If SHTF, who would honor your futures contract?
It is nothing like having access to your own physical gold.
Physical Gold Delivery/CME Group
- Thread starter Spectre2007
- Start date
If SHTF, who would honor your futures contract?
It is nothing like having access to your own physical gold.
Exchange/clearing house backs both parties.
Just thought of this... what if you sold a contract of some random futures, call it pork bellies or gold and a nuclear bomb goes off leaving you with no market to offload to. The buyers wants their pork bellies and gold but how does the exchange honor this? cash settlement?
I agree with the post above. Physical gold bars locked in a safe offers much more security then perpetually owning gold futures where the opposite party cant hold on to his promise to deliver.
The doomsday scenario is hard to comprehend. perhaps buying gold is one of those black swan trades.
I agree with the post above. Physical gold bars locked in a safe offers much more security then perpetually owning gold futures where the opposite party cant hold on to his promise to deliver.
The doomsday scenario is hard to comprehend. perhaps buying gold is one of those black swan trades.
Frozen pork belly future trading died like 6 years ago. It sucks. They are taking away our "Trading Places" fun one instrument at a time.
If you want physical gold just visit your friendly local PM dealer.
• The Comex Is The World’s Most Corrupted Market (IRD)
If you were to poll the public about comparing the investment returns between gold, silver and stocks during the first quarter of 2017, it’s highly probable that the majority of the populace would respond that the S&P 500 outperformed the precious metals. That’s a result of the mainstream media’s unwillingness to report on the precious metals market other than to disparage it as an investment. In reality, among silver, gold, the Nasdaq 100 and the S&P 500, the S&P 500 had the lowest ROR in Q1. Silver led the pack at 14%, followed by tech-heavy Nasdaq 100 at 11.1%, gold at 8.6% and the S&P 500 at 4.8%. Put that in your pipe and smoke it, Cramer. Imagine the performance gold and silver would have turned in if the Comex was prevented from creating paper gold and silver in amounts that exceeded the quantity of gold and silver sitting in the Comex vaults.
As an example, as of Friday the Comex is reporting 949k ozs of gold in the registered accounts of the Comex vaults and 9 million ozs of total gold. Yet, the open interest in paper gold contracts as of Friday totaled 41.7 million ozs. This is 44x more paper gold than the amount of physical that has been designated – “registered” – as available for delivery. It’s 4.6x more than the total amount of gold sitting on Comex vaults. With silver the situation is even more extreme. The Comex is reporting 29.5 million ozs of silver as registered and 190.2 million total ozs. Yet, the open interest in paper silver is a staggering 1.08 billion ozs. 1.08 billion ozs of silver is more silver than the world mines in a year. The paper silver open interest is 5x greater than the total amount of silver held in Comex vaults; it’s an astonishing 37x more than the amount of silver that is available to be delivered.
This degree of imbalance between the open interest in CME futures contracts in relation to the amount of the underlying physical commodity represented by those contracts never occurs in any other CME commodity – ever. Historically, when the amount of paper exceeds the amount of underlying commodity that is available for delivery by more than 20-30%, the CFTC intervenes by investigating the possibility of market manipulation. But never with gold and silver. The Comex is perhaps the most corrupted securities market in history. It is emblematic of the fraud and corruption that has engulfed the entire U.S. financial and political system. The U.S. Government has now issued $20 trillion in Treasury debt for which it has no intention of every redeeming. It’s issued over $100 trillion in unfunded liabilities (entitlements, pensions, etc) for which default is not a matter of “if” but of “when.”
If you were to poll the public about comparing the investment returns between gold, silver and stocks during the first quarter of 2017, it’s highly probable that the majority of the populace would respond that the S&P 500 outperformed the precious metals. That’s a result of the mainstream media’s unwillingness to report on the precious metals market other than to disparage it as an investment. In reality, among silver, gold, the Nasdaq 100 and the S&P 500, the S&P 500 had the lowest ROR in Q1. Silver led the pack at 14%, followed by tech-heavy Nasdaq 100 at 11.1%, gold at 8.6% and the S&P 500 at 4.8%. Put that in your pipe and smoke it, Cramer. Imagine the performance gold and silver would have turned in if the Comex was prevented from creating paper gold and silver in amounts that exceeded the quantity of gold and silver sitting in the Comex vaults.
As an example, as of Friday the Comex is reporting 949k ozs of gold in the registered accounts of the Comex vaults and 9 million ozs of total gold. Yet, the open interest in paper gold contracts as of Friday totaled 41.7 million ozs. This is 44x more paper gold than the amount of physical that has been designated – “registered” – as available for delivery. It’s 4.6x more than the total amount of gold sitting on Comex vaults. With silver the situation is even more extreme. The Comex is reporting 29.5 million ozs of silver as registered and 190.2 million total ozs. Yet, the open interest in paper silver is a staggering 1.08 billion ozs. 1.08 billion ozs of silver is more silver than the world mines in a year. The paper silver open interest is 5x greater than the total amount of silver held in Comex vaults; it’s an astonishing 37x more than the amount of silver that is available to be delivered.
This degree of imbalance between the open interest in CME futures contracts in relation to the amount of the underlying physical commodity represented by those contracts never occurs in any other CME commodity – ever. Historically, when the amount of paper exceeds the amount of underlying commodity that is available for delivery by more than 20-30%, the CFTC intervenes by investigating the possibility of market manipulation. But never with gold and silver. The Comex is perhaps the most corrupted securities market in history. It is emblematic of the fraud and corruption that has engulfed the entire U.S. financial and political system. The U.S. Government has now issued $20 trillion in Treasury debt for which it has no intention of every redeeming. It’s issued over $100 trillion in unfunded liabilities (entitlements, pensions, etc) for which default is not a matter of “if” but of “when.”
What all the doomsday type's don't seem to grasp is that gold is only valuable in a very narrow type of doomsday scenario.
1. If it all goes to heck then gold has less than no value. You can't eat it, drink it, or defend yourself with it, and it's heavy to carry around. If real doomsday happens gold will be a joke.
2. If you have something lesser, like say a world war or two, you really won't be in a meltdown scenario where contracts have no value. Gold may appreciate and be a good hedge against this kind of thing, but physically holding it vs the system we have now isn't necessary.
3. Physical gold is only really useful/necessary if you have some kind of narrow breakdown where there's just enough havoc that contracts aren't honored but there's still enough food and water to go around and civil rule of law is still in effect. If civil rule of law is still in effect, then you'd still eventually get your contractually obligated gold anyway, so even here you have to have a very narrow breakdown of some but not all of the rule of law.
If you're a hard core prepper, then physical gold is something you get after you've built your bunker, put away 10 years of freeze dried food for your family, and purchased your arsenal. For the rest of us you're far better off starting with the freeze dried food part, which you could also use in a far more likely natural disaster, then maybe the bunker part if you're in tornado alley, and a couple guns if you get off on that kind of thing before worrying about physical gold.
Not as narrow as you might think, more like a world that is still functioning, everybody is working sort of and people are still buying what is available and we all have plenty of money, wheelbarrows full, had to get wider iphones just to show all the digits in my account and it grows everyday both income and debts.....man walks to front of line, How much will 10g of gold buy me?
Third world version in Venezuela if you want a preview.
Third world version in Venezuela if you want a preview.
No-one in Venezuela carries around gold to pay for things, nor did people in Zimbabwe when even crazier inflation was happening. High inflation is a very different and far more common occurrence than not honoring futures contracts on gold. The question is if you need to hold it in your hot little hands or if you can simply have claim to it. You're correct that it's not super far fetched that you'd want your assets backed in gold. That's not the same thing as actually carrying the stuff around with you everywhere and shaving off little chunks to buy a hot dog on the street corner. My assertion is that at the point in time you have to do that, there's no guy on the street corner selling hot dogs, and if there is he won't want a piece of soft metal in exchange unless it's affixed to the front end of a projectile with gunpowder behind it.