| | | I've often enough heard that excuse... usually in the form of "you guys don't know what you;re talking about" re shorts in the gold and silver market... because, they say, the "shorts" are actually the producers hedging production... so, "nothing to see here"...
But, market reality turns out to be... it doesn't matter who the trader is... and, only more true if they can't meet a margin call... as producers are no more clairvoyant and no less subject to error than other traders in the game... and, may be less so... given "other things" to focus on than exogenous market risks... while lacking to concern others may have, given the apparent surety in the "metal in the ground" argument...
Miners focused on mining... also tend to be less aware of exogenous risks than investors... who are not going to work in the mine each day... but are mulling the geopolitical variables as the breezes shift... Hence, First Majestic realizes geopolitical risks that I do not... because... I can move my position in a few minutes... and they have, thus far, proven unable to move their mines...
The error in logic is not different than others of the same ilk in the relative value in "who you know" versus "what you know". Corruption naturally encourages fostering dependency on who you know... while traders livelihood depends on awareness that a tendency to error in logical fallacies is a human trait that has not been overcome... so that willingness to be patient and go against the herd, expecting reality to win out in the end over corruption... is an essential.
I do not dismiss the result of one traders error as "a one off"... rather than an indication of "more like that out there"... being masked by the tendency...
I suspect that traders in nickel experiencing margin calls... will have linkages to other trades in other metals...
and, whether that is true or not... traders, including producers, who are short, say, silver... cannot be blind to the fact that... short positions in a market spiking higher... can be company killers... Silver experienced some of that in Feb of 2020 into March of 2021... as production was unable to backstop the push... Today, it may not be Covid imposing the problems... but the nature of the risk now is "faster"...
The dreaded C word is being avoided... but contagion is clearly a possibility...
Keep your head up and you vision unclouded... by others "expectations" re normalcy... more when that inducement to expect normalcy depends on function in human cooperation... at a point where it is failure in human cooperation that is driving dislocations in balances between expectations and realities...
|
|
