It is a crucial part of this rigged shell game, and that is what it is.
I know you are "above" reading articles and things people post in threads, but at least you could have read the next paragraph after in the article Disambiguator posted. Let's post it here, just for everyone else (since you won't read it Todd):
The lynchpin that is holding this dynamic together and keeping the futures markets tied to the underlying cash market is the fact that the futures contracts are deliverable, and a trader can either deliver or take delivery of actual physical silver via his futures position.
Are we seeing a problem yet? The futures markets have lost their viability and trustworthiness because of the MF collapse and theft. At some point in the not-too-distant future, people everywhere are going to realize that the delivery mechanism is not reliable. Heck, just holding cash and/or positions in a futures account is no longer reliable. If the futures market itself is not reliable, traders will no longer attempt to arbitrage these basis spreads because the risk to the trader that the rug will be pulled out from underneath them is simply too great.
And in the metals markets, the delivery process itself is . . . um . . . shall we say, easily corrupted? When you ”take delivery” of physical metals, it doesn’t get sent to your house. All you get is a certificate saying that X number of ounces are being held in a certified vault somewhere with your name on them. After the MF collapse, that sounds like a joke, right? A CERTIFICATE with my NAME ON IT? Yeah. That really is how it works.
When the arbitrageurs finally lose all confidence in the markets, the cash market will decouple from the futures because no one will be willing to take the risk of having their money, positions and/or physical metals stolen/confiscated.
This is all built on dishonesty, greed, and lies.
Great system - until it collapses.
We really shouldn't let the word "arbitrage" get all bent out of shape like what's happened to "hedge fund". Here's what it means:
ar·bi·trage
ˈärbiˌträZH/
nounnoun: arbitrage
It's buying and selling, as old and standard a practice as markets themselves. Sure, it's become popular these days to condemn all market activity, but creating and selling to others that buy and consume is no more sacred than buying and selling to others that buy and sell. These much maligned "middlemen" are necessary; they time shift, distance shift, or lotsize shift to make everything work. Supply and demand is truly the law of the land.
It's a crucial part of every market.
I know you are "above" reading articles
I love to read articles, even if they're stupid.
The lynchpin that is holding this dynamic together and keeping the futures markets tied to the underlying cash market is the fact that the futures contracts are deliverable, and a trader can either deliver or take delivery of actual physical silver via his futures position.
Yes, actual delivery of a commodity is an important part of commodities markets.
The futures markets have lost their viability and trustworthiness because of the MF collapse and theft.
No they haven't.
At some point in the not-too-distant future, people everywhere are going to realize that the delivery mechanism is not reliable.
If the delivery mechanism is unreliable, people will stop trading in that market.
Heck, just holding cash and/or positions in a futures account is no longer reliable.
It's a shame, I thought Ann used to know what she was talking about, but maybe she was always a loon?
If the futures market itself is not reliable, traders will no longer attempt to arbitrage these basis spreads because the risk to the trader that the rug will be pulled out from underneath them is simply too great.
This should make you happy, if arbitrage is bad, no arbitrage must be better.
This is all built on dishonesty, greed, and lies.
I hope you don't trade anything, on any market. You're obviously not cut out for it.
Maybe a coffee can is more your speed?