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I see, better. Thank you.
Mike-pdt
At 05:39 PM 5/24/2008, you wrote:
It is not a matter of taking
delivery, it is about cost. If you bought a July 08 oil future in
July 07 you paid between $68 and $78 dollars for that future. Today
you need the fuel. You sell you 08 future for 131 +/- and pay 131
for your crude. Your actual cost for the crude is what you paid for
the July 08 future.
The only time that this has become a
problem was in the 70s with silver. The Hunt brothers had been
buying silver futures and the market had risen to over $50 per
ounce. Everyone on the floor was waiting for them to start selling
the futures back. The brothers stated that they weren't going to
sell them back and that they were going to take delivery. In effect
the exchange said that they had sold them more silver than there was in
the world and that they couldn't take delivery. If my memory serves
me correctly Silver was limit down several days in a row after the
exchange said they had to sell the contracts back to them and that they
couldn't exercise and take delivery.
A lot of the gold mining companies
got into trouble by selling future production when prices were in the
$250 to $350 dollar range. Now with gold trading above $900 they
are still delivering gold at the lower price levels. They may have
covered their production costs, but they left a lot of profit on the
table and they were a prime force in trying to force gold prices lower.
Right now Brazil is tearing down
rain forest to plant soybeans. What happens next? Maybe
the government will stop subsidizing ethanol and grain prices will fall
through the floor. Who knows?
Ira
www.delta100.com
- ----- Original Message -----
- From: grehert
- To:
realtraders@xxxxxxxxxxxxxxx
- Sent: Saturday, May 24, 2008 1:52 PM
- Subject: Re: [RT] All short term projections are failing in
CL
- I don't know the answer to this line of
reasoning, but the Masters testimony implied that Sovereign Wealth Funds,
etc., were buying commodity futures unlike any situation in the
past. Now if the Chinese Sovereign Wealth Fund decided to diversify
20% of its assets into oil futures, and the fund is worth 1.3 trillion US
Dollars, couldn't this explain the rise in the price of oil -- hoarding
or no hoarding, rolling to the next month or not rolling? And would
there be any reason for the Chinese to close their positions as long as
the dollar was depreciating?
-
- JerryR
- ----- Original Message -----
-
http://www.frontlinethoughts.com/pdf/mwo052308.pdf
- >
http://hsgac.senate.gov/public/_files/052008Masters.pdf
- >
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