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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Silver Physical Delivery Delays- Open Letter to CTFC

Commodities / Gold & Silver Oct 17, 2008 - 04:57 PM GMT

By: David_Morgan

Commodities

Best Financial Markets Analysis ArticleTo Mr. Bart Chilton, Commissioner, CFTC and Ms. Janet Troyke, Director Market Regulation, CME Group :

In full and proper disclosure, I would like to ask the CME/COMEX and CFTC the following question regarding monthly delivery of silver.


I manage a physical gold and silver bullion fund. In order to stay within the “Model State Commodity Code” of many states, an exempt transaction by the purchaser (in this case the Dollars and Sense Growth Fund) must abide by the following code:

A commodity contract for the purchase of one or more precious metals which requires, and under which the purchaser receives, within seven to twenty-eight calendar days (varies depending on the state) from the payment in good funds of any portion of the purchase price, physical delivery of the quantity of the precious metals purchased by such payment, provided that, for purposes of this paragraph, physical delivery shall be deemed to have occurred if, within such 7 to 28 day period (varies depending on the state), such quantity of precious metals purchased by such payment is delivered whether in specifically segregated or fungible bulk form.

In this environment, it has become very difficult and expensive to buy physical silver from the physical dealer market. The difference in paper prices on the Comex and the physical dealer market have widened considerably. In addition, the overwhelming demand for silver has created delivery time delays of up to 4 months. These delivery delays create a direct violation with many Model State Commodity Codes.

My research has led me to the conclusion that it is much more effective and cost efficient to buy silver directly from the COMEX and take full delivery. The spot prices are much cheaper than the dealer market and the CFTC along with the CME/Comex have stated in reports there are ample supplies of silver available for delivery with no market inhibitions. For an individual or institution wanting to accumulate a position, these are ideal market conditions.

The question I have is this:

I would like to buy and take physical delivery of 1 to 5 million ounces of silver a month on a consistent basis. I am not interested in holding warehouse receipts but taking actual physical delivery from your approved depositories/warehouses. Would there be any obstacles or resistence from either the CME Group/COMEX or the CFTC when I begin to implement or during the ongoing process of this strategy?

I look forward to your reply.

Bob Coleman

By David Morgan,
Silver-Investor.com

Mr. Morgan has been published in The Herald Tribune , Futures magazine, The Gold Newsletter , Resource Consultants , Resource World , Investment Rarities , The Idaho Observer , Barron's , and The Wall Street Journal . Mr. Morgan does weekly Money, Metals and Mining Review for Kitco. He is hosted monthly on Financial Sense with Jim Puplava. Mr. Morgan was published in the Global Investor regarding Ten Rules of Silver Investing , which you can receive for free. His book Get the Skinny on Silver Investing is available on Amazon or the link provided. His private Internet-only newsletter, The Morgan Report , is $129.99 annually.

Contact information: silverguru22@hotmail.com , http://silver-investor.com

Disclaimer: The opinions expressed above are not intended to be taken as investment advice. It is to be taken as opinion only and I encourage you to complete your own due diligence when making an investment decision.

David Morgan Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Jim Quinn
18 Oct 08, 17:28
Silver Physical Delivery Delays- Open Letter to CTFC

I would like to know the answer to this question also. When it comes out could someone forward it to me to ensure I see the answer.

Jim Quinn


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