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<p>[QUOTE=&quot;yakpoo, post: 1211959, member: 18157&quot;]I was raised an &quot;investor&quot; and not a &quot;speculator&quot; so I don&#039;t know a whole lot about futures markets. I view futures contracts as investment &quot;insurance&quot; rather than a speculative vehicle...but to each their own.</p><p><br /></p><p>My uneducated understanding of the futures market is that there doesn&#039;t necessarily need to be a one for one correspondence between the number of contracts and the actual amount of a commodity available for delivery...but most posts I see base their positions on that idea.</p><p><br /></p><p>Take an orange farmer, for instance...he&#039;s got an idea of how much product his groves will produce in the coming year, but he can&#039;t say for a certainty. He sells futures contracts (provided he can lock in an acceptable price) for about half the product he &quot;thinks&quot; he can deliver.</p><p><br /></p><p>Now, as (bad) luck would have it, there&#039;s a late freeze (or a drought...of some other such disaster) and he doesn&#039;t produce enough product at high enough quality to cover his contracts...what does he do? He simply buys back the contracts back at a higher price and eats the loss.</p><p><br /></p><p>I don&#039;t see how that example is different than the Silver market. Why does everyone think there has to be all this physical silver laying around to cover all the contracts? Granted, prices will rise and fortunes will be made and lost, but that&#039;s the nature of the beast. As long as there are enough people willing to pay for the &quot;idea&quot; of silver, markets remain stable. Jim nailed it with his discussion of margin rate adjustments.</p><p><br /></p><p>What folks should be focused on (imho) is interest rates. If QE2 is truly over, interest rates will likely rise (at least 75 basis points) to service the debt. If the 10 year note rises to the 5-6% range, we&#039;ll see a protracted period of stagflation and high unemployment. Oh...and silver will drift back below $18/Oz.</p><p><br /></p><p>Personally, I don&#039;t see anyway around it given our antiquated tax system. Those are my thoughts,anyway...[/QUOTE]</p><p><br /></p>

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