| Author |
 Topic  |
|
|
fb101
Administrator
USA
2856 Posts |
|
|
jonflyfish
Penny Hoarding Member
USA
693 Posts |
Posted - 09/05/2009 : 22:23:20
|
| The part I don't understand is why Ted Butler thinks it is about CME/NYMEX/Comex silver when the warning was directed at OTC contracts where the bank is the counterparty, which is much different than exchange traded contracts, where the exchange is the counterparty. If you stiff a bank on a private non- fungible contract (typically a swap payment) that is one thing because there are typically no escrow funds or margin on deposit. If you stiff the exchange, you can kiss your margin deposit (that must be maintained on daily settlement or liquidation occurs) goodbye. |
 |
|
|
dakota1955
1000+ Penny Miser Member
2212 Posts |
Posted - 09/05/2009 : 22:25:32
|
| My question is what will this do to the price of silver? |
|
|
|
jonflyfish
Penny Hoarding Member
USA
693 Posts |
 Posted - 09/05/2009 : 22:34:15
|
quote:
Originally posted by dakota1955
My question is what will this do to the price of silver?
It depends on what type of contract is at stake and if they are even trading silver OTC with these banks. Typically OTC contracts are swaps i.e. fixed for float which is a financial only transaction. From the companies listed, it seemed to have a petroleum consumer angle. If that is the case, option collars and fixed for float swaps would likely be the primary transactions with the banks. Such trades are often used to hedge physical purchases on the spot and forward delivery markets. |
The first panacea for a mismanaged nation is inflation of the currency; second is war. Both bring a temporary (and false) prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunities. |
|
|
|
Nickelless
Administrator
USA
5580 Posts |
|
|
dakota1955
1000+ Penny Miser Member
2212 Posts |
Posted - 09/07/2009 : 07:46:15
|
| Looks like no one has the answer to this question. |
|
|
|
Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
Posted - 09/07/2009 : 18:32:44
|
I read today that these specific SOE's that are threatening default are referring to oil derivatives rather than PM based derivatives.
You must be logged in to see this link.
The Chinese probably would not be doing this unless they had proof-positive that the counter party was misrepresenting themselves and/or manipulating the commodity. The amounts involved are only at or about the low 10's of billions of dollars.... I doubt that the Chinese would put their necks out unless they new that they would win a court battle or, more likely, reach an agreement to quietly nullify the contracts.
This could be HUGE, I suspect that more so due to the virtual non coverage in the major financial news outlets...
This is not to say that it will not spill over to PM's, directly or indirectly, given the preponderence of evidence pointing to PM price manipulation.
Wheee, this investing stuff is easy! (Sorry M.G., it's just so catchy!)
|
"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty." Thomas Jefferson
|
|
|
| |
Topic |
|
China default on Commodities short positions
Forum Locked
