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Silver Prices in the Event of a Comex Default

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Silver Prices in the Event of a Comex Default Powered By Docstoc
					Silver	
  Prices	
  in	
  the	
  Event	
  of	
  a	
  Comex	
  Default	
  
	
  
If	
  and	
  when	
  the	
  Comex	
  silver	
  market	
  implodes,	
  so	
  should	
  the	
  paper	
  market	
  for	
  
silver.	
  Nevertheless,	
  can	
  this	
  happen	
  and	
  will	
  it	
  happen?	
  	
  	
  
	
  
Also,	
  if	
  a	
  Comex	
  default	
  does	
  occur,	
  what	
  are	
  the	
  likely	
  scenarios	
  and	
  aftermath	
  that	
  
will	
  impact	
  silver	
  traders	
  and	
  the	
  price	
  of	
  silver?	
  The	
  following	
  sections	
  explore	
  the	
  
increasingly	
  likely	
  possibility	
  of	
  a	
  Comex	
  default	
  in	
  further	
  detail.	
  
	
  
Inability	
  to	
  Deliver	
  Physical	
  Silver	
  
	
  
Perhaps	
  the	
  most	
  likely	
  scenario	
  of	
  a	
  Comex	
  “default”	
  would	
  involve	
  the	
  inability	
  to	
  
deliver	
  physical	
  silver	
  into	
  its	
  futures	
  contracts	
  due	
  to	
  a	
  pronounced	
  and	
  protracted	
  
physical	
  metal	
  shortage.	
  	
  
	
  
In	
  this	
  case,	
  those	
  holding	
  paper	
  certificates	
  instead	
  of	
  actual	
  physical	
  silver	
  will	
  
probably	
  be	
  settled	
  at	
  the	
  cash	
  value	
  of	
  their	
  position	
  once	
  the	
  physical	
  delivery	
  
problem	
  finally	
  comes	
  to	
  a	
  head.	
  	
  
	
  
At	
  this	
  point,	
  trading	
  in	
  silver	
  futures	
  on	
  the	
  Comex	
  will	
  probably	
  also	
  be	
  halted	
  
temporarily	
  while	
  the	
  market	
  figures	
  out	
  the	
  real	
  price	
  of	
  physical	
  silver.	
  
	
  
Pricing	
  Implications	
  of	
  a	
  Comex	
  Default	
  
	
  
Of	
  course,	
  a	
  Comex	
  default	
  of	
  this	
  type	
  means	
  that	
  you	
  will	
  not	
  be	
  able	
  to	
  buy	
  silver	
  
from	
  the	
  usual	
  markets	
  until	
  the	
  dust	
  settles.	
  Also,	
  when	
  said	
  dust	
  has	
  finally	
  found	
  a	
  
resting	
  place,	
  silver	
  will	
  undoubtedly	
  be	
  priced	
  much	
  higher.	
  	
  
	
  
That	
  is	
  because	
  the	
  price	
  of	
  silver	
  will	
  be	
  based	
  on	
  the	
  actual	
  amount	
  of	
  silver	
  metal	
  
in	
  circulation,	
  rather	
  than	
  on	
  the	
  inflated	
  amount	
  of	
  silver	
  paper	
  that	
  has	
  suddenly	
  
been	
  turned	
  into	
  paper	
  money	
  instead.	
  
	
  
Some	
  of	
  the	
  silver	
  pricing	
  figures	
  proposed	
  are	
  difficult	
  to	
  believe	
  outside	
  of	
  a	
  full	
  
dollar	
  collapse	
  (on	
  the	
  order	
  of	
  $500+/ounce),	
  but	
  seeing	
  the	
  price	
  of	
  silver	
  more	
  
than	
  double	
  from	
  where	
  it	
  is	
  today	
  would	
  be	
  trivial	
  in	
  a	
  Comex	
  default	
  scenario.	
  	
  
	
  
Read	
  the	
  rest	
  of	
  the	
  article.	
  
	
  

				
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Description: Silver prices in the event of Comex default means that you will not be able to buy silver from the usual markets until the dust settles. Silver will undoubtedly be priced much higher.