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Wow. Ponzi writ in silver and copper.
Here it is:
Read more: http://www.sfgate.com/cgi-bin/articl...#ixzz1817VA8xoAnother report indicates that JPM may really be on the ropes with their short silver position and are attempting to hedge themselves by buying $1.5 billion worth of copper. According to the Telegraph, the bank has bought "between 50% and 80%" of the 350,000 tonnes in reserve at the London Metal Exchange.
bb
Wow. Ponzi writ in silver and copper.
http://seekingalpha.com/article/2411...tory-ever-told
If it smells to fanstastic to be true...
The guy pushing hardest regarding this rumor, astonishly enough, stands to benefit a great deal if people rush out and follow his exhortations.
Not that that is any logical reason to disbelieve him from the outset, but one should, as the guy linked above did, subject such claims to some pretty close scrutiny.
I have a hard time believing any sane CEO would sign off on a $1.5tn derivitaves deal these days. Smells like... bull .
I realize all of these things.
Per usual, you take all these different parts, run it through your ideological blinders, then pat yourself on the back about how smart you are in reaching a decision backed by all the information that made it through those blinders.
As I have said before, this is the reason I am very hesitant to assign your conclusions on climate science any real weight.
I can clearly see how stilted your conclusions are, because of how you subordinate everything to your ideological stance, however "sciencey" you dress them up.
"peak copper"?
Copper, although we talk about "consumption" is not consumed in turning it into products. It merely changes form, and can be recycled, a main difference between that and fossil fuels.
I see some steady rises, but nothing really catastrophic here.
As you rightfully noted that new mines are not entered into on the basis of short-term swings. The big ones are multibillion dollar affairs, and you don't pull that kind of trigger without some solid guarantee of cash flows.
As with peak oil or any mineral commodity, it's not only supply that peaks, it's the ability/willingness of the market to cover the profits added to much higher extraction costs, even for an abundant supply, after the low hanging fruit is all taken (eg, oil in lower 48 pushing extraction to Alaska, deep waters, and tar sands).
One might have said the very same thing about all the broker-dealers and megabanks regarding MBSs three or four years ago. There's ample precedent for it, and a perverse incentive is now in place: JP Morgan is TBTF, and they know it.
If Morgan makes a bad bet, the public will backstop them. AGAIN.
(Slightly, OT: The CFTC investigation of JP Morgan sure isn't bull . They seem to be taking Mr.Maguire's accusations seriously enough. )
Hard to argue with this logic.
No, you have me wrong. If you recall, I have posted in the past how metals would be good investments, and since they were not gaining like gold because of momentum, probably a better choice. Though I didn't say so, I meant all transitional metals. My outlook on this is that it is late in the game for copper. It doesn't have the same supply and demand disparity as gold, and buying such a high percentage of it I believe will be disastrous.
Now also remember I did say I could be wrong about this. I am firm on my Global Warming views however, so you are comparing apples with bananas.
And with the clear outlook that copper needs will increase, new mines will be made as necessary. It will not have the same supply and demand effect on pricing as gold does. It is a commodity that I think we will likely never run short on because of future technologies reducing the volumes needed.
I wouldn't be surprised if there were *something* going on here, but part of the problem is that the guy pushing this theory seems to be basing his figures on very thin indirect evidence.
As for TBTF, I am all there with you. I think we need to fix that and fast.
I think the second that one of these firms comes close to failing, you let it fall, then wipe out all the equity, make the bondholders suck up 1/2 the rest of the loss, and THEN step in to backstop any remaining losses. Any un-reserved default swaps issued by the en y get made into worthless paper as well. If you want to sell insurance, you gotta have reserves, period.
... and they do so partly in response to the price of the commodity. This is what OPEC and other cartels call "demand destruction", and why they try to hold prices low to discourage such things.
I have no doubt that new supply will come online, I have lots of doubt that it will come online faster than demand will e. BRIC countries have a lot of room to absorb supplies.
We'll see of course.
I would agree they would make money if they didn't purchase such a large share of the copper. As it stands, they hold too much to unload if they need to, which would plummet the price where they would take a serious loss.
http://online.wsj.com/article/SB1000...LEFTTopStoriesCopper demand is likely to outstrip supply this year by an estimated 455,000 metric tons, Barclays Capital says. Copper inventories at the LME have been declining since February.
Consumption is growing rapidly in China, Brazil and the U.S. And the creation of ETFs to hold physical metal is helping drive demand. On Tuesday, ETF Securities, a London-based provider, said its newly announced copper-backed ETF has added about 850.5 tons of copper, up 43%, to reach 1,445.5 tons.
Last month, the LME reported that a single holder owned more than 50% of the exchange's copper. People familiar with the matter at the time said J.P. Morgan was the holder.
On Tuesday, the LME reported that a single holder now has as much as 90% of the stockpiles, without naming the firm. The LME reports data two days in arrears, so the position increased on Friday.
In the aluminum market, about 70% of the LME metal is locked up, MF Global base metals analyst Edward Meir said during LME Week in London in October.
LME aluminum stocks currently total about 4.3 million metric tons.
As one example, Swiss commodity trading firm Glencore International AG bought about 1.6 million tons of the metal from United Co. Rusal Ltd. earlier this year, market participants said at the time. Glencore then turned around and presold the metal. So even though the aluminum is sitting in LME warehouses, visible to all traders, it is effectively locked up.
These sorts of deals have skewed physical trading in these metals, as other consumers have paid higher premiums to get hold of stocks, even though the metal appeared available in warehouses.
Holding ready-for-delivery metals on an exchange isn't a cheap undertaking for traders, who are responsible for paying insurance, storage and financing costs. And "the end game is to find somebody to buy something you have already bought for a higher price," Mr. Threkeld says.
The recent boom in metal prices has enabled traders to purchase the physical metal, sell a futures contract at a much higher price and still make a profit after paying for storage and insurance.
A federal futures regulator said Tuesday he believes there have been numerous attempts to fraudulently influence silver market prices, and he urged the agency to prosecute those who may have violated commodities laws.
Bart Chilton, a commissioner at the Commodity Futures Trading Commission, made his comments Tuesday at the start of a public meeting where the agency will be proposing new rules to strengthen its anti-fraud and anti-manipulation powers.
Now if they recognize the abused in the stock market as well, maybe they will return the "uptick" rule.
Correct me if I'm wrong, but hasn't copper lost almost 20% value since this thread ended?
Only the taxpayers lose
Copper is down even farther since the start of this thread and post #68.
due to "free market" supply/demand, or due to commodities speculators gaming the commodities markets?
It's no big conspiracy. Construction in China which uses 40% of the worlds copper production has gone in the ter.
http://www.hngn.com/articles/50472/2...d-official.htmA separate report released Thursday by the U.S. Senate Permanent Subcommittee on Investigations detailed how banks such as Goldman Sachs, Morgan Stanley and JPMorgan purchases metals warehouses, crude oil tankers and other physical commodities, and used those business to "gain unfair advantages and influence markets," according to the Guardian. U.S. lawmakers claim such commodity hoarding by big banks jeopardized firms and the financial system.
The report charged the banks with engaging in "many billions of dollars of risky commodity activies, owning or controlling, not only vast inventories of physical commodities like crude oil, jet fuel, heating oil, natural gas, copper, aluminum and uranium, but also related businesses, including power plants, coal mines, natural gas facilities, and oil and gas pipelines."
It also found the banks to have benefited from lower borrowing costs and lower capital to debt ratios compared to nonbank companies, and some of the companies "used or contemplated using physical commodity activities that had the effect or potential effect of manipulating or influencing commodity prices."
related thread: http://www.spurstalk.com/forums/showthread.php?t=229144
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