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

To: stuart haven who wrote (4425)	1/11/2002 11:23:48 PM
From: crm114	Respond to of 8010

Stuart wrote <<...if NY traders are selling silver short and therefore depressing the price, do they not have to go to the physical silver supply to cover their short position sooner or later? There is no mechanism {except leasing} that allows them to get around this procedure...right? >> No, I think that the idea is that the commodity traders expect to settle in cash and not in actual delivery. I think Butler's point is that there are two markets, a physical market and a paper market. The futures exchange is a paper market which has produced the price cues that it has -- some would say artificially low price cues, given the presumed shortage of physical product -- because the traders expect to settle in cash and are disconnected from the fundamentals of the physical market. Pricing in the physical market is stated in terms of lease rates rather than explicit price per ounce, and the presumption is that a position can be either rolled over, or closed out by buying spot silver, which the leasing market presumes will always be cheap. Butler has consistely said that the whole thing will end with a massive delivery default, as Butler calls it, "the biggest force majeur in history." I am not quite as bullish as Butler. I have said that we have no idea how much silver remains in above ground stocks and available at current prices -- though as a long I HOPE it runs out soon -- and that when it does run out, we will first see the end of the leasing market, followed by a reversion to the spot market. At that point the spot price will telegraph the true market fundamentals. I hope not to be a seller below $20/oz. CRM

To: stuart haven who wrote (4425)	1/11/2002 11:52:24 PM
From: Canuck Dave	Read Replies (1) \| Respond to of 8010

Ted is obviously a tad bitter, though who can blame him? He points out that the shorts may find another supply of "leasable" silver to continue the downward game for another round. It also appears a large hedge fund has figured out the endgame is very close and has been buying physical vigorously. The New York/London differential is explained in these terms (spot versus futures markets). Personally, I don't give a rat's ass if there is some big conspiracy to hold prices down. As Ted says, physical will eventually trump paper. The further the pendulum is held back, the further it's going to swing in the other direction. Just my opinion. CD