29 Questions for a Silver Futures Broker - Answers
Silver Stock Report
by Jason Hommel, March 15th, 2009
On February 19th, I issued a challenge to futures
brokers to answer 29 questions, and in return for their answers,
I gave a futures contract of my own. I said I
would publish them, here, to my 80,000 readers, which would give them
publicity. Six Futures Brokers rose to the challenge. I
was going to publish just the best answers of each, which I do
below, but I decided it would be best if I published everyone's full
sets of answers. And so, I forced myself to take the time
to format everyone's full sets of answers, and this report links to 6
more full reports of answers.
Their answers are in bold, so you
should view this report online, and not in email, in case your email does
not read html.
See this report, here:
Here's my original 29 Questions
This is probably some of the most
important reporting and commentating that I have ever done, or
seen anywhere else.
This really cuts to the heart of the
matter of what is wrong in America today. Many people know that it's
the money powers that are controlling our politicians. The Achilles
heel to the money powers is physical silver, because there is so much
less of it than gold.
To manipulate silver, and keep it
suppressed, they use futures markets. One bank now, likely JP
Morgan, has an overwhelming short position in silver.
brokers who answer below, work, indirectly, for those money powers
that are wrecking everything. They help divert investment demand
away from physical silver, and into the paper products of the money powers
that control everything. They may not be consciously aware that
that's what they are doing, but then again, that's just my
The answers these industry professionals give are
just fantastic for the insight they bring to the table, mostly, how
unaware they are of the data that I present to them that indicates the
scope of the financial fraud in the industry in which they work.
Some of them seem unconcerned about defaults, and some do
recognize the possibility. Overall, I was shocked by their
answers. They seem generally so unaware, and unconcerned, except a
few of them, just a little bit concerned.
They just don't seem to
be aware of the data. Most have never heard of the CPM Group, a key industry group that
gathers and publishes statistics on silver in an annual yearbook, that I
continue to hammer home to my readers.
Also, since they
don't know the data, they seem to be mentally incapable of analyzing the
data, to be able to compare the values of key numbers, such as
the total amount of annual physical investor demand for silver, (50-100
million ounces) with the total number of short positions (up to 800
They don't seem to realize that diverting
investment demand away from physical silver, and into paper, is price
suppressive of the physical price.
They don't seem to realize that
the physical silver market is $1 billion annually, and the paper shorts
stand to lose $8 billion if the silver price doubles.
seem to realize that if all paper longs simply bought physical silver
instead, the silver price would be multiples higher than it is
They don't seem to realize that if all paper longs, such as
bondholders bought silver, the price of silver would be hundreds,
thousands, if not millions of times higher than it is today.
most shocked at how short term most futures trades are, only a few
months. And then, they expire, and have to be sold, for new paper
instruments, and each time, they have to pay a commission, to these guys
who answer below, to do so.
The self-deceiving lies of
one respondent shocked me, as he claimed, "everything expires".
Silver itself does not expire! Silver lasts thousands of
years, even with a little tarnish that actually protects the silver from
further decay. There is no "time limit" on one's personal savings
that may need to last nearly one's entire lifetime, or more, to leave
behind an inheritance for one's children's children. These days, you
are likely to outlive and outlast most financial institutions!
about 9 years ago, before I knew much of anything about finance, back when
people were first beginning to pay for "clicks" on the internet, some of
the highest bids recorded were up to $10 per click, being paid by futures
brokers desperately looking for clients. These guys stand
to make more money from your losses than any other financial
professional, except perhaps JP Morgan or the Federal Reserve, or a
company like MONEX with their own proprietary "futures" "atlas
account". See www.monexfraud.com
for more info
on that group.
While the names of the brokers who
responded are listed in each report, here also are the names and contact
information for each person and company who responded, and key excerpts
from their answers:
========== Answers #1 ==========
Yitzchok at Bullion Trading LLC
accepts orders of any size and processes orders using the spot price.
Bullion Trading LLC only sells from their active inventory and only
stocks in-demand grain, coin and bar products.
& see for yourself at:
After he answered, Yitzchok wrote back, regarding his answer to
question 12: I started to write an answer to your
questions. As I got to this question & began to answer it I thought
that I should just clip this and see what you
12. What gives you confidence that there
won't be a default in silver futures contracts at the NYMEX?
If any contract would default then this
would be a problem for the entire system not just the silver market. When
I buy a contract the brokerage firm is garrenting (sic) that I will make
good on this commitment. In addition the brokerage firm has its own
insurance for this. This is also on top on the margin that I need to hold.
In the event that the silver market goes straight up first I would get
stopped out because I would not have enough money in my account the
difference would then be charged to the brokerage & then the insurance
would have to pay the balance. Also the way things are right now the
government would then be making some sort of a bail out. If you really
think about it & you really believe that there is a short manipulation
going on by some of the big firms then you also need to believe that the
government would be bailing them out so they really do not need to worry
about this short position because the government would need to continue to
carry this short position while they bail them out. The government would
not close out this short as this would hurt them in a big way sooo I now
really do not think that buying silver because of a supposed short
position would be worthwhile.
The part that I would like your thought is on the bail out
I wrote back: There are a lot of issues
to what you are saying. If the government bails out, but as you
said, the government might not want to bail out.
I think you are
still stuck in the "paper gains" mode of understanding. A paper bail
out is still not silver.
Yitzchok wrote back again: I
agree that a paper bail out is still not silver. Nevertheless even if
the govít were to bailout & this would have to be after JP fails. The
govít would now have to make good on the short position. I think that they
would keep this position (if it does exist) open; thereby silver would
effectively not be changed by such a transaction.
I am really glad that I responded to these
questions as they clarified some of the nagging thoughts that I
========== Answers #2
4440 Von Karman Ave. Ste. # 115
Newport Beach, Ca. 92660
Toll Free: (888) 959-9955 / Local: (714) 843-9884 / Fax: (949)
Alan also answered very well. Here are
his best answers:
12. What gives you confidence that there won't be a default in
silver futures contracts at the NYMEX?
Futures Broker: Thereís never been a default on any Commodity
Exchange to my knowledge, but I donít have the confidence that they're
(sic) couldn't ever be a default. If there were a default, I guess
they would try to cash settle the contracts, but then again, what would
that ďcashĒ actually be worth if there were a default. You ask good
14. I'm concerned about default because the open interest is
always so much higher than the silver that is in the warehouses, both
registered and eligible for delivery.
As of 2-10, the open interest is 130,692 contracts for 5000 oz.
a total of 653,460,000 ounces, is that correct?
Right now, the silver warehouse stocks, total, registered and eligible,
for all 4 warehouses, is 124.7 million ounces.
"Warehouse Stocks" and then "Silver Stocks" at the bottom of the page.
That seems to be quite an imbalance, so what is the guarantee that the
shorts can deliver silver to the longs?
Futures Broker: I think you've answered your own
question. There is no guarantee. I donít think the
shorts can guarantee delivery if everyone who's long right now stands for
delivery. The system has never been ďstress testedĒ IMO to know what
would happen in this case if everyone stood for delivery. Obviously,
there is not enough silver in the wharehouse (sic) right now to cover the
current outstanding contracts.
16. There is another major market in silver, besides the NYMEX,
and I'm speaking of the LBMA, the London Bullion Market Association, which
is a group of very large bullion banks that all act as market makers for
bullion orders for their own clients. http://www.lbma.org.uk/members_list.html
In the 2008 CPM Group yearbook, on page 16, they list the Estimated
Silver Inventories in London and Zurich at about 75 million ounces for
2006. That seems a rather small amount, what do you think?
Futures Broker: I think the amount is especially small
given that they are one of the largest physical suppliers overseas.
75 million ounces is not a lot inventory if a few large institutional
investors came in and bought up all the supply.
========== Answers #3 ==========
Removed by request; the answers were not intended for the public, and I goofed in publishing them.
========== Answers #4
President, Heritage West Financial, Inc.
8775 Aero Dr., Suite
San Diego, CA 92123
John's answer to point 8 is good. It would take $23 million
to buy options a year out, at the position limits imposed on paper longs,
but that trade is larger than the open interest!
understand there are position limits of 1500 contracts in a given
month. How much money would it take, at a minimum, to buy 1500
silver options contracts, a year out, at the best prices, in your
What's the point and purpose of this
question? Is this a math test? 1,500 contracts, that's 7.5
million ounces. How is this question relevant to your average silver
trader/buyer? Anyhow, simple math: see answer to question #5 ($3.10
x 5,000 ozs. x 1500 contracts) however, this is theoretical there isn't
much open interest that far out.
========== Answers #5 ==========
Drew Klein, President
4348 Van Nuys Blvd, Suite 207
Sherman Oaks, CA
TOLL FREE - (888) 548-RUSH (7874)
LOCAL/INTL - (818)
FAX - (818) 907-9233
Drew also gives a good answer to question #8,
at approximately $17 million.
12. What gives you confidence that there won't be a
default in silver futures contracts at the NYMEX?
Broker (Drew Klein, Greenrush Capital): I can't be anymore confident that
the NYMEX won't default than I can that the US Government won't
default. Itís certainly possible, but my figures donít show it
happening any time soon.
========== Answers #6
Answers removed upon request.
If anyone is trading futures here is my simple
plea. Stop trusting the vain promises of what men may give
you. Instead, trust what God has already given you: your reason, and
the provision of the world's silver.