Anybody catch this in the business section (Page 23) of The Australian today (Mon 7th May 2012)? Caption reads The Chinese hope the start of Shanghai futures trading this week will help ease the volatility in the metal's price We live in interesting times...
I have pasted the Australian article below for those interested... Shanghai Futures Exchange starts a silver futures trade by: Robin Bromby From: The Australian May 07, 2012 12:00AM SILVER and China are coming full circle. In the mid-1930s the academic journal Foreign Affairs noted how "the world was startled by the news that China had abandoned the silver standard" after foreign miners began dumping surplus metal into China. Seventy-eight years later, this coming Thursday, the Shanghai Futures Exchange begins trading silver contracts. China Daily noted there had been an absence of silver trading ability in China and -- significantly -- it would make the market more liquid. The silver buffs jumped on that one, predicting the end of big Western speculators manipulating the price, which so many of them believe has been occurring. However, silver still tends to behave as it did more than 80 years ago. That Foreign Affairs article noted "the ups and downs of silver have been more marked than those of any other commodity". Same now. China Daily noted "the price of silver has long been volatile", recalling last year it dropped 13 per cent in a single session. Chinese commentators expect the silver contract to do well as most retail investors there prefer that metal to gold, because its minimum purchase value is lower. But silver is also imbedded in the Chinese psyche: it was long the basis of China's currency and in 1935 the Shanghai-based biweekly Finance and Commerce reported personal hoards of the metal in China were estimated at 1.27 billion ounces. China is not only the world's largest gold producer but is becoming the biggest importer too. We will wait and see whether the same import demand builds for silver. Shanghai futures trading could mean additional investment demand for silver, just as we have seen Chinese retail investors stock up on gold. But, more importantly, we might see Chinese corporates looking to pick up silver projects (and companies) abroad, just as they have begun doing with gold deposits and producers. If Standard Bank's bullion strategist was right in February, China has very large stockpiles of silver, estimated as being sufficient for 15 months' fabrication demand. So China does not need physical silver today -- but buying foreign silver assets is about demand in the years ahead. It seems all the gold and silver roads are leading to China. A note from London-based Libertas Capital on the state of the platinum sector contained this intriguing sentence: "Chinese demand for palladium jewellery fell to an eight-year low, indicating the fashion change towards gold may be permanent." News from the sector over the week included PanAust (PNA) pouring its first gold-silver dore, a semi-pure alloy of the two metals, from its Ban Houayxai project in Laos. PNA is planning output of 85,000oz of gold and 200,000oz of silver this year. White Rock Minerals (WRM) has made another silver discovery. Its Mt Carrington gold-silver project near Drake, northern NSW, already has a resource of 284,000oz of gold and 23.3 million ounces of silver. Drilling at the Mozart prospect within the project area has returned an intersection of 33m at 97 grams/tonne silver, Mozart being one of 10 near-mine and regional targets to be drilled this year. The Drake mineral field has been yielding precious metals discoveries since 1853. Work started up again in the 1960s and was explored by several parties, including the former CRA. Mt Carrington was acquired in 2008 by Rex Minerals (RXM), which has since made headlines with its South Australian copper-gold finds, WRM being demerged in mid-2010 to take over the NSW work. Gold tipped to soar A PRIVATE client adviser tells us all the signs are there's not much time left to get aboard the gold bandwagon before it heads off to $US2100/oz. "It is imperative that any buying of gold stocks is done early," he says. "Now that many market investors have reduced their gold exposure we are likely to see a much clearer move up in gold stocks as the oversold condition is unwound." An article from one of the more reliable US gold websites was attached, showing how well gold has done since April last year, being up 5 per cent. By contrast, silver has lost 35 per cent of its value over 12 months, the senior US mining indices are down by 25 per cent and juniors by 46 per cent. Yet gold stocks have been taken out back and given a good kicking along with all the others. The damage done, for example, to the West African gold sector by investor pessimism has been dramatic. At Friday's close, Azumah Resources (AZM) was at 28c, compared with a 52-week high of 62c. Gryphon Minerals (GRY), which has 2 million ounces in Burkina Faso, closed at 92.5c against its high of $2.05 and Ampella Mining (AMX) at $1.03 is down from $2.46. And all these against a reasonable gold price and sound progress by the companies involved. Badly hit, too, has been Perseus Mining (PRU) even though it has runs on the board. It closed at $2.50 but has hit $4.05 over the past 12 months. Warwick Grigor at Canaccord-BGF terms PRU's performance "outstanding" with cash costs in the March quarter of $723 an ounce against guidance of $950/oz. "It is rare to find a company that has consistently delivered on its promises and reported only good news for such a long period," Grigor said in his Friday client note. Rum upbeat SPACE left for only a few brief but important mentions. Long-term thinkers will still be watching the world food story, and should note Rum Jungle Resources (RUM) has a maiden potash resource in the Northern Territory of 530,000 tonnes; the estimated resource is contained in brine of 16 salt lakes. On the phosphate front, Krucible Metals (KRB) has been given environmental clearance for trial mining at the Korella project near Mt Isa. The company is in joint venture discussions. Industrial Alliance Securities of Montreal estimates the world might need as many as 23 new graphite mines by 2020. Syrah Resources (SYR) showed its determination to have one of those last week by selling off its Tanzanian mineral sands ground, allowing it to throw everything at its Balama graphite project in Mozambique.
Add to this the 8 year long effort by Mexico (the world's largest silver producer) to monetize silver and the world of silver is getting VERY interesting. http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=178
If the Chinese start their own price suppression charade, for all the same reasons, then I'm selling my stack, taking my ball and going home! If the yanks can keep it going for this long, then the Chinese will have it licked for my life time.
Im sure the Chinese will milk it as much as the US has been. Just another rigged casino as far as im concerned, sure, might be good for prices as more investors will be on board but i dont think it will stop the manipulation.
The difference as I am lead to believe is that the China exchange is going to by backed by metal. Ned Naylor-Leyland explains the implications here. http://www.tfmetalsreport.com/podca...iscusses-page-silver-and-true-price-discovery What worries me is that Geitner and Clinton flew to China last week, if he went there to put pressure on the government not to allow silver to rise under the new exchange like what happened to the planed gold exchange, then it may be more of the same. I'd like to know why are they shit scared of a real price discovery.
Sometimes, I wonder if people's memories go for more than a week... There was like a 5 page thread about this exchange a few months ago when it was announced on KWN. Also, there would be less speculation if people actually bothered to try to go on the site and read what it says.
:| People are interested because its starting this Thursday. Not sure it has anything to do with people memories. Savvie? :lol:
All the posts are about whether or not the Chinese are trying to supress the prices. If people were either not lazy, they could go on their SFE site and try to read about the silver contracts themselves or if they had a better memory, they would remember the interviews with Andrew Maguire and Ned Leyland who both directly addressed this issue with regards to the exchange.
http://www.shfe.com.cn/ translated by Google Silver futures traded in the Shanghai Futures Exchange Update date :2012-05-10 May 10, 2012, approved by the China Securities Regulatory Commission, silver futures contracts at the Shanghai Futures Exchange traded, bringing China's futures market has been listed 28 varieties of futures. Liu Xinhua, Vice Chairman of the China Securities Regulatory Commission, Shanghai Municipal Committee, vice mayor Mr. Tu, Wang Qinhua, China Nonferrous Metals Industry Association, vice president, attended the listing ceremony and speech has. Jiang Yang, assistant to the chairman of the China Securities Regulatory Commission took the approval of China Securities Regulatory Commission agreed on the Shanghai Futures Exchange listed Silver futures. Liu Xinhua and Mr. Tu gong for silver futures contracts inaugurated and opened trading. Liu Xinhua in his speech congratulated the first of the silver futures market. He pointed out that this year, the China Securities Regulatory Commission to implement the spirit of Premier Wen Jiabao in the 2012 national financial work conference on "secure introduction of crude oil and other commodity futures and financial derivatives", actively promote the crude oil, bonds, silver, coking coal, glass and other futures listed on the preparatory work, in order to enhance our overall competitiveness and meet the real economy needs to provide more tools and instruments. Silver futures market, there will be conducive to optimizing the silver price formation mechanism for the enterprise to provide low-cost, efficient means of risk management, and promote the structure adjustment of China's silver industry, is conducive to the sound of precious metals futures series to promote the futures market to better serve the national economy. Liu Xinhua stressed that the silver futures from the listing to mature and play feature requires a gradually cultivated, not overnight. Shanghai Futures Exchange to strengthen the market surveillance, effectively guard against market manipulation and other illegal activities, and increase enterprise futures knowledge and training, and strengthen investor education; futures companies to do market promotion work, to fully reveal the risk, to help spot according to their involved in futures trading, to meet the needs of production and management; silver production, trade and consumer enterprises have to understand, be familiar with and master the rules of the futures market run, and continuously improve the ability to use futures markets; the majority of investors should fully understand involved in futures trading risks rationally participate in the silver futures trading. In his speech, Mr. Tu pointed out that the silver futures market is an important step in the development process in the Shanghai Futures Exchange. In recent years, in accordance with the unified arrangements of the CPC Central Committee and State Council, under the leadership of the China Securities Regulatory Commission, the Shanghai Futures Exchange steady development, launched a series of commodity futures, service entities, economic development, to meet the demand of market parties to promote the Shanghai Futures Market development, but also promote the construction of Shanghai international financial center. In the "12th Five-Year" period, the Shanghai municipal government will continue to support the healthy development of all types of financial market in Shanghai, and also to provide better service for the Shanghai Futures Exchange into an international first-class Exchange. Wang Qinhua said that China's metal futures market after nearly 20 years of normal development, has become one of the most mature product lines in China's commodity futures market, and constantly enhance the depth and breadth of the economic and social development. Silver futures listed marking of precious metals futures sequence of continuous improvement, will further enhance China's influence on the global metals markets. Chairman of the Shanghai Stock Exchange Gui Minjie and from the Office of the State Council, the National Development and Reform Commission, Ministry of Public Security, Ministry of Industry, CSRC dispatched institutions person in charge of all securities and futures exchanges, the Industry Association, Shanghai The charge of relevant departments as well as representatives of industries and enterprises attended the listing ceremony. The listing ceremony was presided over by the previous period, general manager Yang Mai Jun. Silver futures listed on the Six Questions Update date :2012-05-10 One, why should the introduction of silver futures? A: In recent years, international silver price volatility. Due to the lack of authority of the price signals to guide the production and management, it is difficult to avoid the risk of price fluctuations, China's silver production, consumption, trade enterprises face greater market risk, there is an urgent need to carry out futures trading to price discovery and hedging hedge against inflation. Traded futures in the perfect spot price formation mechanism, promote the development of the spot market, optimizing the national macro-control, to improve the business means to improve the competitiveness of the industry have played a positive role in the silver futures market and gradually assuming the role of the function will be the silver industry have a profound impact. First, to optimize the silver price formation mechanism, the upstream and downstream enterprises to rationalize production and operating guidance silver, of silver rational allocation of resources and market supply and demand balance; for silver production, consumption, trade enterprises to provide low-cost, high risk control means efficiency, improve enterprise management level, and enhance market competitiveness, and promote the steady development of related industries; is conducive to promoting China's silver industry structural adjustment and Exchange strict brand registration system improve product quality and scale The production has a positive effect; Fourth, the sound of precious metals futures sequence to promote the futures market to better serve the national economy. Second, the period of listing and trading of silver futures for which ready? A: As early as 2007, I began to research on the silver futures and silver futures research process has been to insist on a thorough and meticulous, cautious and prudent principle. Because our silver is mainly associated with lead and zinc products, according to the strategic requirements listed on the Shanghai Futures Exchange, the new varieties, to be zinc, lead gradually after listing plans to introduce silver futures. In the course of the study of the silver futures, the upstream and downstream enterprises in the dialogue banking sector has carried out extensive market research. Focus on the one hand, visited the major silver manufacturers and consumer companies, to learn about the production, consumption, pricing models, and means of circulation of silver; the other hand, held a number of silver production, consumption, trade enterprises, commercial banks and futures companies forum , to fully listen to the parties comments and suggestions on silver futures contracts and the relevant rules designed on the basis of design of the silver futures contracts and related rules. April 17 announced the silver futures contracts and related draft rules, sufficiently wide to listen to the views of the market parties, and has collected feedback from finishing and continue to improve the contract and the rule content. April 23, the China Securities Regulatory Commission approved the agreement on the period to carry out the silver futures trading. May 4, 2012, the China Securities Regulatory Commission was approved by the Shanghai Futures Exchange listed Silver futures contracts. Then on the silver futures contract and related implementation details be made public, and announced that trading of silver futures contracts will be listed on May 10, 2012. In preparation for the listing process, I depth of investor education and risk education and training, respectively, for the silver-related companies and futures analyst; also on the Shanghai Futures Exchange, precious metal delivery of goods registration regulations were revised, the new growth and improve the registration requirements of the silver delivery of goods. Do silver futures delivery brand registration, to specify a delivery warehouse settings, and on May 4 announced the list of designated delivery warehouse, a registered brand list and list of quality inspection institutions; completion of technical preparations, silver futures simulated trading and system testing of the member units, the majority of investors are familiar with the rules of silver futures contracts. Next, I will continue in accordance with high standards, steady start "requirements, careful planning and implementation of the various market-ready one by one, pay attention to prevent and properly resolve the possible market risks, to ensure a smooth listing and safe operation of the silver futures. Third, consider the design of the silver futures rules focus on what is it? A: The design of silver futures contracts and their related rules guiding ideology, to implement the State Council, and steadily develop the futures market, under the premise of strict risk control, the gradual introduction of price discovery and hedging for commodity producers and consumers function of commodity futures "spirit in all aspects of the design contract, to amend the Articles fully realized. In addition, the process of design rules, according to the characteristics of the silver variety, starting from the market demand, taking into account the preservation and investment demand. Risk is the bottom line of financial product innovation, in the silver futures research process, I learn from the successful experience of the mature metal such as copper, aluminum, zinc, gold futures trading risk control, while in-depth study compared many international futures exchanges silver futures case, the relevant data for empirical analysis and feasibility studies, scientific design of the rules of the silver futures contract. In every aspect of the price limits, margin system, position limits regime, hedging system fully embodies the concept of risk prevention, and to carry out the silver futures trading for risk assessment, develop a risk prevention measures targeted to ensure that the silver Futures Exchange, the smooth conduct and steady running. Fourth, how do the risk prevention, to ensure the smooth operation of the silver futures? A: silver futures research and development and listed on the preparatory process, I always put the risk management top priority. The one hand, the combination of the characteristics of the silver market risk control indicators of scientific settings, silver futures risk control management approach, a more stringent regulations; the other hand, will strengthen the first-line supervision of the silver futures market, and strengthen the education of investors' risk crack down on illegal activities, maintain good trade order. Same time, I will further strengthen the functions of the first-line supervision, in line with the timely detection, and promptly stopped, and timely investigation of the "time" principle, to crack down on illegal activities, maintain good trading order. Currently, I have been equipped with monitoring personnel do people stare varieties found in real-time monitoring of unusual transactions, knock, actual control between account transactions, false trading, super-position, and other violations, according to exchange rules to give timely treatment; market potential key risks to be timely detection, tracking, analysis, assessment and early warning, and resolutely put an end to price-fixing behavior that may occur. When the market may be a greater risk, early development of risk response plans, and actively prevent market risk, and earnestly safeguard the operation of the market order. Five investors to participate in the silver futures should pay attention to what issues? A: Silver is an important precious metals, copper and aluminum zinc and lead and gold, and its own unique attributes, which objectively requires the investor to fully understand the operational features of the silver industry policy and the spot market, familiar with the silver futures the contract rules, risk awareness, and to do the risk prevention measures. In addition, investors should fully understand the silver market volatility characteristics. The volatility of the market price of silver in recent years, which requires investors with the corresponding strong risk tolerance, financial strength and risk management capabilities. Before the delivery month and the first month of the last trading day before closing, Member, all customers in the speculative position of each member at the silver futures contracts should be adjusted to integer multiples of two hands. The delivery month, the speculative position of the silver futures contracts should be integer multiples of two hands, the new opening, closing should also be integer multiples of the two hands. In addition, given the natural person customers can not issue VAT invoices for delivery in order to better control near the settlement risk, the Closing Date, less market liquidity situation that may arise under the provisions of a futures contract last trading days prior to the third trading After closing, the natural person customers of the futures contract positions should be hand. The introduction of silver futures trading in China, to provide investors with a standardized and efficient market to meet participants' investment, hedging and risk management needs. Before China's legitimate silver futures market, leading to some investment and a hedge demand for businesses or individuals are attracted to illegal trading in illegally in the electronics market, not only the rights and interests have been damaged, and also seriously disrupted the normal order of the silver market . Late last year, the state has adopted the State Council decided to "straighten out all types of trading venues to effectively guard against financial risks to regulate commodity market place, in this context, the introduction of silver futures will play its due role . I will continue to actively carry out market training and investor education, "will thoroughly publicize the rules, the risk to speak enough" to ensure a smooth listing and stable operation of the silver futures, and to promote the functioning of markets gradually effectively. Six, silver in the futures market should pay attention to what issues? A: The international and domestic experience shows that the futures is a risk management tool, the main role of futures markets for corporate and institutional investors to provide the tools to avoid the risk. Stock companies must learn to actively use the futures market, in order to survive in the fierce competition. Silver enterprises to participate in the futures market should be familiar with the silver futures of the rules, strengthen the construction of hedging the management system, strict implementation of risk control system, improve and perfect the internal control and the supervision mechanism, the only way to make full use of the futures market services for enterprise development. The more important point is to adhere to the principles of hedging. Enterprises to participate in futures trading purpose is to protect the production and management stability, and improve the controllability of the sales and profits, is not to profit from speculative trading. Domestic and international futures markets, experience has shown that a futures varieties from the listing to mature and play its function is a step-by-step cultivation process, silver futures also experience such a process, not overnight. Silver in the futures market also need time to understand and be familiar with and master the rules and techniques, the need to constantly improve the level of the futures market in practice.
Volatility should not matter. We know silver is manipulated and goes up and down with alarming regularity. For example, it always drops just before options expiry. But if this is the case, rather than bemoaning it, stackers should get a paper position and work it to their advantage. Buy low and sell when it's high. If you have a paper position of close to 1000 ounces, a $1 movement in the price would come close to a weekly wage for some people. That's how you can get an income from silver right here and now. And when the US dollar comes closer to collapse, exit the paper position and turn it into the real thing.
Hmmm... how is their strategy going? Has it really made a blip of difference to volatiliy? All is quiet regarding Shanghai.
