Silver: the Wallstreetbet mess causes a separation between paper and physical. The CME intervenes

2 February 20213 years ago babelfish

The announced intervention of the speculative wave of micro-traders led by skilled shepherds has had a certain effect on silver prices, even if, perhaps, not what was expected.

There was a separation between the prices of physical silver, that represented by bars and coins, and that of paper, treated as futures at the CME and in other similar markets. This break is evident when looking at the prices:

We remember that normally the two markets go to satisfy different needs: the physical one is for those who love to physically save in metal, while the paper market is for speculators or for those who have to buy metal for industrial purposes. There had already been gaps between the values of physical metal and paper, especially at the beginning of the pandemic crisis, but never of this size and never to this extent.

The separation was also due to the decisive intervention of CME, which owns and regulates the COMEX silver market in the US, and which has decided to increase the hedging required to operate in the silver futures market by 18%. The contract backer will have to go from $ 14,000 to $ 16,500. In this way, a restriction in the offer of the contracts themselves is produced and therefore the possibility of speculating on these products is limited, or it makes it more expensive. This has caused the split between the prices of silver coin and that of paper.

Furthermore, the speculation on silver started too early, if you really wanted to perform it and it was not yet another “Ballon d'Essai”. There were still too many open positions on GME and other speculative shares on the stock exchange and this divided the forces. Nobody wants to stay with the match in hand.

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The Silver article : the Wallstreetbet mess causes a separation between paper and physical. The CME intervenes comes from ScenariEconomici.it .

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/argento-il-pasticcio-wallstreetbet-provoca-una-separazione-fra-carteceo-e-fisico-il-cme-interviene/ on Tue, 02 Feb 2021 09:00:01 +0000.