[SkyPilot]

Case in point......

Now the opposite scenario: a STRONG basis. Let’s say cash silver is trading at $32.00 and the futures are trading at $28.00. A trader might take physical silver that he has in inventory and sell it in the cash market, and then immediately take those proceeds and buy back and equal number of ounces in the futures market and take delivery. Since the same number of ounces in the futures market cost $4.00 per ounce LESS, he would end up with the same number of ounces in his inventory PLUS $4.00 per ounce in CASH in his pocket. If he and many other traders saw this condition and they all sold cash silver and bought the futures, this would, again, converge the spread between the cash market and the futures market.

And no one goes to jail for this, let alone even be exposed. Enron execs went to prison for what exactly again?

[IncPen]

And no one goes to jail for this, let alone even be exposed. Enron execs went to prison for what exactly again?

Brings to mind the banking concept of 'fractional reserve'.

[Toddsterpatriot]

Let’s say cash silver is trading at $32.00 and the futures are trading at $28.00. A trader might take physical silver that he has in inventory and sell it in the cash market, and then immediately take those proceeds and buy back and equal number of ounces in the futures market and take delivery. Since the same number of ounces in the futures market cost $4.00 per ounce LESS, he would end up with the same number of ounces in his inventory PLUS $4.00 per ounce in CASH in his pocket. If he and many other traders saw this condition and they all sold cash silver and bought the futures, this would, again, converge the spread between the cash market and the futures market.

That's called arbitrage. It's not a crime.

Someone who thinks it is could be charged with criminal stupidity though.

[Labyrinthos]

And no one goes to jail for this, let alone even be exposed. Enron execs went to prison for what exactly again?

Perhaps, but let's not ignore personal responsibility. No one makes anyone invest in the precious metals "casino." If a person is going to risk tens of thousands of dollars in the gold and silver markets because of the ads on the Glenn Beck Show,for example, but is unwilling to spend three hours researching the pros, cons, and hoaxes that go with the territory, then he or she is too stupid to invest in anything more than a passbook savings account.