Thanks for the great posts, guys.

Ganalane - enjoyed yours in particular, considering you have good reason to trade futures for the commodity you produce - wheat.

I do think there is a difference. The main difference is that eventually all of that wheat actually gets delivered and consumed, so there is a physical basis for the market. You do count on someone picking up your crops, even if you sold a notional amount that covers it a year ago.

That is reflected in the fact that the wheat futures volume is not 1,000 or more times the physical market as it is with gold.

If the price of wheat is artificially depressed for some time, it will affect production and consumption. For gold, it's a matter of moving accounting chits around, and nobody on the street cares what the price of gold is - but they care about bread or oil.

My Friday engineering buddies tease me about being involved with KXL. They say, "Let us get this straight. It's all about getting this substance out of the ground. And then you put it back in the ground (in a vault). You risk your life savings on it but it never actually goes anywhere. Is that about right?". They're right, of course.

My issue is with how far the paper markets get out of whack vs. the real substance. Wheat and Corn, not bad. The stuff gets eaten or used. Oil and Sugar, so-so, a bit more manipulated but eventually on track. Base metals, again they get consumed, although the Chinese stockpiled copper a while back - for not forever. But gold, interest rate swaps, credit default swaps, and even more esoteric instruments - they are divorced from reality, and that shows up because the paper markets are vastly greater than the store of all related hard quantities. Poor Iceland - the people lost their real life savings and real food and real houses and real everything because of some wacky derivatives based on physically nothing. How ridiculous is that?

Why do I care? Because it affects what we do on the ground with KXL, and because we get whipsawed by the big players. They push us off our shares, or make us pay over the odds. We get screwed, basically, because we don't have infinite money to play with.

I was deciding whether to liquidate a bunch of KXL, but I think I'll just stuff the shares under my mattress for a long time. They count on smoking us out, running our patience down. In the meanwhile, they keep holding through periods when it does eventually rise.

The gold market - I have not a lot of Comex left, and I just don't have any confidence in the market. The real world has reasons for gold/Comex to rise and fall, but they have no influence because the price is whatever the big banks and central banks chalk onto their boards. It's completely arbitrary. They just tease us a bit now and then. I will keep a bit "just in case" but really all I care about is hoping that the rigged price stays in a range that keeps KXL's prospects mineable. Here's hoping.