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

To: paul ross who wrote (6201)	12/5/2002 10:27:58 AM
From: Zardoz	Read Replies (1) \| Respond to of 8010

There's penalities for everything... most aren't fixed and go into arbitration. Generally the BIG guys pay the pain. {you lease a tonne, you get screwed} The futures markets are similiar to the stock option market. The pro's get executed on first. I'm not even sure when or IF there has every been a default on leased silver-gold. But I'm sure a lot of future traders have borrowed silver only to go bust on the trades. But that doesn't push a lease into penality. The loss would have to be greater then the margin on {the futures+the lease rate}, which is hard if you are borrowing at 10%+ and putting up the margin requirements to sell on the futures, with those added margins. Most lease silver is Short term, nearly over night {most less then 2 weeks} and is leveraged against other futures. It's not like a person is playing one simple commodity. The futures markets are built to match other futures in trades. And the lease is really only for those speculating short term. Most leases are based on Libor rates, and are by nature currency specs. Lease rates are really a one-sided second derivative of borrowing costs ad silver prise moves. Which means that as silver rises and treasuries rise, the lease rates rise. These are temporary events, and the rising lease rates reflect a peak in silver. I doubt you'll ever see silver rise beyond a 15% lease rate. There is a book out there that explicitly explains silver leasing, and I think it's called {but aint sure} "Financial Deivitives" <-- read it once, nearly beyond my Math skills.