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 Replies: 27 / Views: 3,198 |
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Pillar of the Community
United States
1200 Posts |
@sdcrow---Picky, picky, picky! Fourteen months--shmorteen months! Who cares? We all love a good juicy tidbit to get all bent out of shape and lathered up about!
Now---could we please get back to the possible elimination of the US dollar bill, penny, nickel and dime and whether or not Brinks+etc are actually grabbing all the circulating silver coin?
Oh year---and what sizes and forms it's best to have PMs stockpiled in when SHTF occurs (presumably late next week), too...
Thank you.
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Valued Member
United States
137 Posts |
Well, I guess that I will just have to learn to pay better attention!!  Man, do I feel stupid. |
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Pillar of the Community
 United States
1590 Posts |
"To get back to the hamburger analogy its more like buying a share into the place that makes the hamburger than buying the hamburger itself. If hamburgers do well you make money, if not you lose money. But if all you wanted was lunch you should have went and actually bought that instead of a voucher"
Actually I agree. My beef is that the ETF's are touted as being the cheapest way to "own" gold and/or silver.
From Wiki: "a futures contract is a standardized forward contract in which the buyer and the seller accept the terms in regards to product, grade, quantity and location and are only free to negotiate the price.[2]"
"A futures contract has the same general features as a forward contract but is standardized and transacted through a futures exchange"
"A forward contract is an agreement between two parties to exchange at some fixed future date a given quantity of a commodity for a price defined today."
So while in practice the futures markets run exactly as Basbal says, in theory and by contractual mechanism they require delivery. And that makes sense because if the longs have a price which is way above the spot price at delivery time, then they would lose money. Which is why you have all the mechanisms to mitigate those losses...for a price.
Agreed though that this does seem to be a rumor.
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Pillar of the Community
United States
3789 Posts |
i didnt look at the link but seeing the comments, yes that was a big rumor that was spread around, and then there was talk about the SLV not having enough silver and then talk about JPM since they are the custodian and yada yada yada yada.
Not suprised to see tho the rumor trying to lift up again lol very typical lol
But thats typical,,,, the REAL attention should be paid to palladium and platinum BEFORE you start to see it pop up left and right on financial news articles. These two are the clear leaders in the PM group and I keep harping on them because I hope anyone and everyone reading this goes and researches this and is able to bank some coin $$$$.
let silver and gold do their thing for now, their time will come. they probably will get a lift from pall and plat as well.
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Pillar of the Community
United States
3789 Posts |
BTW - futures contracts do not require delivery. THey are simply rolled up into the next contract before they expire. They are also used to hedge by end users. also contracts and be exited before they reach price limits.
ETFs and ETNs are great products for investing and trading. The liquidity on most of these cannot be beaten. You can also hedge yourself. Try and do that with bullion coins.
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Pillar of the Community
United States
1590 Posts |
I understand that they don't strictly require delivery, but they are very clearly written FOR delivery. That seems to be the basic underlying premise of the contract. As I said I understand there are mechanism's to get out of delivery. And these mechanism's have become the norm. But that doesn't change the fact that delivery is a key underpinning of the contract. As stated above the base of any futures contract is for a given commodity to be delivered in the future for a price set today. Take the word delivery out of that sentence and what you have is meaningless.  ...kinda like the oil futures. |
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Pillar of the Community
United States
3789 Posts |
Well..
I think its key to understand that the futures market is used by more than just speculators. There are different industry groups that do take delivery. Anyone from Domino's pizza to Exxon Mobile are in the futures markets. Some are there to hedge, some are there to take delivery and others are there to simply trade.
So, no, they are not written for the explicit intent to take delivery. futures contracts are formulated in such an extent that allows various participants can make a market and keep liquidity, prices , supply and demand available to and for what is needed.
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Pillar of the Community
United States
1590 Posts |
I would disagree. The contract itself is written with the intent to take delivery. The intent of the person buying the contract is beside the point of the legal basis of the contract.
Yes, they are formulated to let you get out of delivery. But delivery is still the basis.
And supply and demand have no basis in futures contracts. Non whatsoever. It is all about perception. Take the Mint saying they have to halt sales of AE's. That is a forecast problem not a supply problem.
Lets go back to the hamburger analogy. If I owned a Hamburger/Fast Food Franchise ( and I do, by the way) and I forecast a need of x pounds of hamburger in January based on historical demand and expected sales growth or contraction, and then I run out of hamburger because my forecast was wrong; that doesn't mean there is a hamburger shortage. It means I messed up.
The mint did the same thing. They made a forecast for X amount of planchents based on historical demand and the lessening in demand for FY2012. That forecast was wrong. But such has always been the nature of business.
Let me make this clear; there is no shortage of Silver; yet Silver is at historical highs ( not the highest levels, but high in the context of the last 10 years). Likewise the EIS has stated that America will be a net Oil exporting nation within 24 months. Yet everytime some bozo fires an AK47 in the middle east the price of oil goes up...shortage...shortage...every in the pits shout.
Remember Numismatic Silver is a very small percentage of the market. The industrial usage for electronics is down. Photographic uses are almost at nil; and this was a MAJOR market segment. Yet this segment goes away and has no effect on the price of silver. Solar use is almost stagnant right now. I could go on and on. But the point is supply and demand have no place in the Futures market.
Even well known commentators on Kitco admit it is all about perception, manipulation and greed..."Buy the rumor, sell the fact".
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Pillar of the Community
United States
3789 Posts |
sorry but its not and you are wrong. the contract was not written with the exclusive intent for delivery. IF that was the case then a contract would not have options to roll over nor to be hedged.
IF the sole basis was to take delivery, then we wouldn't have a market. And a market needs buyers and sellers. Furthermore, futures are allowed to roll over and over and over and over.
Its really very simple- a market is made up of many participants. It decides where prices go. Futures rise because of demand of a certain commod. whether it be oil, silver, wheat, corn or coffee. This has been going on for a long long time and not think that supply and demand don't drive prices in the futures market is wishful thinking.
Price is NOT based on perception. Price is based on supply and demand. To think otherwise would be very short sighted.
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Bedrock of the Community
13014 Posts |
Quote:
Price is NOT based on perception. Price is based on supply and demand. Its based on both. If people think something is going to be harder to come by in the future it doesn't matter if thats true or not the price goes up. A lot of times in economics perception can make things true. Theres more to it than that but it definitely plays a role. At any given time you can find things both over and under valued for no other reason than perception |
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Pillar of the Community
United States
4008 Posts |
Quote:
A lot of times in economics perception can make things true. Agreed. The fear / greed cycle IS alive and well. With small investor money starting to come out of bond funds and going into stock funds it is looking like fear is ebbing while greed is flowing. There was a recent article about Ford Motor Company buying up a lot of Pd several years ago in expectation of a rising Pd price only to have a substantial pull-back and thereby a large paper loss. I just skimmed the article so don't recall if they held that position or liquidated it. Good for them IF they kept it! |
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Pillar of the Community
United States
3789 Posts |
1- small investor/retail/mom and pop is no where near owning stocks. most are still stuck to bonds, or sitting on gold and silver at the top, mind you... retail money has yet to flood the equity markets.
2- equity markets are rising because of - tons of CB liquidity, the long bond is getting liquidated, market is pricing in better economic growth.
perception does not maintain prices higher or lower. sorry but markets don't work that. I know its hard to grasp but sorry it doesn't. The markets are great discounting and appreciating vehicle, always have been, always will be. I see it everyday, M-F, 365 days a year.
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Replies: 27 / Views: 3,198 |
First Page
Posted 01/22/2013 10:23 am
