The real mystery is why do we even have a futures market in gold and silver? They're not consumed in the sense of wheat, corn, lumber, cotton etc. nor are they negotiable in the sense of bonds or currencies. So what are they doing there? Whose idea was that?

Not tough to answer that one. The futures market for PM's is no different than other commodities because like other commodities they are produced. There is a demand for them and consumption is irrelevant to the question of hedging.

As with all commodities some producers like the certainty of knowing their price prior to going through the cost/effort of production. Silver of course is very much consumed in industrial applications and gold in jewellry.

Why look at them differently? Where there are buyers and sellers each living in uncertainty it is good business to mitigate the risk of price fluctuation in order to better assure profitability whether a buyer or a seller.

orgy