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<p>[QUOTE=&quot;desertgem, post: 1470195, member: 15199&quot;]I don&#039;t think that JP Morgan would sell short (naked) <img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie1" alt=":)" unselectable="on" unselectable="on" /> , but if they did, they do have a time limit ( SEC regs) to deliver or offset, ( usually 30 days for most commodities), other alternatives so they would not have to buy at spot, depends on whether they feel it will still go down or at a specific period ( maybe 60 days) it will be higher.&nbsp; If they thought it at a bottom for a while, they would themselves buy a contract for delivery in the same period as the one sold. The difference is that the price would be the ~&nbsp; $50 less oz., so they would only make about $50 x 10,000 and be off the hook for the their delivery of gold as they bought a delivery of gold in the same expiration period which offset.So they would keep their physical. </p><p><br /></p><p>If they thought it was still going down, They would let their sell stand for a time, or hedge with some call options that could be converted to delivery later and if gold comes back up, the call value increase will offset some of the physical cost. The fact is they made money , the hedge protects it. Of course this is hypothetical to help answer the OP.[/QUOTE]</p><p><br /></p>

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