the end is near embry warns gold price riggers, page-12

Interesting comment Rowingboat

“It’s like a company's shares on the stock market... more shares don't have to be issued to meet demand... exiting ones change hands at the market price decided between seller and buyer.”

I don’t think that you can equate futures to shares.

The number of share on issue is finite and controlled by the company. The number of open futures contracts in the market is theoretically unlimited, but practically limited by the size of positions that buyers and sellers are prepared to run. The price goes up and down when buyers and sellers change those preferences by reference to changes in the price of the physical.

I sometimes find the fact that we never get a noticeable short squeeze in the near gold contract puzzling.

I understand the motivations of the structural shorts, but not the structural longs. It is this second group who are selling the near contract to the banks prior to the close. Judging by the size of the eventual delivery relative to the banks hedges, I can only assume that they too are closing out positions. But I don’t know who they are and I can only guess why they don’t want to take delivery.

But their very existence is a major problem for anyone claiming that the market is fundamentally unstable.

Afterthought: The futures open interest can be misleading. Because the margin requirements are calculated on a net basis, clearing members often don’t bother to immediately close out matching bought and sold positions belonging to the same client. Often they will leave this until the last weeks of the contract’s life and only match them out when the exchange calls them to ask about their delivery intentions. (I know this because I have been guilt of it myself!) So the published open interest is almost always a multiple of the actual open interest and because of derivatives hedges, neither is a reliable indicator of potential delivery volumes.

Cheers