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1000+ Penny Miser Member
USA
3121 Posts |
 Posted - 04/06/2010 : 12:53:53
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Copper Catcher
Administrator
USA
2092 Posts |
Posted - 04/06/2010 : 14:22:06
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In the articles it says:
The way to beat JPM at this game is to take away the supply of physical gold that backs the paper gold that trades at the COMEX. Once the physical gold is taken off the table, ‘paper gold’ will shrivel and disappear.
We do that by refusing to trade futures except with the intent to take delivery. By taking delivery we reduce the pile of gold that is left.
** I am not sure it works that way.. Maybe someone can chime in.
As I understand all contracts have the option to be settled in cash versus delivering the physical metal. Correct? |
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Lemon Thrower
1000+ Penny Miser Member
USA
1588 Posts |
Posted - 04/06/2010 : 14:48:19
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copper catcher, you are right but the article is right to an extent.
the comex is an exchange. the point of an exchange is the exchange acts as a sort of middleman to eliminate counterparty risk. it sets margin and other requirements.
the participants on the comex pony up physical bullion to back their activity.
you are correct that the futures contracts may be settled in paper (GLD), or if tehre is a default they might change the rules and say cash is OK. i don't think the losing party can force you to accept cash today, although many people accept it today.
but there are people who are taking delivery in physical, and taking it away from the exchange. there are also people who are taking their physical and not playing the futures game anymore. among these is a large hedge fund. the finance types use to collect a small rent on their physical by selling futuers on it. this hedgie figured out that its cheaper to hold physical and pay your own storage and forego that rent.
so its starting to happen. if you read ed steer or ted butler, they discuss the numbers. over time, physical is being pulled away from new york. |
Buying:
Peace/Morgan G+ at $15.00
copper cents at 1.3X
wheat pennies at 3X
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 04/06/2010 : 15:46:07
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| I think such a strategy would work better with the silver market than gold's. Silver is a much smaller market and the governments of the world, especially the U.S. government, don't have a lot of it in which to help out the paper pushers. |
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beauanderos
1000+ Penny Miser Member
USA
2408 Posts |
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There is a way to beat JPMorgan at their game
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