Silver getting crushed today

Discussion in 'Bullion Investing' started by Soiled, Apr 1, 2016.

  1. sakata

    sakata Devil's Advocate

    As long as it is paper silver you can dump as much as you want. But I doubt you would be able to dump 100,000 oz of physical - just think of the mailing costs!
     
    abuckmaster147 and chascat like this.
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  3. abuckmaster147

    abuckmaster147 Well-Known Member

    Ha Ha I have made the trip from CNY to Dallas in less than a day a few times! When I was a lot younger .:wacky:
     
  4. harrync

    harrync Well-Known Member

    100,000 oz seems like a lot, but look at it as only 20 contracts on the commodity exchange, and it's not that much.
     
  5. sakata

    sakata Devil's Advocate

    Exactly right. As I said, yo can dump all the paper you want. Very few contracts are actually delivered.
     
  6. harrync

    harrync Well-Known Member

    I actually "took delivery" of a bar many years ago. It was a "baby" contract [only 1000 oz] and I didn't actually get the bar, only a statement from my broker that I had a bar in a certified warehouse. [Hope this is not a duplicate post. I tried to make a post a few minutes ago, but when I hit 'post', it seemed to just disappear.]
     
  7. Clawcoins

    Clawcoins Damaging Coins Daily

    Do you pay maintenance storage costs ?
     
  8. mpcusa

    mpcusa "Official C.T. TROLL SWEEPER"

    Why wouldnt you take delivery ? and what if any is the benefit of not ?
    So this would be a futures situation correct ?
     
  9. harrync

    harrync Well-Known Member

    The silver futures market [at least when I was dabbing in it] had a stair-step kind of pricing; each month out was just a little more than the previous month, by an amount that was just about what the carrying costs [lost interest, storage, etc.] would be. [Google "cantango" for more info.] Say you buy a contract a year out. The year goes by and you have to either sell the contract or take delivery. On my 1000 oz contract, I had put down maybe $500 margin; since the price I had agreed to pay was $3500, I had to come up with another $3000 to take delivery. Most traders were in for the leverage; they had better uses for that $3000 [maybe buy six more futures contracts?], or didn't have the $3000 immediately available. They would sell their current month contract, and buy a new contract about a year out [again, at a price premium about equal to the carrying costs.] A few years later, I sold a contract, and when it came due, I had a "good delivery bar" in an approved warehouse to "deliver". That is, my broker sent me a notice that I no longer had a bar in storage, and the buyer's broker sent him a letter saying he now had one in storage. I never got into the details of taking actual physical delivery; IIRC, my broker said it was not worth the trouble. I came out ahead of the "rolling over the contract and putting the $3000 in a CD" approach, but not by much.
     
  10. harrync

    harrync Well-Known Member

    If you are not familiar with the "good delivery bar" concept, here's a short explanation: The commodity exchange has a list of approved refiners who cast "1000" oz bars of a specified fineness [they don't have to be exactly 1000 oz - I think mine was 978 oz or thereabouts.] The refiner [or the customer who paid to have their silver refined] sells a contract to deliver, and then delivers the bar to an exchange approved warehouse to satisfy the contract obligation. Only these "good delivery bars" can be used to satisfy your obligation when you sell a contract. You can come in with 1112 oz of junk silver, and it would not be accepted [even though everybody would know it had over 1000 oz fine silver - still no go.] When you go 'long" a silver contract, you get the right to have one of the bars delivered to you. This was important back in the Hunt brothers debacle in 1979. People say the price of silver got to $49/oz. Not so; the price of good delivery bars got to $49, but you could buy all the junk silver coin you wanted at about $35/oz. One major approved refiner was on strike, the others went to refining for their own account only; that is, they usually would let anyone bring in a bunch of silver, pay a small fee, and get back a good delivery bar. But not during the squeeze on good delivery bars; they would buy your silver at $35/oz, refine it, and sell it themselves at $49.
     
  11. abuckmaster147

    abuckmaster147 Well-Known Member

    WOW!!! That seems like a lot of crap to go through , And Risk, I think I will stick to my buying 6 ounces of physical silver every ten years, Ha Ha And maybe someday I can buy my wife the lunch she has wanted me to take her out for for 25 years.:D;)
     
  12. harrync

    harrync Well-Known Member

    Yes, rolling over expiring contracts can be a hassle - one reason I never took that approach. But taking "paper" delivery was no more complicated [or risky] than buying stock and leaving it in your account in your brokers name. My broker paid my very modest storage fees out of my account balance, so there was really nothing for me to do - that bar could still be there in my name if I hadn't sold it, and I would have had to do nothing for the last 40 years except make sure my brokerage account had enough cash in it to pay the storage. And don't confuse a Chicago Board of Trade approved warehouse with "Joe's Local Corner Storage Vault". Your are taking a substantial risk using one of those private storage vaults, just like you take a risk keeping bars at home. I don't think anyone has ever lost a bar in one of those exchange approved storage facilities. But every once in a while, I read of stuff disappearing from a private, unapproved facility; just like I frequently read of homes being ransacked.
     
    abuckmaster147 likes this.
  13. ddoomm1

    ddoomm1 keep on running

    Aaaaand there goes silver (thank you to the Fed).
     
  14. Clawcoins

    Clawcoins Damaging Coins Daily

    the perverbial silver cliff ...
    [​IMG]
     
  15. sakata

    sakata Devil's Advocate

    What did they do? I don't have access to newsfeeds right now.
     
  16. abuckmaster147

    abuckmaster147 Well-Known Member

    The U.S. Federal Reserve left interest rates unchanged on Wednesday but signaled it still expects one more increase by the end of the year despite recent weak inflation readings.
     
  17. sakata

    sakata Devil's Advocate

    Well that explains why it did not drop very far and is already on the way up - an irrational response without any thought. When will people learn?
     
  18. baseball21

    baseball21 Well-Known Member

    You often see an end of the day pull back a lot regardless of direction something is movie. Human nature for people to think something is overbought or oversold after a noticeable move all day
     
  19. Santinidollar

    Santinidollar Supporter! Supporter

    Don't overlook the significance of the Fed selling the bonds it bought during quantitative easing. It will take years -- and if the bond market gets more than it can handle, interest rates could rise sharply.
     
  20. SilverTracker

    SilverTracker Well-Known Member

    This whole thing gives me a headache. Lol
     
  21. Santinidollar

    Santinidollar Supporter! Supporter

    Me too.
     
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