Brad Zigler

Noticed the Oil Backup?

WHERE did you get the notion that a central bank would contract for long metal exposure with a swaps dealing bank?

Got some proof?


On Jul 26 12:34 PM nobby73 wrote:

> The central banks are the OTC swaps counterparties for the precious
> metals shorts....

Noticed the Oil Backup?

Though, by the strictest definition, contango actually represents the premium OVER the cost of carry (storage, insurance and financing costs).


On Jul 25 10:21 PM Brad Zigler wrote:

> Contango exists when an immediately deliverable commodity is priced
> lower than a deferred delivery e.g., when September crude oil trades
> under December futures.
>

Noticed the Oil Backup?

So, would you say that this explains the oft-reviled short positions in precious metal futures held by U.S. banks?

Are these banks merely hedging the swap exposures granted to fund customers rather than colluding with the central bank in a scheme to manipulate the price of metals lower?


On Jul 26 11:10 AM The Greatest Rip Off of our Time wrote:

> When Congress passed the Commodity Exchange Act in 1936, they did
> so with the understanding that speculators should not be allowed
> to dominate the commodities futures markets. Unfortunately, the CFTC
> has taken deliberate steps to allow certain speculators virtually
> unlimited access to the commodities futures markets. The CFTC has
> granted Wall Street banks [like Goldman Sachs] an exemption from
> speculative position limits when these banks hedge over-the-counter
> swaps transactions. This has effectively opened a loophole for unlimited
> speculation. When Index Speculators enter into commodity index swaps,
> which 85-90% of them do, they face no speculative position limits.
>
> The really shocking thing about the Swaps Loophole is that Speculators
> of all stripes can use it to access the futures markets. So if a
> hedge fund wants a $500 million position in Wheat, which is way beyond
> position limits, they can enter into swap with a Wall Street bank
> and then the bank buys $500 million worth of Wheat futures.
> In the CFTC’s classification scheme all Speculators accessing the
> futures markets through the Swaps Loophole are categorized as “Commercial”
> rather than “Non-Commercial.” The result is a gross distortion in
> data that effectively hides the full impact of Index Speculation.

Noticed the Oil Backup?

Contango exists when an immediately deliverable commodity is priced lower than a deferred delivery e.g., when September crude oil trades under December futures.



On Jul 25 07:59 PM merv. wrote:

> Please don't jump on me for asking a simple question. What is contango?
> Thank you.