Market Curiosity: Exploring Markets And Systems

December 15, 2010

Update: bonds and the small silver market

Filed under: Just Watching — Tags: , , — Jeff Fitzmyers @ 10:44 am

UPDATE Jan 22: Cleared things up here.

– LBMA silver Backwardation nearby lease rates are now in it’s 4th day with the first and second months.

A reports via King World News: “Last week Asian buyers let the price come in to them. They were buying all day long, hitting all of the offers and they were not sending the price higher… What they are doing is buying spot, which is a currency transaction because you can’t get the metal. The physical market has now completely diverged from the paper market.
– Bonds continue to decline on volume.

– There is supposedly about $2 trillion in about 15,000 hedge funds. (some funds are pretty small though)
– $1.5 billion, or 10,000 contracts, would buy all of the available COMEX silver.
– The position limit is 1,500 contracts or 7.5 million ozs, or $15 million in margin, or $225 million to take delivery.
– So, if 7 hedge funds took max delivery the COMEX would be bare.
– Or, all the hedge funds could buy all the available COMEX silver with less than 0.1% of capital.

Since September, Larry Ellison of ORCL sold enough shares to buy all the available COMEX silver.

Muni bonds (MUB) have been going down on big volume too. At some point people are going to want to put all that money somewhere “safe”, away from counter party risk. Silver seems like a good place to me!

LBMA 1 Month Silver Forwards > 2 Month SIFO For Past 2 Days (2)
Death Of The Dollar: Muni Bonds (3)

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