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Gold/Mining/Energy : Silver prices -- Ignore unavailable to you. Want to Upgrade?

To: Canuck Dave who wrote (4071)	12/19/2001 7:29:51 PM
From: ild	Read Replies (1) \| Respond to of 8010

thebulliondesk.com <<<Comex silver warehouse stocks declined a whopping 1.8 million ounces, which was most probably a movement from New York to London, as silver seeks the higher prices available there. This commentary has been forecasting this movement and I still believe that a whole lot more still needs to get moved. Not to worry. If enough silver gets moved offshore, then Comex will begin to carry a premium to London and then all the silver will just get moved back. Just the normal ebb and flow of this market and the ones who profit from it are the arbitragers and the shipping companies. In thinking about why silver lease rates are so uncharacteristically high at this time of year, it struck me that it might be a result of London silver trading higher than New York and the arbitrage that is occurring by dealers to correct it. OK. Lets go through a possible scenario and the steps a trader would execute in this arbitrage. 1. Trader sells silver in London for 2-day value (for payment and delivery in two days) at, lets say seven cents over the New York price and simultaneously buys silver in New York. 2. Trader then BORROWS silver in London to meet his obligation to deliver silver. 3. Trader has bought silver in New York, takes delivery and ships it to London, which takes about two to three weeks by ship to repay his silver loan. So, this could explain why lease rates in London have gone so high, so fast. What is does not explain is why London silver has been priced so highly over New York silver. If the above is even a bit factual, then the real issue is not the lease rates, it is the difference in prices between the two major trading centers. And, exactly what is the cause of that discrepancy. When trying to investigate a mystery, it must help to be asking the right questions. >>>