trade, the crooks that run the COMEX would just screw me out of my profits anyway, just as we saw at the LME for nickel. Perhaps that is part of the reason why the open interest in the COT report has been in decline. People are finally starting to realize that the casino is rigged and are going somewhere else to speculate. We have also seen the abuses in derivative trading for other asset classes fail recently. Do people think that irresponsible leverage was confined only to swaps and securities? Think again. If GATA is correct, then a whole lot of the physical bullion that has supposedly been locked in vaults is now gone forever and replaced by promises to repay loans. So the specter of a delivery failure in the metals pits should not be that far from reality. The FED seems very eager these days to hand out money that has almost no chance of ever being repaid, so why should what the bullion banks have been doing be seen as anything out of the ordinary? [/b] [b]There can be many promises to deliver generated on physical gold and silver, but once its gone, its gone... Specs will do well to remember that fact. For example, if gold pledged to the IMF is actually also double-counted by CBs as if it is owned by them, and then CBs sell swaps on that gold, and then the IMF itself 'loans' out the gold so that it is sold in the market, then you have at least three parties that think they own the same gold. Only one party actually does own it... the guy that bought the physical bullion. Musical chairs is a fun game to play until you find yourself without a chair when the music stops. [/b] [b][b][b]When push comes to shove and the diverging markets are exposed, I believe the real physical bullion will trump the paper. I doubt I will regret my decision to buy a small chunk of gold and silver and own the real metal. The fake spot price may be down today, but I am guessing the derivative scam in the metals trading will implode like all the others. I do not play the lottery either by the way. cheers! MexicoMike Silver is king, Go Gold !
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