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  1. #1
    us
    Living the WP

    Apr 2006
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    Gold and silver manipulation again!

    The Chicago Mercantile Exchange seems to feel it is the worlds policeman and overall watchman for the price of precious metals.
    If they cannot cover, they change the rules. I am so tired of these agencies that change the rules midstream because it is not good for a couple of the head honchos in the agency.


    Anyway, here is a great article on gold and silver manipulation, You all wonder why the prices have not been acting rationally?

    http://www.minyanville.com/businessm.../2011/id/36305
    Thomas Paine-
    "Government even in its best state is but a necessary evil," Paine wrote, and "in its worst state an intolerable one." Like many Americans today, Paine believed that government added insult to injury by using tax dollars in ways that were actually harmful to the public. "When we suffer," wrote Paine, "or are exposed to the same miseries by a government which we might expect in a country without government, our calamities are heightened by reflecting that we furnish the means by which we suffer." To Paine, "securing freedom and property to all men, and, above all things, freedom of religion," were the only legitimate functions of government. Americans generally agreed, and went to war to achieve this vision.
    http://mises.org/freemarket_detail.aspx?control=233

  2. #2

    Apr 2008
    3,104
    150 times

    Re: Gold and silver manipulation again!

    Dave,

    I am not saying gold and silver are not manipulated, however, the article you posted had some "facts" that are completely wrong.

    Gold trades in 100 ounce contracts, not 5000.

    As far as Comex getting a $50 fee per ounce of gold, I have never heard of that. If that is true, then why would they be doing anything that would limit or discourage the number of trades? They would be encouraging them so they could make lots of $$$$ in my opinion. I would like to know where this assertion of $50 fee comes from.

    It is not Comex's duty to deliver the metal if the buyer wants delivery, it is up to the seller (short) to deliver.

    I don't know if there are other mistakes, but read the comments at the end of the article and you will see others have seen some mistakes.

    Jim
    R.I.P. Rich Hartford

  3. #3
    us
    Living the WP

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    Re: Gold and silver manipulation again!

    Quote Originally Posted by jim4silver
    Dave,

    I am not saying gold and silver are not manipulated, however, the article you posted had some "facts" that are completely wrong.

    Gold trades in 100 ounce contracts, not 5000.

    As far as Comex getting a $50 fee per ounce of gold, I have never heard of that. If that is true, then why would they be doing anything that would limit or discourage the number of trades? They would be encouraging them so they could make lots of $$$$ in my opinion. I would like to know where this assertion of $50 fee comes from.

    It is not Comex's duty to deliver the metal if the buyer wants delivery, it is up to the seller (short) to deliver.

    I don't know if there are other mistakes, but read the comments at the end of the article and you will see others have seen some mistakes.

    Jim


    Actually Jim,, I am positive that you know more about the silver and gold trading business than I do. I posted that from the Marketwatch website and I am sorry for any mistakes made by the author.

    Lets not throw the baby out with the bathwater though! What is verifiable is that the CME is manipulating the gold and silver market, that is, not letting the market decide, and changing the rules during the game!
    Thomas Paine-
    "Government even in its best state is but a necessary evil," Paine wrote, and "in its worst state an intolerable one." Like many Americans today, Paine believed that government added insult to injury by using tax dollars in ways that were actually harmful to the public. "When we suffer," wrote Paine, "or are exposed to the same miseries by a government which we might expect in a country without government, our calamities are heightened by reflecting that we furnish the means by which we suffer." To Paine, "securing freedom and property to all men, and, above all things, freedom of religion," were the only legitimate functions of government. Americans generally agreed, and went to war to achieve this vision.
    http://mises.org/freemarket_detail.aspx?control=233

  4. #4

    Apr 2008
    3,104
    150 times

    Re: Gold and silver manipulation again!

    Quote Originally Posted by Dave44
    Quote Originally Posted by jim4silver
    Dave,

    I am not saying gold and silver are not manipulated, however, the article you posted had some "facts" that are completely wrong.

    Gold trades in 100 ounce contracts, not 5000.

    As far as Comex getting a $50 fee per ounce of gold, I have never heard of that. If that is true, then why would they be doing anything that would limit or discourage the number of trades? They would be encouraging them so they could make lots of $$$$ in my opinion. I would like to know where this assertion of $50 fee comes from.

    It is not Comex's duty to deliver the metal if the buyer wants delivery, it is up to the seller (short) to deliver.

    I don't know if there are other mistakes, but read the comments at the end of the article and you will see others have seen some mistakes.

    Jim


    Actually Jim,, I am positive that you know more about the silver and gold trading business than I do. I posted that from the Marketwatch website and I am sorry for any mistakes made by the author.

    Lets not throw the baby out with the bathwater though! What is verifiable is that the CME is manipulating the gold and silver market, that is, not letting the market decide, and changing the rules during the game!
    Dave,

    I don't know much but I am still learning, and no need to apologize for anything. I think it is great when people post articles here. I was just surprised by some of the facts alleged in the article that were pretty far off base.

    While I agree that paper markets are always open to changing the rules and making position harder to maintain (via increased margins, etc), there is a simple cure for this and that is buying physical.

    If/when the demand for PMs becomes widespread and the masses (big investors and average citizens) want physical metals there will be nothing to stop the price from going up. Right now less than 1% of all investment money is invested in PMs from what I have read.

    The so called "manipulation" only works short term in my opinion. Since gold has gone up from $250 to $1800 in this bull market, you can see it is not possible to keep prices down forever. Silver has gone from about $4 to $50 in that same time period. And these gains have been made without much investment demand into PMs (based on the fact that less than 1% of all investment money in the world in PMs).

    Jim
    R.I.P. Rich Hartford

  5. #5
    us
    Living the WP

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    Re: Gold and silver manipulation again!

    Well I agree for the most part. I hold physical metal myself,, that is why it is weird that when silver was making a big move CME made this change and it reversed,, and then Silver got to 50 any way and it reversed. And every time it started upward again it gets reversed. I am not even sure I give a rip about futures contracts, but it is weird that the CME keeps getting in the middle of it.

    Why would they do that? Transparency is what we need!
    Thomas Paine-
    "Government even in its best state is but a necessary evil," Paine wrote, and "in its worst state an intolerable one." Like many Americans today, Paine believed that government added insult to injury by using tax dollars in ways that were actually harmful to the public. "When we suffer," wrote Paine, "or are exposed to the same miseries by a government which we might expect in a country without government, our calamities are heightened by reflecting that we furnish the means by which we suffer." To Paine, "securing freedom and property to all men, and, above all things, freedom of religion," were the only legitimate functions of government. Americans generally agreed, and went to war to achieve this vision.
    http://mises.org/freemarket_detail.aspx?control=233

  6. #6
    us
    Mar 2009
    A Place In Heaven
    Excalibur 1000, Garrett Scorpion.
    1,795
    173 times
    All Types Of Treasure Hunting

    Re: Gold and silver manipulation again!

    Quote Originally Posted by Dave44
    Well I agree for the most part. I hold physical metal myself,, that is why it is weird that when silver was making a big move CME made this change and it reversed,, and then Silver got to 50 any way and it reversed. And every time it started upward again it gets reversed. I am not even sure I give a rip about futures contracts, but it is weird that the CME keeps getting in the middle of it.

    Why would they do that? Transparency is what we need!
    I don't think it's manipulation (a word used by people because of an excuse for fear) but people selling their silver off to buy the gold stuff and others selling because of fear because silver is wavering. Only the people that hold are going to make money when silver takes off again and my gut (and indications in the world) tells me it will. Charlie

  7. #7

    Apr 2008
    3,104
    150 times

    Re: Gold and silver manipulation again!

    The various futures exchanges provide an important function that many don't know about. Let's say a person is a corn farmer. Farmer believes that the price of corn is going to go up in the fall/winter, so he plants a huge amount in the spring. But the farmer worries that if the price drops, he is gonna be up $h*t creek so to speak since he committed all his fields to corn, so he also buys put options on corn futures or even goes short on a certain number of corn contracts as insurance in case his prediction about higher prices is incorrect. If the price does drop he receives less for his crops, but his futures "hedges" make him a profit so he is OK.

    Many industries rely on futures markets to "hedge" whatever it is they trade in, as well as ensuring that they have a supply of whatever commodity it is they need and lock in prices that they find acceptable at any given point in time. If a company needs cotton for example to make clothing and the price is now low, they can lock in and be guaranteed that they will not pay a penny more for that cotton when the delivery month approaches.

    Although a long (buyer) may demand delivery of the underlying commodity, the vast majority of futures contracts "settle" in cash, where the buyer does not want the actual commodity but takes his profits in cash when the contract is about to expire. Speculators play the futures market much like they do the stock market-in hopes to make a profit. They have no connection to any company that needs any actual commodity or produces any commodity, so they don't want someone dumping a huge amount of cocoa, sugar or coffee on their front doorsteps.

    Now with PMs (as well as other commodities), the issue that comes into play is these futures markets can dictate the price you will pay for physical commodity at the grocery store or at the coin store. Even though a coin store will add a premium that may be higher or lower depending on the availability or lack thereof for the commodity in question, the base price of the PM is tied to the spot price that comes from a futures exchange. Thus the paper futures markets dictate what you pay at the coin store (at least for now).

    It would seem that any institution(s) with enough money to play with can influence the direction of a commodity if they put enough $$$$$ into any particular direction (long or short) and overwhelm the other side of the transaction. The only way to counter that is for buyers to demand delivery so that the short (seller) has to come up with the physical commodity to deliver. If the actual underlying commodity is scarce, the seller may have a hard time coming up with it and will have to pay a higher price (than the paper price) to get the underlying commodity to deliver.

    What makes things "interesting" is that a short (seller) can sell a commodity futures contract and is not required to have the physical on hand at the time they sell the contract (this is what I was told--if this is incorrect please someone let me know ). They have to keep their margin account with the proper amount just like the long (buyer) does, but don't have to have the entire amount of the underlying commodity in their possession ready to deliver when the contract is formed. In my opinion, this is akin to what is called naked short selling. If a person shorts a stock, they generally need to "borrow" the shares before they can short them. But if a commodities short (seller) can sell a contract and does not have to worry about getting a hold of the physical commodity underlying the contract UNLESS the buyer (long) decides he wants delivery when the contract is about to expire, the seller would have a huge advantage to influence prices. I believe that they have instituted position limits fairly recently to try to prevent "manipulation", but I don't know how all that works since I don't trade in futures.

    One could opine that if a seller (short) were required to actually hold or have somehow in their possession the physical metal they are selling in the underlying contract at the time the contract is created, it would prevent the situation where lots of paper cash could disproportionately influence the price of the metal for reasons completely unrelated to the true supply and demand factors of said metal-such as mining output, industrial/investor demand, etc. But perhaps it gets back to the issue that if there is so much of the underlying commodity available and the sellers have no problem delivering when buyers demand delivery, then maybe the paper price (futures price) IS the right price for the commodity--for if the paper price were too low (as many say about silver for example), then wouldn't the short (seller) be unable to buy the physical metal for a price that makes it profitable to be a short in the first place when it comes time to deliver to the long (buyer)?

    I wish I knew the answers to all of this. Just my opinions and random thoughts.

    Jim

    R.I.P. Rich Hartford

  8. #8
    us
    Living the WP

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    Re: Gold and silver manipulation again!

    Well Charlie, I am not sure fear is what I feel,, I am quite bullish actually. But changing the rules without consult is a bit strange to me,, did they announce to you they were going to do that? They never told anyone that I know they were contemplating this.
    Thomas Paine-
    "Government even in its best state is but a necessary evil," Paine wrote, and "in its worst state an intolerable one." Like many Americans today, Paine believed that government added insult to injury by using tax dollars in ways that were actually harmful to the public. "When we suffer," wrote Paine, "or are exposed to the same miseries by a government which we might expect in a country without government, our calamities are heightened by reflecting that we furnish the means by which we suffer." To Paine, "securing freedom and property to all men, and, above all things, freedom of religion," were the only legitimate functions of government. Americans generally agreed, and went to war to achieve this vision.
    http://mises.org/freemarket_detail.aspx?control=233

  9. #9
    us
    Mar 2009
    A Place In Heaven
    Excalibur 1000, Garrett Scorpion.
    1,795
    173 times
    All Types Of Treasure Hunting

    Re: Gold and silver manipulation again!

    Quote Originally Posted by Dave44
    Well Charlie, I am not sure fear is what I feel,, I am quite bullish actually. But changing the rules without consult is a bit strange to me,, did they announce to you they were going to do that? They never told anyone that I know they were contemplating this.
    Hi! Dave I wasn't saying you where fearful just making a statement about others Selling and nobody told me anything about any change, I said My Gut Feeling and that's good enough for me. I'm also glad to see you're holding on as I am.

  10. #10
    ge
    Apr 2011
    Georgia
    Teknetics Delta 4000
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    Re: Gold and silver manipulation again!

    Marchas45 is the man.

    That is all......
    LMAO

  11. #11
    us
    Living the WP

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    Re: Gold and silver manipulation again!

    Sorry Marchas, I understand your point. Actually I believe that even with the constraints they try to put on metals, they are going up. Trying to chill the volatility seems like they are putting off the inevitable ,, to buy time? Seems like another way to control information!
    Thomas Paine-
    "Government even in its best state is but a necessary evil," Paine wrote, and "in its worst state an intolerable one." Like many Americans today, Paine believed that government added insult to injury by using tax dollars in ways that were actually harmful to the public. "When we suffer," wrote Paine, "or are exposed to the same miseries by a government which we might expect in a country without government, our calamities are heightened by reflecting that we furnish the means by which we suffer." To Paine, "securing freedom and property to all men, and, above all things, freedom of religion," were the only legitimate functions of government. Americans generally agreed, and went to war to achieve this vision.
    http://mises.org/freemarket_detail.aspx?control=233

 

 

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