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<p>[QUOTE=&quot;Cloudsweeper99, post: 649904, member: 3011&quot;]The point is that someone can go into the futures market and purchase contracts to deliver X million ounces of silver at a future date when they don&#039;t actually own silver.&nbsp; This has the same impact on the market price of silver as an actual sale and tends to keep the price low.&nbsp; If the party is a big enough player, they can roll-over the contracts or even add to their short position for years at a time without ever covering -- this has actually been going on.&nbsp; At the same time, this party may be profiting by purchasing silver or options on silver or selling the contracts back into the futures market at a profit on price dips.&nbsp; The futures exchange was set up to (1) allow legitimate hedging by buyers and sellers, and (2) to act as a price discovery mechanism.&nbsp; A little speculation is okay because it provides liquidity, but it has grown so large that the original legitimate purposes have been drowned out by speculative volume.&nbsp; If one of the large speculators is forced to default for some reason and doesn&#039;t hold physical silver to cover, there is going to be chaos, and the exchange may actually close.&nbsp; The regulators have recently become concerned enough about this possibility to consider placing position limits on sellers who can&#039;t demonstrate they own the silver they are offering to sell.&nbsp; This looks like a positive development to me.[/QUOTE]</p><p><br /></p>

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