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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Proud Deplorable who wrote (83912)8/28/2008 7:02:46 PM
From: The Vet  Read Replies (2) of 116555
 
Silver price manipulation or just normal market making?

The differences in the Nadler, Butler positions is a chicken and egg argument. It can be easily proven if, and only if we had accurate data and such data is withheld from us.

It can be argued that the banks and market makers started selling paper silver in volume on the futures market to force the price down which in turn caused panic selling of the long speculators which the banks then snapped up.

The alternative argument is that the longs panicked for no obvious reason, the banks bought the offered positions and then hedged by selling on the futures market.

In both cases the result is the same in that the long speculators unload their long positions which are taken up by the banks who in turn hedge by selling equivalent short positions. But who is taking the other side to the banks short sales? It can't be the long speculators - they are the panic sellers.

And then look at the profits. If the banks were simply reacting to panic sales from long speculators and then offsetting their positions they would be making continuously losing trades as it would be impossible to hedge fully in a rapidly dropping market. However if they where "hedging in advance" and then using the market weakness so created to force the long speculators out of their positions then the banks would be profiting all the way down at virtually no risk.

I'm going to follow the money....
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