Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Stock Review : Markets : News Wire : Quotes : Radio : Silver : Stocks - Main 
  
 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Seeker Weekly Wrap-Up: Gold and Silver End Slightly Lower on the Week
By: Chris Mullen, Gold-Seeker.com

Gold Rebounds but Gold Miners Struggle
By: Jordan Roy-Byrne, CMT

COT Gold, Silver and US Dollar Index Report - October 24, 2014
By: GoldSeek.com

Is Your Portfolio Mispricing Next Year's Growth?
By: Graham Summers

Bullish Silver Stealth Buying
By: Adam Hamilton, Zeal Intelligence

Blood in the Streets to Create the Opportunity of the Decade
By: Laurynas Vegys, Research Analyst

GoldSeek Radio Nuggets: Gerald Celente, Peter Grandich & Chris Waltzek
By: radio.GoldSeek.com

JP MORGAN GOLD INVENTORIES: Fall A Stunning 33% In One Day
By: Steve St. Angelo, SRSrocco Report

The BIS Paves the Way for Silver and Gold
By: Dr. Jeffrey Lewis

Markets and reality disconnected
By: Alasdair Macleod

 
Search

GoldSeek Web

 
Gold and Silver Futures: Broken Price Discovery



-- Posted Friday, 9 November 2012 | | Disqus

By Dr. Jeffrey Lewis

Most futures traders have learned to accept or pay cash in exchange for rolling their futures contracts out when delivery approaches. Just about everybody now knows that physical delivery cannot actually happen in the silver market.

 

Not even close to enough actual metallic silver exists to satisfy all of the outstanding futures contracts. Those who trade futures are captured by the paper market and would rather not be part of a default – so they ultimately lose.

 

Most Traders Stay Silent About Manipulation

 

Traders typically depend on profiting from a market system as it currently exists, and this explains why so many traders, even the most public and vocal among them, tend to remain silent about the unbalanced structure of the paper gold and silver futures market.

 

Some traders just turn a blind eye to the situation, while some of them even adamantly insist that the impact of manipulation on the silver market is negligible.

 

Perhaps if you are a deep pocket long trader who looks the other way and plays the chances of receiving premium over position as an incentive to roll the contract, some money could be made. There have been rumors of this happening - although unconfirmed.

 

Price Suppression Facilitated by Futures Market

 

Nevertheless, the fundamentally unbalanced process of the seller of a futures contract being able to make a cash payout in lieu of delivering physical metal simply facilitates price suppression.

 

Not-for-profit agencies that can print enough Dollars to pay for any trading losses they might incur can use this mechanism to keep silver and other strategic commodity prices artificially low.

 

As long as such agencies continue to be able to cover their trading losses with manufactured and intrinsically worthless paper or electronic cash, the legitimacy or integrity of the COMEX and the Chicago futures exchanges can be maintained a little while longer.

 

As GATA and others have been pointing out for years, most miners are also complicit in this price suppression process, as well as those who business it is to evaluate and recommend them.

 

Key Data Releases Still Shock the Market

 

Meanwhile, momentum traders will remain subject to what happens on almost every major data release. Consider last week's Non-Farm Payrolls release as an example. One minute before the data release all orders are pulled and trading volume is virtually non-existent in the barren pre-release market.

 

As the data is released, the algorithmic traders get it first, so they slam large orders into the market. A second or so later, real traders respond by adding to these orders at market and the computerized algorithms start to sweep in their profits. This drives the price as stop loss orders are triggered and slower or more cautious traders start to enter the market.

 

For the last NFP release, it was well known that the number would be pretty much the same as October’s result. Revisions would also not matter much, now that the U.S. election is over. Nevertheless, when the release actually happened, the gold and silver got slammed.

 

All of this trading occurs in parallel with the historically loose monetary policy adventure devoted to debasing the U.S. Dollar. Not only will this policy lead to further mispricing for just about everything, but its primary risk will be to awaken the beast of hyperinflation in the United States.

 

For more articles like this, and to stay updated on the most important economic, financial, political and market events related to silver and precious metals, visit http://www.silver-coin-investor.com


-- Posted Friday, 9 November 2012 | Digg This Article | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2014


© GoldSeek.com, Gold Seek LLC


GoldSeek.com Supports Kiva.org

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.
OilSeek.com