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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: The Vet who wrote (31728)	10/24/2004 9:18:39 AM
From: tyc:>	Read Replies (1) \| Respond to of 39344

>>"which require the longs to declare their intention to take delivery AND put up the full amount of the cash ...." This is surprising. I would have thought that the margin requirements to hold physical would be the same as to hold a future.... If you can afford to be long a future, you can afford to be long the physical. Is this not so ?

To: The Vet who wrote (31728)	10/24/2004 1:43:35 PM
From: Ken Reidy	Respond to of 39344

Thanks Vet, and thanks for explaining how the COMEX rules are stacked in favor of the shorts. Furthermore, the COMEX and other Commodity Exchanges can and often do change their rules midstream to protect the shorts....as the Hunt Brothers found out back when they tried to corner the silver market. The big hit to copper 10 days ago was in part due to increased margin requirements in Shanghai....as the following article indicates. Note that the timing of the increased margin requirements...done while most dealers were attending the LME dinner in London was likely not a coincidence: "London Metal Exchange benchmark three-months copper fell at one point by 5.5 percent on the day to $2,660 a tonne, the lowest since July 27, before recovering to end at $2,749, off 2.3 percent from its $2,815 close on Wednesday. Copper futures closed lower Thursday at the COMEX in New York, but off the day's lows as the market appeared to be consolidating after Wednesday's sell-off, traders said. Copper futures were off 1.85 cents to 0.20 cent, with benchmark December copper (HGZ4) down 1.85 cents at $1.2695 a lb. ``Things may start to consolidate around these lower levels,'' said James Quinn of AG Edwards, though he did not rule out further declines in the market. ``It could be an underlying belief that the economy is not growing as much as we want it to,'' he said. The sell-off ``did start in China. London then came in and there was rumor of yuan revaluation,'' said Michael Lewis, head of commodities research at Deutsche Bank AG London, referring to the last three days' trading. The size of the drop was aggravated by the low volumes of trading due to many dealers attending the industry's biggest annual event, the LME dinner in London. Lewis also said that model-based trading accounts, which pay little attention to fundamentals and trade automatically, had exacerbated the sell-off. A combination of increased margin requirements and persistent rumors of an impending revaluation of China's yuan currency, which triggered some selling in Shanghai early this week, weighed on the market, traders and analysts said."

To: The Vet who wrote (31728)	10/25/2004 12:02:42 AM
From: LLCF	Read Replies (2) \| Respond to of 39344

To be honest it's not at all clear to me that the "paper markets are rigged in favor of the shorts": <the rules of the paper markets which require the longs to declare their intention to take delivery AND put up the full amount of the cash to do so BEFORE the shorts have to actually produce the commodity they have sold.> I don't think it is 'stacked' to make longs declare intention to take delivery or pay upfront... 1.) if you want something out of circuit cities warehouse, you better order ahead!! On the other side, shorts have to deliver product that meets certain specifications and stamped by proper producers and have gold stored in licenced warehouses! IF there isn't enough gold to deliver to the longs, the COMEX [and NYMEX] GO OUT OF BUSINESS AND ALL SEATS ON THE EXCHANGE ARE WORTHLESS!! 2.) I see nothing wrong with paying before getting what you paid for... it happens every day with every transaction in the country unless you have specifically set up a credit arrangement. 3.) I would watch the open interst vs warehouse stocks before colouring the COMEX with the same brush as the central banks... ie. don't blame the fact that there has been more gold borrowed and sold than could actually be come up with today on the comex without showing numbers. DAK