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Gold/Mining/Energy : Gold Price Monitor
GDXJ 113.82-6.4%Dec 29 4:00 PM EST
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To: Terry Rose who wrote (12131)5/24/1998 4:31:00 PM
From: PaulM  Read Replies (1) of 116835
 
Terry, the obvious resolution to the palladium "problem" is a higher price.

At a much higher price, those physically holding this metal would let go, given an offer they can't refuse. But apparently, Adam's SMith's solution is unacceptable in this instance. To me, there are many facinating aspects to this story which is why I keep bringing it up:

1. The price of the June contract is hgiher than the offical quote. The price is the NYMEX quote PLUS the cost of an additional $11,000 which would otherwise be earning a return elsewhere in the interim.

2. If I were a long, I guess I wouldn;t have seen this coming. NYMEX has essentially forced me out of the market if I can't come up with the money. Had I thought this could happen in advance, I might have arranged my affairs otherwise. NYMEX can pull this trick (raising the deposit requirement above the contract price) effectively ONCE. Just once.

3. The behavior fo the Japanese is interesting. Selling when logic dictates buying. Perhaps an analagous situation explains why gold doesn't behave in "traditional" fashion.

4. What happens if the shorts can't return the metal? They have defaulted. What happens to you and I when we default on our credit card?

5. I would take another look at silver.

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