If you were foolish enough to short copper with these market dynamics, punishment should have been swift. If you were shrewd enough to take the other side of the trade, rewards should have been realized.
So now that the backwardation has been popped and capped going forward by the rule change, is it a good idea to be long Copper? Anybody done the stats on returns of 3 month when the curve is normalizing?
You make a good point. I think the LME always gets in knickers in a twist because the old boys down the pub might think this type of behaviour is "un-gentlemanly". However, as you say you have to let the market clear.
That said the UK exchanges in general have some arbitrary rules around taking/making delivery and they can be easily gamed. In this example, it would be easy for a taker to make up sales to its customers as an excuse to take delivery.. I
n my view though they are all big girls and boys and you have to play by the rules.
It will be interesting to see if this causes more volume to move to the CME for copper.
Not that I know anything about the copper market, but based on this article it doesn't seem like Trafigura was engaged in market manipulation? They bought a bunch of copper. If supplies were running low, prices should rise. I learned about this once, it's called supply and demand.
I wonder if the LME considered the long term consequences of intervening.
So now that the backwardation has been popped and capped going forward by the rule change, is it a good idea to be long Copper? Anybody done the stats on returns of 3 month when the curve is normalizing?
Sorry chook, don’t remember much after “Alyssa Milano sleeping naked” but I’m sure it was great.
Glad to see the Images are back to normal.
You make a good point. I think the LME always gets in knickers in a twist because the old boys down the pub might think this type of behaviour is "un-gentlemanly". However, as you say you have to let the market clear.
That said the UK exchanges in general have some arbitrary rules around taking/making delivery and they can be easily gamed. In this example, it would be easy for a taker to make up sales to its customers as an excuse to take delivery.. I
n my view though they are all big girls and boys and you have to play by the rules.
It will be interesting to see if this causes more volume to move to the CME for copper.
Will the LME run the same playbook if silver or gold were in this position?
Not that I know anything about the copper market, but based on this article it doesn't seem like Trafigura was engaged in market manipulation? They bought a bunch of copper. If supplies were running low, prices should rise. I learned about this once, it's called supply and demand.
I wonder if the LME considered the long term consequences of intervening.
Rule changes...lol. Covering someone's butt for being offside.