Freeport-McMoRan (FCX)

[eddy2]

The Eddy alias is an investment club set up in Alberta Canada. There can be up to ten of us at anyone time using the Eddy alias. We do this to keep cost down on the use of the level II trading platform offered.

Now our members also have there own alias’s as well they can use.

Getting back to your question you are correct but with that said you have to extract the ore, ship the ore, find the ore, ect.

There are so many variables to wether they can provide the product. There can be a demand for something but can they deliver it for the price the market is willing too pay.

As an investor your job is to determine if they are capable of delivering there promises.

If they under promise on there contract they must provide the shortfall. This can be done by buying in the spot market for the ones who exceeded there obligation. An example would be smaller players that don't have the capacity or a constant production to meet a contract obligation.

A lot of time these smaller players will have deals put in place with the larger players. There are also co-ops of many producers owning shares of a parent entity. They often get special treatment from the parent entity.

An example would be if they delivered product they would receive shares at book value and not market pricing.

If market pricing was high this action would be dilutive. If market pricing was low then this would benifit market participants and be dilutive to the ones providing the product. In this situation product will be often held in trust.

Of course none of this maters once the product is delivered on the contract.

In conclusion in answering your question you want to buy on the base line not below and not above the line. So you will want to establish your self a hedging stratagy to hold the baseline.

Now there are the ones who fly by the seat of there fancy pants taking all sorts of risks mediating that risk with unsounded BS “ business sense “ that turns it self into pure bull shit. Not going to mention names, we know they are.

Remember it’s a derivative your buying and it must be treated as a derivative. Good luck with your endeavors.