paper gold default report - february edition, page-7

The futures markets were intended to match up buyers and sellers of the underlying commodity.

A futures contract is just that, the right to buy the commodity at a set price at a future date. Sellers like it because they lock in a buyer for their commodity and have a known future cashflow. Buyers like it as it guarantees a source of supply at a known price. This is what was intended.

What Timber is confirming is something we all know, the market is corrupted and controlled by speculators who don't have what they claim to be selling. This only works under the assumption that the commodity is never all collected, much like bankers issuing more script than the gold they held in their banks.

It is fraud even if legal as every single one of those contracts has the right to collect the commodity they have a contract for. Just because there are now clauses that state that contracts can be settled in cash doesn't change the fact that a fraud is being perpetuated, that's just a get out of jail clause put in to protect the bankers.

There was never any problem with fractional banking unless a bank run occured, then it was game over. Same deal here.