I've heard that the players in a commodity market know who holds the inventory, how much and where it is.

Is this true? I know it's been questioned for decades by those who indulge in gold and silver trading. With silver especially, it has long been argued that in any given month there is far more silver shorted than is deliverable. Similar questions have been raised about gold. Just recently I read a speculative assertion that a similar situation exists in the oil market.

Keep in mind, this is not an attempt to open a discussion on any of the above mentioned markets. However, if "real" commodities are allowed to trade in tandem with "paper" representations of those commodities, how do you traders determine if the "market price" is truly representative of a supply-and-demand dynamic rather than a manipulation?


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