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<p>[QUOTE=&quot;InfleXion, post: 1471888, member: 29012&quot;]Notwithstanding any specific commodity, how exactly is it not manipulation if the market price setting mechanism is capable of expanding the &quot;supply&quot; (paper contracts representing real commodities) by 4000%? If only 2.5% is delivered then the real supply would have to grow by 4000% to meet 100% delivery. This would require speculators to also increase demand by 4000% to equalize the supply/demand dynamic, and to say that leaves some wiggleroom is a gross understatement. A contract may change hands multiple times before delivery or being closed out, but that still initiates buy and sell orders that impact the price in the process. While this does provide the benefit of price stability, it is at the expense of fair value.</p><p><br /></p><p>In the case of gold and silver these contracts also usurp demand from the physical market as investors use the paper contracts instead of the real thing, which actually hurts those investors because if they all bought physical the price would have to be a lot higher.</p><p><br /></p><p>I&#039;ve heard before that every buy has a corresponding sell, so they cancel out (in a world where naked shorting does not exist), but if everything cancels out then the movement of these contracts in between initial creation and close out should have no impact on the price. Maybe this is the case and I just don&#039;t understand it well enough.</p><p><br /></p><p>Regardless, there can still be upwards of 100 ounces of paper bought or sold for every physical ounce that exists. Using that metric, the real supply only impacts 1% of the price. Again, how is this not manipulation?[/QUOTE]</p><p><br /></p>

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