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Zorro
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Will The Real Silver Commercials Stand Up? - Jeffrey Lewis -

"One of the more persistent flaws in the world's most important price discovery mechanism comes down to a simple question.
How did it come to pass that banks were given access to the commercial category of traders?"

Given access? What do you mean? Are you asking why they are included in the Commercial category of Traders?
If so, the answer is so basic it suggests you have no working knowledge of the rules and function of the futures market.
I will nonetheless, explain it to you.

A Commercial Trader is... an entity or person that engages in the commercial use of futures contracts as a hedge.
In other words, it certainly could be a Bank, Hedge fund, or similar Trader that is using a futures contract to offset
risk in another investment.
It is required that all traders holding contracts at or beyond reporting levels file form CFTC 40
which is specific in determining whether the Trader is using futures contracts as a hedge and that they are Commercially engaged
in the use of such.
Here are a few reasons a Bank would be listed as a Commercial trader
They supply physical silver directly from the US Mint and must hedge against price fluctuations.
They have loaned money to a mining operation and seek to offset any risk through the futures market.
They have overseas branches which deal in other currencies and wish to offset risk of exchange.

The reasons for hedging in the futures are numerous but it cannot be disputed in any way, they are bona fide hedgers
in the silver market.

You understand by now...... I hope.

Commented 3649 days ago

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Beginning of the headline :One of the more persistent flaws in the world's most important price discovery mechanism comes down to a simple question. How did it come to pass that banks were given access to the commercial category of traders?It's a given that the market is rigged to high heaven. And it’s completely obvious by now how it is accomplished. They only folks left in denial about it have a direct incentive for ignoring it - usually an obvious one. The nature of the players should tell one all they really need to k... Read More

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