Look at the silver lease rates!

[Neuro]

Seems likely this is COMEX shortage related. I haven't followed the lease rates for 6 months or so, but this is the first time I have seen them for an extended period of time above 0, since 2007 I think...

http://www.kitconet.com/charts/metals/leaserates/ag_go_0365_lsb.gif

[Neuro]

The lease rates are continuing up today... Most likely Silver will continue it's rally... I can only interpret this as the physical shortage is getting worse...

[JJ.G0ldD0t]

Thanks-

I was debating a buy today.

I'm going to do it now for sure.

[Neuro]

Thanks-

I was debating a buy today.

I'm going to do it now for sure.
I was debating a sell/swap for gold, I am not going to do it now for sure....

[Low_five]

Whats a silver lease rate? how much you can borrow silver for? so the interest rate at which you can borrow silver goes up, and there is less silver on the market, which may drive silver spot price up?

why would you want to borrow silver? in the hopes that it goes up in the future and can sell it for profit? Why would you want to loan silver for .5 - 1.5%?

[Neuro]

Whats a silver lease rate? how much you can borrow silver for? so the interest rate at which you can borrow silver goes up, and there is less silver on the market, which may drive silver spot price up?

why would you want to borrow silver? in the hopes that it goes up in the future and can sell it for profit? Why would you want to loan silver for .5 - 1.5%?
This is the interest rate bullion banks charge for borrowing out silver, for speculators to sell at the COMEX, with the hope to buy it back for less than they bought it for. This is just a paper transaction they don't actually transfer the silver to the one who borrowed it. The perverse thing is that the last couple of years the interest rate has been negative to to borrow 'silver', they have wanted to stimulate naked short speculation on the COMEX, it only works as long as those who have been long doesn't want to take delivery of their contract... Now for the last month the interest rate on silver has remained above zero, which means that the bullion banks and fed wants to (or rather have to) discourage naked short selling, because longs have started demanding delivery on their contracts. And there is not sufficient silver in warehouses to deliver... Still the rates to borrow 'silver' are very low, but they could at any time explode...

[Book]

why would you want to borrow silver?



Wall Street jews don't offer actual loans to small businesses or do anything useful anymore. They invent games like this to wager with goyim money.

[Bigjon]

Well I disagree with the prevailing sentiment, I think lease rates rise when there is more demand to lease metal to sell into the market.

Also because of backwardation speculators can sell metal at spot and buy it back with a cheaper futures contract.

[hoarder]

Well I disagree with the prevailing sentiment, I think lease rates rise when there is more demand to lease metal to sell into the market.


Do you mean to sell into the market just to suppress the price?

[Bigjon]

Well I disagree with the prevailing sentiment, I think lease rates rise when there is more demand to lease metal to sell into the market.


Do you mean to sell into the market just to suppress the price?


No, sell and buy it back cheaper in the future and make a profit on it. Since there is a shortage right now the only metal available is leased metal.

[Bigjon]

I have some spreads working right now and because they are further out than the spot month, backwardation is hurting the value of my spreads.

[Neuro]

Well I disagree with the prevailing sentiment, I think lease rates rise when there is more demand to lease metal to sell into the market.

Also because of backwardation speculators can sell metal at spot and buy it back with a cheaper futures contract.
Well as you yourself pointed out there's a shortage on the supply side, wouldn't that have the same effect as an increase in demand on leasing to sell? For several years we haven't seen short term lease rates above 0% for any prolonged time, and for the last month it has been... Until recently the situation could only be described as perverse, what thinking sane person would borrow out silver and pay for it?

[Bigjon]

Well I disagree with the prevailing sentiment, I think lease rates rise when there is more demand to lease metal to sell into the market.

Also because of backwardation speculators can sell metal at spot and buy it back with a cheaper futures contract.
Well as you yourself pointed out there's a shortage on the supply side, wouldn't that have the same effect as an increase in demand on leasing to sell? For several years we haven't seen short term lease rates above 0% for any prolonged time, and for the last month it has been... Until recently the situation could only be described as perverse, what thinking sane person would borrow out silver and pay for it?


The sane person who legs into this trade by going long a further out cheaper contract and then leasing metal (not buying metal) to sell into the spot month when the price runs up. This gives him more capital to do it again.

I am only brainstorming here and welcome all who can point out why this is a faulty idea.

OK, so I am long the 4 year out contract and when the spot price runs up I lease metal and sell it at a price that nets me a profit over my current long. This gives me more capital to go long the current 4 year out contract. Then as time and events unfold my longs appreciates in value, and my only cost is the lease rate I have to pay.

Hopefully I already know what my 4 year cost is and the difference between the sale price and the future price covers the interest cost plus a profit. One problem I see is the shrinking dollar, will my metal be worth enough to cover the shrinking FRN...? I say YES in spades.

[Bigjon]

bumpity bump

[Neuro]

The only problem I can see with that is if there is a COMEX default and your 4 year contract becomes worthless, and you'll lose your margin you put down. As I understand it the reason for backwardation, is that people doubt the COMEX ability to deliver in the future...

[Bigjon]

The only problem I can see with that is if there is a COMEX default and your 4 year contract becomes worthless, and you'll lose your margin you put down. As I understand it the reason for backwardation, is that people doubt the COMEX ability to deliver in the future...


Well I'm not doing it, I'm just trying to understand why someone else might be doing it and I think what I have proposed is a reasonable explanation. I think the reason for backwardation is a near term shortage of the metal and the cure is higher prices.

If this is what is going on it puts a cap in place that will limit how fast the metals rise in price.

[Neuro]

We will see... ;)

[Neuro]

Silver lease rates leveling off, and silver is hot!