On the topic of backing trucks up, how do people here feel about the 5000oz futures contacts for those of us with limited tray space?
This is why I ask I'm strictly physical but I wondered how these sorts of instruments are viewed amongst stackers.
They are viewed with a sort of love-hate relationship: Stackers love them. They are infatuated with the price and follow it continuously, waiting for it to validate their decisions, because it determines the value of their stack. Futures also provide a very useful and rudimentary excuse to explain away their mishaps should price move against the stacker. Stackers hate them. They claim futures are an illusion, backed by nothing, and serve no purpose except to allow bankers to specifically target and bully the bearer of physical metal, no matter how relatively small or insignificant. They sometimes also claim that futures price has no bearing on their physical stack?
I love having a physical stack, my girlfriend thinks I'm part dragon the way I enjoy playing with my PM. Thing is that now that I'm looking at making a serious investment the costs associated with securing and insuring it are making me think about futures since I think silver looks good in the mid term. I actually agree with the sentiment that physical silver's price should be (and in reality is to an extent) divorced from these cooky paper markets and although my preference is to actually own something I'm buying it looks like a way of reducing my counter party risk where the other party is a guy in a ski mask with a crowbar. That and the ability to massively leverage the money I have to invest makes it look, in theory at least, attractive. I just can't get it out of my head that one day the market at large will start to value physical silver differently from investments made in the price of theoretical silver. I suppose that's a big part of the rationale behind stacking. In any case, to the point of the thread, I'm head first into the shiny stuff.
What are the costs associated with taking delivery if you like the price and you can cover the cost? Do they make you pick it up from NYC?
I am not exactly sure, perhaps someone else can help out. I know that if you take delivery on a lot of futures contracts at once, you might need to hire cowboys and private jets. "Meanwhile, back at the ranch, (the Circle K Ranch in Texas) brother in law Randy Kreiling and his brother Tilmon held a shooting contest amongst the cowboys to find the best marksmen. The dozen best marksmen were hired for a special assignment to ride shotgun on one of the largest private silver transfers in history. The Circle K cowboys flew on 3 specially chartered 707 jets to Chicago and New York where they were met by a convoy of armored trucks during the middle of the night. Forty million oz of silver was loaded onto the planes and they immediately flew to Zurich where they were met by another convoy of armored trucks. The cowboys loaded the trucks and silver was dispersed to six different storage locations in Switzerland. The transfer cost Bunker and Herbert $200,000. The storage costs for the 40 million oz in Switzerland and the 15 million oz still in the US amounted to $3 million/year." (from "H.L. Hunt's Boys and the Circle K Cowboys", January 26, 2004)
I actually saw a youtube video with that narration last night, it was interesting to see a silver bug who was on side with the Hunts. I'd be very curious to know how taking possession works and who your actually buying it from (does the comex act as escrow against whoever is hedging the price using the contact)?
