ted butler on the NYMEX palladium scandal:
ted butler (@When the going gets tough......change the rules) ID#317184:
Copyright © 2000 ted butler/Kitco Inc. All rights reserved
Here's a follow up on the absurdity of the NYMEX raising palladium margins to 180% of the contracts value, and what it really means. At the time of the margin increase announcement, the lead September contract had around 800 contracts open ( 80,000 ounces ) and had almost 3 weeks to go before first delivery day, Sep 5. World annual production runs around 6 million ounces a year. ( Making palladium mine dollar volume twice as large as silver mine volume ) . 80,000 ounces of palladium equals less than 5 days world mine production. 5 stinkin' days.
So, the world's largest precious metals exchange, instead of acknowledging that the shorts who run the exchange, can't come up with 5 stinkin' days of supply to back the tens of thousands of contracts they've shorted naked over the years, changes the rules to protect the shorts. Instead of making the markets honest by demanding all metal shorts have warehouse receipts on or before first notce day, this crooked exchange comes up with a manipulative margin scheme to shake out the longs. ( To those who would say that the margins apply to the shorts also - so what? Shorts can't deliver money, just metal ) . Instead of letting the price balance supply and demand, the NYMEX has decided to set price by manipulative margins. It doesn't get more corrupt than this. They can't even trot out the usual bullshit line - how greedy speculators are manipulating and squeezing the market. With what - 800 contracts?
I said yesterday that we all should be outraged about this action by the NYMEX. Here's why - if they can do it in palladium, they can do it in gold and silver and platinum. It's the same exchange. It is a horrible precedent ( This is actually the second time they did it in palladium ) . Whether you trade in NYMEX contracts or not, does not matter - you should be outraged if you believe in free markets. After all, the price of precious metals is set on the NYMEX/COMEX 99% of the time. If you don't think that influences you as a non-futures/options investor, you're wrong. The NYMEX/COMEX has sent a clear signal that they will fight any legitimate supply/demand price increase with preposterous rule changes. It used to be that the exchanges would fight and compete to introduce and maintain different markets. To see the NYMEX allow its palladium contract to go down the tubes, shows you who comes first in the NYMEX's eyes - the naked shorts. And to think - we have a government agency expressly created to prevent this crap, the CFTC. It's disgusting. |
