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Discussion Starter · #1 ·
"There are persistent rumors in trading circles that an unusually large number of long contract holders intend to stand for delivery in December for both gold and silver. There is good reason for that. Bullion dealers desperately need metal to fill mushrooming customer orders. "

http://www.resourceinvestor.com/pebble.asp?relid=47347&t=60

If I remember correctly, the date of notice to take December delivery is Nov 28. It may be an interesting week for gold next week if this is the case.
 

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And what's gonna happen when they can't fulfill their orders?

I wonder if any gold contracts were leveraged with credit default swaps?
 

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back in the 70's when the hunt brothers saw that silver was undervalued, they loaded up on silver bars, and also comex silver contracts. (even apparently loaded a 747 with silver and armed guards, and flew a load of silver from the US to switzerland, according to what I read.)

anyway, when a bunch of big players were caught short silver with no way to cover, the comex changed the rules: all contracts would be settled in cash not delivery, and some other rule change I can't remember. silver crashed.

note how recently when banks and financial companies were collapsing, the SEC and treasury suddenly made it illegal to short those shares.

so, i'd expect that if there is a problem they will just change the rules in the favor of the most politically connected players. (which probably isn't anyone on this board.)

if you want gold as insurance, you need to have direct title to it, either in your possession, or as "allocated" storage somewhere that you trust, and out of the reach of desparate politicians (ie, in a financially stable country.) if you want to speculate on the short term direction of gold, then futures may still be a valid vehicle for that.

--sgl
 

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Discussion Starter · #4 ·
And what's gonna happen when they can't fulfill their orders?
I have been wondering about that. I was reading some of the bylaws of the COMEX last night (the reference is about 3 years old so it may be out of date).

It made a reference to "force majeure" "may be invoked when the supply of a commodity is curtailed for circumstances beyond control of the parties involved". The COMEX may invoke force majeure and settle with the parties with cash.

I guess this would be their loophole if they couldn't deliver...
 

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Discussion Starter · #5 ·
back in the 70's when the hunt brothers saw that silver was undervalued, they loaded up on silver bars, and also comex silver contracts. (even apparently loaded a 747 with silver and armed guards, and flew a load of silver from the US to switzerland, according to what I read.)
--sgl
They are an interesting group of people. I worked for Herbert and Bunker Hunt at Hunt Energy in their Houston office back in 1980 when they were summoned before congress because of their silver ploy.

They took delivery on enough silver to make the price spike 200-300% (maybe more; I just don't remember).
 

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Anyone needing "allocated storage"? They can contact me. I'll keep it allocated. Seriously! Of course, you'd need to deliver it in person, and pick it up in person. But then, why? If a person owns gold or silver, I think they'd have their own personal allocation system...

Gold or silver IRA? Paper paper paper... Fine, in our grandpa's heyday! With the apocalyptic clouds on the horizon (Iran is racing toward being 'nucular'... Israel is racing towards preventing that), grandpa's days are history... if you can't rub the metal between your fingers, you have nothing... Just try bartering with me... yes, I'll trade you this piece of paper saying I own an ounce of allocated silver in a bank in Bongo Bongo, for that double bit axe... good luck... of course, if I don't have a dozen extra double bit axes, your physical silver won't buy much, unless the dark days are over, the golden horde is composted, and a semblance of medieval normality has returned...

The only allocated storage I'd trust would involve my own two hands and a shovel and compass...
 
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