The pool of futures contracts isn't backed. A mere % of it ends in metal ownership transfer. Just in dollar transfer. Backing is thus irrelevant, not the purpose at all. The purchasers of the position don't want. Just because it wasn't their reason to get the metal, just the dollars to hedge against trades on the cash market. This was said in the post. And hence my question about what kind of paper contract was ment, regardless whether that is paper, electronic, contract or share. The ignorant sits in the wrcmad-mirror. A futures market is used as a place to hedge against temporary stories (that includes bad harvests and buyers) on the cash market (the market of the underlying where the futures contract is a derivative from).. The goal of taking futures positions is to be sure of a cost in the cash market. One orders 100 ounces gold to deliver over a month, and wants to lock in the cost, so that eventual price changes and thus a higher cost/less ounces (and also potential windfall gains) are evaded by a dollar stream on the futures positions accounts during such eventual price change, totalling to an amount that offsets the eventual higher cost, and thus allows to purchase the same ounces. A sale in the cash market is the same, only some things inverted. Understanding this gives an explanation for what is stated there. For ex, "The Commercials are famed for the bearish positions on gold", commercials are dominantly sellers. Their risk is a dropping price. A short position delivers dollars on its account during a price downtrend. So, commercials as a whole tend to have a total net (all their longs + all their shorts) short position. This is especially the case in markets where temporary price changes are due to stockpiling (nearly implying a later destockpiling). And a relative lower degree of consumption, meaning that it doesn't reappear for sale easily (read: without a substantial cost / recycling). This situation is the dominant case for precious metals, because people buy them for monetary storage of value reasons (to later sell them again). And thus, the total net position of the commercials is for precious metals nearly permanently short. Of course with a varying degree (amount positions), depending on the price risk over the period of their cash market contracts / agreements, and the amounts involved. One that wants to buy 200 ounces over 3 months, and hedge 100% against eventual price changes over this period, can take 2 long positions of 100 ounces on this term. The counterparties of the positions are easy to find: just the counterparties in the cash market, in the end the high supply chain / bullion banks that act as central nodes over the whole of the market just like a precious metal dealer serves as a local node over a certain geographical region / market. The precious metal stocks in the Comex depositories / warehouse have nothing to do with the amount positions. They are what they are: stocks. A stock is a product buffer to the market. Product owners can chose to store their metal there, at a cost. They can make it available for sale upon request and upon price. It's what it is, just like the shelves in a supermarket. The more customers (expressed in product purchases ofc) the supermarket has, the bigger the stock it will have in the shelves. That's also why there is not any short term relation between Comex stock and product price.
Your post is full of air. You assume a pool of futures contracts, to suit your cause. You can spin it anyway you like. You can waffle some more. Even huff & puff. ETF's & allocated are NOT contracts. Fact.
Reply on your edit: that's what I did, and it didn't come from 'internet nobodies' (the words you once used in another topic) like you, but assembled from all I found, regardless book, internet, but with a reputation, and published by companies that are renowned for the matter / education. You, are just an internet nobody troll on a forum. Hard to learn anything from lol
In other words the markets can be summarised like this .... https://www.youtube.com/watch?v=Dtc58sTsTpE
Yep, like you, I am just one of many internet nobodies here. I'm not trying to teach you about the markets... waste of time trying to teach anyone who thinks they know it all. But I will correct your misinformation to others. About the only thing I could teach you would be how to stop losing money... but that would be extremely difficult too.
good, leave it at that and move on. Trust me, that's the best advice you'll get in this thread. It's a load of shit, an idea sold to sheep by very persuasive permabulls (most of which were selling metals at the time). They use big words and to the uninitiated the theory seems reality, but scrape back the BS and you'll not find any hard evidence of manipulation.
From my perspective, having a paper PM market in of itself is manipulation due to destruction of natural laws of supply and demand influencing price. I am no expert by any means but common sense goes a long way.
This assumption also fails to look at the big picture, and instead focusses in on the woes of the PM bug. It does nothing to destruct the natural laws of supply and demand.
All longs + all shorts = total net position of a trader class. Green = commercial hedgers + swap dealers Red = large traders + other reportables Blue = small traders (nonreportables). Green = Red + Blue Because a seller needs a buyer and vice versa. Because a dollars receiving account (long / short depending on price direction) needs a dollars losing account (short / long depending on price direction). Data source: Most recent: http://www.cftc.gov/dea/futures/other_lf.htm Older: http://www.cftc.gov/MarketReports/CommitmentsofTraders/HistoricalViewable/index.htm Example from 28/10/2014: http://www.cftc.gov/MarketReports/CommitmentsofTraders/HistoricalViewable/index.htm click on october 28 http://www.cftc.gov/MarketReports/CommitmentsofTraders/HistoricalViewable/cot102814 click on Metals and Other Long Format http://www.cftc.gov/files/dea/cotarchives/2014/futures/other_lf102814.htm scroll down to GOLD. Structure of trader classes: SIDE 1 (Green on finviz.com) Producer/Merchant/Processor/User Long 38273 Short 88088 SwapDealer Long 64780 Short 113829 SIDE 2A (Red on finviz.com) ManagedMoney Long 128420 Short 68353 OtherReportables Long 67465 Short 26793 SIDE 2B (Blue on finviz.com) SmallTraders Long 32399 Short 34274 Total size of the pool of futures contracts of SIDE 1 (general supply side): 38273 + 64780 = 103053 long positions. 88088 + 113829 = 201917 short positions. >>> net total position / size of futures market hedge / the pool of contracts: 103083 + (-201917) = -98864 (minus = net short) Total size of the pool of futures contracts of SIDE 2A (general demand side): 128420 + 67465 = 195885 long positions 68353 + 26793 = 95146 short positions >>> net position of these 2 trader classes: 195885 - 95146 = 100739 (positive = net long) Total size of the pool of futures contracts of SIDE 2B (general demand side): 32399 long positions 34274 short positions >>> net position of this trader class: 32399 - 34274 = -1875 (negative = net short) If you combine SIDE 2A and 2B, you get a net total position of the general demand side: 100739 - 1875 = 98864 (positive = net long). This is the same figure as aboves SIDE 1, but inverted. This is no coincidence, but just because a buyer needs a seller and vice versa, every 100 ounces bought requires another to sell 100 ounces. That's why finviz.com charts green trend equals the sum of the blue and red trends. This small trader class net negative is a rare occurrence. It's also only a small figure anyway (1875 x 100 = the price influence of a 5.83 tonnes supply/demand ratio change), while the total hedged is 98864 x 100 = 9,8864 Moz or 307.5 tonnes, so 53 times bigger. One could state here that the small trader class sits close to NET NEUTRAL, being that they don't have much gold purchases/sales to hedge against price changes, and/or that they don't see much price risk. The total annually traded on the gold market, as reported by thomsonreuters, hovers over the years around 128 Moz / 4000 tonnes. A typical (frequently occurring) total futures market gold hedge peak sits between 150K (multiyear price downtrend) and 300K (uptrend). That corresponds to a spot price impact (along the forward prices and market arbitration, that gets its incentive from designed for profits in the case differences), sized between 150000 x 100 ounces and 300000 x 100 ounces, thus 15 Moz and 30 Moz, being respectively 15/128=12% and 24%, average thus being 18%, 1/7 or 1/8 of that 128 Moz total annually traded. Silvers case is 250/1000 Moz, being double that, 25%, and thus its price is moved twice as much. No assumptions, just figures released and passed by institutions / companies that have some reputation to hold up, at the punishment of losing the confidence people put in them, and at the same time their existence reason and income. "Internet nobodies" (words returned to sender) like wrcmad can say, focus on, make straws, all he wants, including King Nothing decorated with the Troll Medal. That's why I placed this "thorough" post: the wrcmads in the world don't like seeing things explained because their profit requires anothers error. That was it for the moment folks! Keep in touch if you like! If you don't, also fine! Freedom rules!
More air. More empty. You've been pushing this line of BS for years. If you knew how markets worked, you wouldn't have such rubbish price targets. BTW, ETF's are still NOT contracts.
If you mean 'futures' with 'paper': it just depends from which perspective you see it. Take into account this: you (general addressment not particularly you), are a silver stacker. A silver stacker made the choice to swap cheapskate fiat to ounces metal, with the purpose to evade purchasing power loss along fiat devaluation. In the case of fiat devaluation, you thus expect compensation along a rising price of silver, compensation you receive by selling it at the risen price. Yet, you sell it to somebody. Well, those somebodies may not like to pay the risen price if they think the price will drop again within the term they can resell it. Because that would mean loss. So basically, your compensation would generate a loss at some1 else. Well, that some1 else wants to be able to refuse it. Now, the problem is that for ex a precious metals dealer cannot just say no when you return to his shop. Because you wouldn't like it of course, and may regret, and not revisit his store again. And potential new customers would refrain if they heard the no. And the pm dealer also can't just drop his buy back price, because paying less than spot would cause the same customer feelings. So, they invented the futures market, so that they can buy your silver back at the risen price even when knowing ahead that it will drop again, because they take futures positions, that cause the spot/cash price to rise a degree (depending on how much was purchased and hedged against its eventual sellback) more than it would have with your purchase alone. Other stackers see then a stronger rise, think uptrend let's buy, and so on, a story named as 'bull market', because a bull takes his victims on the horns and throws them up. The dealer receives these dollars along his futures position, and uses them to buy your silver back at the risen price. End to end, the silver stackers or share buyers, paid their eventual extra dollars themselves, rendering the inbetween stackers market (read: real speculators) market to a zero sum game. Now, put yourself in the place of that dealer. Would you like to sell low and buy high back from your customers? Of course not. So the futures market is not an evil place to manipulate or so, it's nothing but companies and persons that try to avoid being the inevitable losing side. What one gets more, has another to receive less. A dead metal doesn't generate more wealth. It's not a machine / investment. This applies across the entire market. My personal opinion is to strive for break even in terms of purchasing power, nothing more. And to avoid paying prices driven up by positions of what I name the money for nothing club (which includes governments institutions). Why: because even hedging "suffers" the need for timing. If people refuse to pay the "extra" parts of the price uptrend, then price fluctuations will become smaller and less frequent, and without those, one gets a steady price trend, with no chance to buy back in lower, being the crucial stage to rinse and repeat. In the end, that is what real speculators do: stabilize prices. An animal collects fruit in autumn cheap because there is plenty. This extra collecting gives the fruit value a higher bottom. And later on, in winter, the extra sold gives the fruit value a lower maximum. A price mechanism is ment to make supply and demand match. Without that, some would be unable to buy and some would be unable to sell. There would be surpluses and shortages, read: waste and misery. Ice cream in winter and hot soup in summer. Stockpiling an asset for monetary reasons however, can only be a zero sum story. Regardless the presence of a futures market. To see manipulation, you don't need to visit the futures market. You can see it everwhere, on dealer sites, on forums, on blogs and the central planning thieves are more than happy to generate the greed and concern in the market they also have large positions in, and or have some law based influence on.
Markets don't work. Markets are situations where people act in. Data shows these acts. "paper contracts" do not imply futures. "paper" can be electronical instead. "contract" can be share instead. Sometimes there is ambiguity. I then ask. You can give a Troll answer to your own post here. It would look like this: "BTW, ETF's are funds NOT contracts. " Does the mirror hurt?
