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*Breaking: The Comex Confirms That Its Gold and Silver Inventory Reports Are Fraudule
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<p>[QUOTE="medoraman, post: 1724171, member: 26302"]Good illustration. To me, the stronger argument is that the COMEX will get paid, period. There is massive amounts of money pledged to make good on all trades, to ensure settlement. They have to do this since if anyone ever has a trade unsettled that is the end of the market. So, ALL TRADES are settled. It just happens the VAST MAJORITY of trades people do NOT want the physical metal, so either cash settle or close their position with buying the offset before settlement date. </p><p><br /></p><p>YES, the basis can drift. This is the price between market and physical delivery. Its discussed ad nauseum in classes discussing CME boards. I have gone to three such classes and am sick of the word they harp on it so much so that participants are aware of the issue. MARKET PARTICIPANTS, (maybe not internet complainers), are extremely aware of basis risk, but have no other choice but to use the market to hedge. </p><p><br /></p><p>Like I have said before, come up with a better market, one that is more useful to everyone, and you will be a billionaire.[/QUOTE]</p><p><br /></p>
[QUOTE="medoraman, post: 1724171, member: 26302"]Good illustration. To me, the stronger argument is that the COMEX will get paid, period. There is massive amounts of money pledged to make good on all trades, to ensure settlement. They have to do this since if anyone ever has a trade unsettled that is the end of the market. So, ALL TRADES are settled. It just happens the VAST MAJORITY of trades people do NOT want the physical metal, so either cash settle or close their position with buying the offset before settlement date. YES, the basis can drift. This is the price between market and physical delivery. Its discussed ad nauseum in classes discussing CME boards. I have gone to three such classes and am sick of the word they harp on it so much so that participants are aware of the issue. MARKET PARTICIPANTS, (maybe not internet complainers), are extremely aware of basis risk, but have no other choice but to use the market to hedge. Like I have said before, come up with a better market, one that is more useful to everyone, and you will be a billionaire.[/QUOTE]
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