Showing posts with label CME. Show all posts
Showing posts with label CME. Show all posts
18 February 2012
SilverDoctors: CME Group Places Bid for London Metal Exchange
SilverDoctors: CME Group Places Bid for London Metal Exchange: The fallout (decline in trading volume) from the MF Global fiasco must be greater than ever we imagined. Less than 2 weeks ago the CME anno...
10 February 2012
SilverDoctors: CME Slashes Initial & Maintenance Margins for Gold...
SilverDoctors: CME Slashes Initial & Maintenance Margins for Gold...: In an obvious sign that the CME is suffering from a massive exodus of investors in the wake of the CME refusing to make MF Global clients w...
09 February 2012
SilverDoctors: S&P Downgrades CME Group to AA- Over MFG Risk
SilverDoctors: S&P Downgrades CME Group to AA- Over MFG Risk: After threatening to downgrade the US again in the next 6-24 months earlier today, S&P tonight downgraded the CME Group from AA to AA-, ou...
04 February 2012
SilverDoctors: CME NOT Systemically Important Enough to Fall Unde...
SilverDoctors: CME NOT Systemically Important Enough to Fall Unde...: Dodd-Frank Act was once billed as, "the act which brought the most significant changes to financial regulation in the United States since ...
29 January 2012
The Silver Singularity Is Near
Price, as they say, is determined on the margins. This is especially true for inelastic goods. If 100 Tickle Me Elmo dolls exist in Walmart on Christmas eve, and 100 people absolutely need to have them, you don't have a problem. The price will be some reasonable markup on the cost of production. However, if one more person walks in fearing the wrath of his child if there's no Elmo under the tree, Walmart (WMT) can quickly turn into a war zone. In Walmart, this supply shortage might be settled by shoving and hair pulling. In a civilized market, this supply, demand inequity is settled with price. In the case of Elmo in 1996, some dolls were reportedly sold in aftermarkets for $1500.
This is an important concept to keep in mind when evaluating the silver market. Silver is interesting because it is actually two different markets. On one hand, silver is a physical commodity that is used in industry or warehoused as physical savings. This market is rather inelastic on the supply and demand side as I will discuss in a bit. On the other hand is the silver derivatives market, paper contracts for silver, that set the spot price on the margins. The paper market is elastic and depends more on investor psychology than underlying fundamentals.
First the physical market. Each year, new silver is dug out of the ground and added to supply. A higher silver price causes an increase in silver production, but that increase is constrained due to the time it takes to bring new production on line and the fact that 70% of silver production comes as a relatively small byproduct of mining other metals. Government sales and recycling added about 25% to the physical supply in 2010, but those factors are only loosely correlated with price.
On the demand side, industrial applications make up nearly half of the demand. For many of these applications, such as electronics, coatings, anti-microbial uses, etc., the amount of silver in the final product is a tiny fraction of the product cost, thus a rise in the silver price does not affect its usage. For demand components such as jewelry, coins, and physical bar investment, a rising price can actually add to the desirability of these goods. As such, the supply and demand of physical silver is very insensitive to price as I explain further in my article, "The Top 10 Reasons Silver Will Soar".
Now for the paper market. Like all commodity futures markets, the silver futures market has its roots in providing a legitimate market function. A silver miner, for instance, may sell futures to lock in prices and pay for capital equipment. On the other side of the trade, an electronics manufacturer may buy futures to lock in their costs for silver they intend to use in the future. And like other commodities, the silver futures market provides speculators a convenient way to bet on the future price of silver without having to ship the stuff around. This speculation through commodities derivatives is not always a bad thing as it can add liquidity to markets and can help with price discovery.
But in the case of silver, the derivatives market has gotten way out of hand to the point of distorting true price discovery. Some market watchers believe there has been manipulation by banks with huge short positions, such as J.P. Morgan. Some, like Eric Sprott, suggest that the CME Group's odd behavior, such as raising margins two days after the silver price had just dropped by 22%, is holding down the price to help the commercial shorts. Regardless of whether you believe these "conspiracy" theories, in the long run, it does not matter. The important thing to realize is that the silver derivatives market, like all derivatives markets, is based on leverage, confidence and promises.
The main way the futures market keeps down the spot price of silver is by greatly adding to the supply of silver for investment. Take the example of the COMEX which currently has 102,516 open interest contracts (512 million ounces) promised for future delivery. This compares to roughly 117 million ounces of physical silver available for investment in 2010 (Mine supplies 736 + recycling 215 + gov't. sales 45 - fabrication 879 = 117Moz.) Shorts have promised to deliver over four times the amount of physical silver available per year. In other words, demand for silver investment at today's price is much higher than physical supply. This works fine as long as futures investors don't take physical delivery. Shorts can simply settle the contract for the cash value and everybody's happy. If a small amount of investors stand for delivery, the shorts can transfer silver from their accounts at the COMEX or buy silver on the open market. However, as more investors stand for physical delivery, things can get dicey.
Kyle Bass of Hayman Capital was clearly concerned about this leverage risk in the COMEX when he said the following:
This is an important concept to keep in mind when evaluating the silver market. Silver is interesting because it is actually two different markets. On one hand, silver is a physical commodity that is used in industry or warehoused as physical savings. This market is rather inelastic on the supply and demand side as I will discuss in a bit. On the other hand is the silver derivatives market, paper contracts for silver, that set the spot price on the margins. The paper market is elastic and depends more on investor psychology than underlying fundamentals.
First the physical market. Each year, new silver is dug out of the ground and added to supply. A higher silver price causes an increase in silver production, but that increase is constrained due to the time it takes to bring new production on line and the fact that 70% of silver production comes as a relatively small byproduct of mining other metals. Government sales and recycling added about 25% to the physical supply in 2010, but those factors are only loosely correlated with price.
On the demand side, industrial applications make up nearly half of the demand. For many of these applications, such as electronics, coatings, anti-microbial uses, etc., the amount of silver in the final product is a tiny fraction of the product cost, thus a rise in the silver price does not affect its usage. For demand components such as jewelry, coins, and physical bar investment, a rising price can actually add to the desirability of these goods. As such, the supply and demand of physical silver is very insensitive to price as I explain further in my article, "The Top 10 Reasons Silver Will Soar".
Now for the paper market. Like all commodity futures markets, the silver futures market has its roots in providing a legitimate market function. A silver miner, for instance, may sell futures to lock in prices and pay for capital equipment. On the other side of the trade, an electronics manufacturer may buy futures to lock in their costs for silver they intend to use in the future. And like other commodities, the silver futures market provides speculators a convenient way to bet on the future price of silver without having to ship the stuff around. This speculation through commodities derivatives is not always a bad thing as it can add liquidity to markets and can help with price discovery.
But in the case of silver, the derivatives market has gotten way out of hand to the point of distorting true price discovery. Some market watchers believe there has been manipulation by banks with huge short positions, such as J.P. Morgan. Some, like Eric Sprott, suggest that the CME Group's odd behavior, such as raising margins two days after the silver price had just dropped by 22%, is holding down the price to help the commercial shorts. Regardless of whether you believe these "conspiracy" theories, in the long run, it does not matter. The important thing to realize is that the silver derivatives market, like all derivatives markets, is based on leverage, confidence and promises.
The main way the futures market keeps down the spot price of silver is by greatly adding to the supply of silver for investment. Take the example of the COMEX which currently has 102,516 open interest contracts (512 million ounces) promised for future delivery. This compares to roughly 117 million ounces of physical silver available for investment in 2010 (Mine supplies 736 + recycling 215 + gov't. sales 45 - fabrication 879 = 117Moz.) Shorts have promised to deliver over four times the amount of physical silver available per year. In other words, demand for silver investment at today's price is much higher than physical supply. This works fine as long as futures investors don't take physical delivery. Shorts can simply settle the contract for the cash value and everybody's happy. If a small amount of investors stand for delivery, the shorts can transfer silver from their accounts at the COMEX or buy silver on the open market. However, as more investors stand for physical delivery, things can get dicey.
Kyle Bass of Hayman Capital was clearly concerned about this leverage risk in the COMEX when he said the following:
13 January 2012
SilverDoctors: Theft, RICO Lawsuit Targets MF Global, CME Group, ...
SilverDoctors: Theft, RICO Lawsuit Targets MF Global, CME Group, ...: A massive class-action RICO lawsuit has been filed in US District Court in the Southern District of New York against MF Global, the CME Grou...
10 January 2012
CME to raise stake in Dubai Mercantile Exchange
Source: BI-ME with Bloomberg , Author: Posted by BI-ME staff
Posted: Tue January 10, 2012 12:09 pm
UAE. CME Group Inc. (CME), the world’s largest futures exchange owner, is set to increase its holding in the Dubai Mercantile Exchange, according to Ahmad Sharaf, Chairman of the Dubai-based oil bourse.
The DME plans to raise money by offering more shares to existing investors this year, Sharaf said while attending a conference in Abu Dhabi today. The current roster of shareholders, which includes CME, a Dubai investment fund and the state of Oman, will remain the same, with only the size of their stakes changing, he said.
“The CME wants to expand its presence in the DME,” Sharaf said. He declined to give details on the timing or the size of the capital increase.
CME offers clearing services for trades done on the DME and supports swaps and options contracts that are based on the Dubai exchange’s main Oman oil futures contract.
SilverDoctors: Gasparino: Break-Up of CME on the Table
SilverDoctors: Gasparino: Break-Up of CME on the Table: Charlie Gasparino of FOX Business states that sources have told him that " a break-up of the CME is on the table " over the lack of CME regu...
04 January 2012
EXCLUSIVE-Big banks may line up to block sale of LME
* Potential bidders CME, ICE would entail U.S. regulation
* Tough regulator could curb holdings of dominant positions
* Blocking stake of 25.1 pct seen achievable
By Melanie Burton and Susan Thomas
LONDON, Jan 3 (Reuters) - Top bank stakeholders of the London Metal Exchange are likely to amass enough support to block a sale they fear would bring a more heavily regulated owner and hurt their lucrative warehousing businesses, senior industry sources say.
The LME said in September that at least 10 parties had expressed interest in buying it, and analysts estimate it could be worth as much as $1 billion. As a member-owned organisation, the exchange requires approval from members holding 75 percent of outstanding ordinary or "A" shares for any sale.
Potential buyers are likely to include CME Group Inc , IntercontinentalExchange and SGX Singapore Exchange. The first two in particular have stricter U.S. regulators, which could threaten members' businesses.
Big banks such as J.P. Morgan and Goldman Sachs have invested heavily in physical metals business since the economic downturn began by buying warehouses and beefing up their trading teams and financing operations.
Shunting metal around has been a money spinner for them as slowing global growth pulls down commodity prices and leads to stockpiles of surplus material.
* Tough regulator could curb holdings of dominant positions
* Blocking stake of 25.1 pct seen achievable
By Melanie Burton and Susan Thomas
LONDON, Jan 3 (Reuters) - Top bank stakeholders of the London Metal Exchange are likely to amass enough support to block a sale they fear would bring a more heavily regulated owner and hurt their lucrative warehousing businesses, senior industry sources say.
The LME said in September that at least 10 parties had expressed interest in buying it, and analysts estimate it could be worth as much as $1 billion. As a member-owned organisation, the exchange requires approval from members holding 75 percent of outstanding ordinary or "A" shares for any sale.
Potential buyers are likely to include CME Group Inc , IntercontinentalExchange and SGX Singapore Exchange. The first two in particular have stricter U.S. regulators, which could threaten members' businesses.
Big banks such as J.P. Morgan and Goldman Sachs have invested heavily in physical metals business since the economic downturn began by buying warehouses and beefing up their trading teams and financing operations.
Shunting metal around has been a money spinner for them as slowing global growth pulls down commodity prices and leads to stockpiles of surplus material.
03 January 2012
SilverDoctors: CME's Terry Duffy: CME Won't Guarantee MFG Client ...
SilverDoctors: CME's Terry Duffy: CME Won't Guarantee MFG Client ...: Warren Pollock has interviewed the Commodity Customer Coalition's CEO James Koutoulas on MFGlobal and JPM's theft of MFG clients' segregated...
30 December 2011
Investigation Into MF Global Expected to Heat Up
By BEN PROTESS
When customer money disappeared from MF Global over Halloween weekend, it seemed implausible the cash would remain at large come New Year’s Day.
But two months later, the hunt for roughly $1.2 billion in client money continues. Some MF Global customers, including farmers and hedge funds, are still without about a third of the money in their accounts at MF Global, the brokerage firm once run by Jon S. Corzine, the former governor of New Jersey.
Against this backdrop, and as 2012 gets ready to begin, the investigation into the MF Global debacle is expected to heat up.
In the coming months, federal authorities are likely to answer crucial questions, including the exact whereabouts of the customer money and who at MF Global caused it to disappear. At some point next year, because MF Global violated rules prohibiting the mingling of customer money and the firm’s, authorities may also file enforcement actions.
The Federal Bureau of Investigation is exploring whether MF Global violated criminal laws, though no one has been accused of any wrongdoing.
Despite the lingering questions, federal investigators have made some strides in unraveling the mystery. Based on interviews with multiple people close to the case, here’s where things stand with the investigation into MF Global and the search for the missing money.
Summer 2011
MF Global, like other brokerage firms, was legally borrowing customer money to buy assets like corporate bonds. Under the law, the firm must put sufficient collateral, using assets like United States Treasury securities, in the place of the customer cash.
August 2011
MF Global may have borrowed customer money, even briefly, without providing sufficient collateral.
Oct. 21
Authorities suspect that MF Global was tapping customer accounts on Oct. 21, more than a week before the firm filed for bankruptcy. But these transfers may have been legitimate. Because brokerage firms often keep an extra cushion of their money in customer accounts, MF Global may have simply been drawing down that buffer.
Oct. 27
By Oct. 27, the firm had depleted that buffer. The firm was moving customer money from the futures side of the firm to the securities side. The firm may have then used the money to settle its securities trades.
At the time, MF Global was frantically closing out trades to generate liquidity ahead of a possible sale of the firm. Federal authorities are examining whether the firm began moving client money to the Depository Trust & Clearing Corporation, a clearinghouse that served as a middleman while MF Global unwound its trades.
It is unclear whether MF Global officials knowingly used customer money or believed the buffer was still intact. Sloppy record keeping may have obscured the fact that they were misusing customer money.
Nevertheless, the firm stopped backing the loans it took from customers. So in essence, the firm was receiving free loans from clients.
Oct. 28
On the morning of Oct. 28, the last business day before MF Global filed for bankruptcy, JPMorgan Chase alerted Mr. Corzine that the firm had overdrawn an account at the bank in London.
Chip Somodevilla/Getty ImagesJon S. Corzine, MF Global’s former chief executive, being sworn in at a Senate hearing on the firm’s demise.“At that time, I was trying to sell billions of dollars of securities to JPMorgan Chase in order to reduce our balance sheet and generate liquidity,” Mr. Corzine recently told a Congressional committee. “JPMorgan Chase told me that they would not engage in those transactions until overdrafts in London were cleaned up.”
Mr. Corzine said he passed along the request to his staff. Someone at MF Global then instructed Edith O’Brien, a treasurer at MF Global’s Chicago office, to replenish the overdrawn account.
Authorities suspect that MF Global, perhaps unwittingly, used roughly $200 million of client money to do so.
After the transfer, JPMorgan questioned Mr. Corzine about the source of the money. Ms. O’Brien, Mr. Corzine told a Congressional committee, assured him that MF Global was not improperly using customer cash.
Ms. O’Brien is now considered a “person of interest” in the investigation, according to two people close to the case. She has not been accused of any wrongdoing, and there is no indication that she knowingly transferred customer money.
Oct. 30
Later that weekend, MF Global was closing in on a deal to sell part of the firm to a rival brokerage house.
About 6 p.m. that day, MF Global’s general counsel, Laurie Ferber, notified the CME Group that there was an apparent shortfall. Ms. Ferber blamed an accounting error, according to CME, the exchange where MF Global did business and one of the firm’s main regulators.
But by 2 a.m., Ms. O’Brien and other MF Global officials told CME that $700 million was sent from customer accounts to the firm’s securities unit.
Oct. 31
By 10 a.m., MF Global filed for bankruptcy. Federal regulators, meanwhile, began the search for the missing customer money.
The week of Dec. 12
Mr. Corzine, a former United States senator from New Jersey, returned to Capitol Hill to face questioning from his former colleagues.
Andrew Harrer/Bloomberg NewsTerrence Duffy, executive chairman of the CME Group.“I don’t know of any loan that was backed by customer funds,” Mr. Corzine said. “I wouldn’t have authorized it.”
Terrence Duffy, executive chairman of the CME Group, told lawmakers that MF Global had used customer money to lend from one arm of the firm to another — and that Mr. Corzine had been aware of it.
Mr. Corzine rejected Mr. Duffy’s claims.
“I never gave any instructions to misuse customer money, never intended to give any instructions or authority to misuse customer funds, and I find it very hard to understand how anyone could misconstrue what I’ve said as a way to misuse customer money.”
When customer money disappeared from MF Global over Halloween weekend, it seemed implausible the cash would remain at large come New Year’s Day.
But two months later, the hunt for roughly $1.2 billion in client money continues. Some MF Global customers, including farmers and hedge funds, are still without about a third of the money in their accounts at MF Global, the brokerage firm once run by Jon S. Corzine, the former governor of New Jersey.
Against this backdrop, and as 2012 gets ready to begin, the investigation into the MF Global debacle is expected to heat up.
In the coming months, federal authorities are likely to answer crucial questions, including the exact whereabouts of the customer money and who at MF Global caused it to disappear. At some point next year, because MF Global violated rules prohibiting the mingling of customer money and the firm’s, authorities may also file enforcement actions.
The Federal Bureau of Investigation is exploring whether MF Global violated criminal laws, though no one has been accused of any wrongdoing.
Despite the lingering questions, federal investigators have made some strides in unraveling the mystery. Based on interviews with multiple people close to the case, here’s where things stand with the investigation into MF Global and the search for the missing money.
Summer 2011
MF Global, like other brokerage firms, was legally borrowing customer money to buy assets like corporate bonds. Under the law, the firm must put sufficient collateral, using assets like United States Treasury securities, in the place of the customer cash.
August 2011
MF Global may have borrowed customer money, even briefly, without providing sufficient collateral.
Oct. 21
Authorities suspect that MF Global was tapping customer accounts on Oct. 21, more than a week before the firm filed for bankruptcy. But these transfers may have been legitimate. Because brokerage firms often keep an extra cushion of their money in customer accounts, MF Global may have simply been drawing down that buffer.
Oct. 27
By Oct. 27, the firm had depleted that buffer. The firm was moving customer money from the futures side of the firm to the securities side. The firm may have then used the money to settle its securities trades.
At the time, MF Global was frantically closing out trades to generate liquidity ahead of a possible sale of the firm. Federal authorities are examining whether the firm began moving client money to the Depository Trust & Clearing Corporation, a clearinghouse that served as a middleman while MF Global unwound its trades.
It is unclear whether MF Global officials knowingly used customer money or believed the buffer was still intact. Sloppy record keeping may have obscured the fact that they were misusing customer money.
Nevertheless, the firm stopped backing the loans it took from customers. So in essence, the firm was receiving free loans from clients.
Oct. 28
On the morning of Oct. 28, the last business day before MF Global filed for bankruptcy, JPMorgan Chase alerted Mr. Corzine that the firm had overdrawn an account at the bank in London.
Chip Somodevilla/Getty ImagesJon S. Corzine, MF Global’s former chief executive, being sworn in at a Senate hearing on the firm’s demise.Mr. Corzine said he passed along the request to his staff. Someone at MF Global then instructed Edith O’Brien, a treasurer at MF Global’s Chicago office, to replenish the overdrawn account.
Authorities suspect that MF Global, perhaps unwittingly, used roughly $200 million of client money to do so.
After the transfer, JPMorgan questioned Mr. Corzine about the source of the money. Ms. O’Brien, Mr. Corzine told a Congressional committee, assured him that MF Global was not improperly using customer cash.
Ms. O’Brien is now considered a “person of interest” in the investigation, according to two people close to the case. She has not been accused of any wrongdoing, and there is no indication that she knowingly transferred customer money.
Oct. 30
Later that weekend, MF Global was closing in on a deal to sell part of the firm to a rival brokerage house.
About 6 p.m. that day, MF Global’s general counsel, Laurie Ferber, notified the CME Group that there was an apparent shortfall. Ms. Ferber blamed an accounting error, according to CME, the exchange where MF Global did business and one of the firm’s main regulators.
But by 2 a.m., Ms. O’Brien and other MF Global officials told CME that $700 million was sent from customer accounts to the firm’s securities unit.
Oct. 31
By 10 a.m., MF Global filed for bankruptcy. Federal regulators, meanwhile, began the search for the missing customer money.
The week of Dec. 12
Mr. Corzine, a former United States senator from New Jersey, returned to Capitol Hill to face questioning from his former colleagues.
Andrew Harrer/Bloomberg NewsTerrence Duffy, executive chairman of the CME Group.Terrence Duffy, executive chairman of the CME Group, told lawmakers that MF Global had used customer money to lend from one arm of the firm to another — and that Mr. Corzine had been aware of it.
Mr. Corzine rejected Mr. Duffy’s claims.
“I never gave any instructions to misuse customer money, never intended to give any instructions or authority to misuse customer funds, and I find it very hard to understand how anyone could misconstrue what I’ve said as a way to misuse customer money.”
Further Moves Lower in Gold Seem Unlikely
By: P Radomski | Fri, Dec 30, 2011
We are on the cusp of a new year, and this is the time that we take a look at those brave (or foolhardy) financial analysts who take out their crystal ball and predict where precious metal prices will go in 2012.
But first let's see how last year's prognosticators (including Sunshine Profits) fared. We are talking about predictions for the very chaotic 2011.
Bank of America Merrill Lynch had forecast last year at around this time that gold would top at $1,500 in the near-term and that the second half of 2011 would be more challenging. Well, gold did a lot better than $1,500 this past year. It hit an all-time nominal high in August of $1,923.70 an ounce. Gold may be down about 16% from the August highs, but it's still up roughly 14% from the 2010 settlement of $1,421, which still makes it one of the best performers this year. Even with prices falling again this week, the metal is still the top performing commodity of 2011.
Peter Schiff said about gold prices: "You ain't seen nothing yet." He was overly optimistic and predicted that gold will go up to $2,000. He might yet be proved right, but not in 2011.
James West, publisher of the Midas Letter, said gold was likely break through $1,700 an ounce by the end of 2011 and silver will likely see $35, and may even go through $40 an ounce. Well, he was right. Gold definitely broke through the $1,700 an ounce range.
Nick Barisheff, president of Canada's Bullion Management Group Inc., was looking at $1700-to $2,000 per ounce gold in 2011; he was within the right range.
At Sunshine Profits we also went out on a limb and guesstimated gold's high for 2011 at $1,800 and $45 for silver.
A review of 2011 shows a chaotic picture for the precious metals. During the first few months of 2011 the price of silver sharply outperformed the price of gold and by the end of last April the price of silver rose by nearly 56%, while gold rose "only" 9% from the beginning of the year. With the sharp rise in silver prices the CME raised margins which caused silver prices to decline to 7% above the initial price level of 2011. The next rally came from May to the beginning of September for both metals due to uncertainty about the stability of the U.S. economy and the debate about raising the debt ceiling. The rally came to a halt in September due to the CME raising margins and also because the Fed did not come up with QE3. The decline of precious metal prices soon followed.
To predict how precious metals will behave in the short run, let's begin the technical part with the analysis of the USD Index. We will start with the very long-term chart (charts courtesy by http://stockcharts.com.)
Summing up, the situation in the USD Index is more bearish than not. The breakout above the declining long-term resistance line may be seen at some point, but until it is seen and verified, this situation here will not turn to bullish. The currently bearish outlook for the dollar translates into o rather bullish outlook for precious metals.
To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, we urge you to sign up for our free e-mail list. Gold & Silver Investors should definitely join us today and additionally get free, 7-day access to the Premium Sections on our website, including valuable tools and unique charts. It's free and you may unsubscribe at any time.
But first let's see how last year's prognosticators (including Sunshine Profits) fared. We are talking about predictions for the very chaotic 2011.
Bank of America Merrill Lynch had forecast last year at around this time that gold would top at $1,500 in the near-term and that the second half of 2011 would be more challenging. Well, gold did a lot better than $1,500 this past year. It hit an all-time nominal high in August of $1,923.70 an ounce. Gold may be down about 16% from the August highs, but it's still up roughly 14% from the 2010 settlement of $1,421, which still makes it one of the best performers this year. Even with prices falling again this week, the metal is still the top performing commodity of 2011.
Peter Schiff said about gold prices: "You ain't seen nothing yet." He was overly optimistic and predicted that gold will go up to $2,000. He might yet be proved right, but not in 2011.
James West, publisher of the Midas Letter, said gold was likely break through $1,700 an ounce by the end of 2011 and silver will likely see $35, and may even go through $40 an ounce. Well, he was right. Gold definitely broke through the $1,700 an ounce range.
Nick Barisheff, president of Canada's Bullion Management Group Inc., was looking at $1700-to $2,000 per ounce gold in 2011; he was within the right range.
At Sunshine Profits we also went out on a limb and guesstimated gold's high for 2011 at $1,800 and $45 for silver.
A review of 2011 shows a chaotic picture for the precious metals. During the first few months of 2011 the price of silver sharply outperformed the price of gold and by the end of last April the price of silver rose by nearly 56%, while gold rose "only" 9% from the beginning of the year. With the sharp rise in silver prices the CME raised margins which caused silver prices to decline to 7% above the initial price level of 2011. The next rally came from May to the beginning of September for both metals due to uncertainty about the stability of the U.S. economy and the debate about raising the debt ceiling. The rally came to a halt in September due to the CME raising margins and also because the Fed did not come up with QE3. The decline of precious metal prices soon followed.
To predict how precious metals will behave in the short run, let's begin the technical part with the analysis of the USD Index. We will start with the very long-term chart (charts courtesy by http://stockcharts.com.)
Summing up, the situation in the USD Index is more bearish than not. The breakout above the declining long-term resistance line may be seen at some point, but until it is seen and verified, this situation here will not turn to bullish. The currently bearish outlook for the dollar translates into o rather bullish outlook for precious metals.
To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, we urge you to sign up for our free e-mail list. Gold & Silver Investors should definitely join us today and additionally get free, 7-day access to the Premium Sections on our website, including valuable tools and unique charts. It's free and you may unsubscribe at any time.
19 December 2011
The Silver Rush at MF Global
By ERIN E. ARVEDLUND
Investors are furious that they can't get back the gold and silver they stashed with the failed brokerage.
It's one thing for $1.2 billion to vanish into thin air through a series of complex trades, the well-publicized phenomenon at bankrupt MF Global. It's something else for a bar of silver stashed in a vault to instantly shrink in size by more than 25%.
That, in essence, is what's happening to investors whose bars of silver and gold were held through accounts with MF Global.
The trustee overseeing the liquidation of the failed brokerage has proposed dumping all remaining customer assets—gold, silver, cash, options, futures and commodities—into a single pool that would pay customers only 72% of the value of their holdings. In other words, while traders already may have paid the full price for delivery of specific bars of gold or silver—and hold "warehouse receipts" to prove it—they'll have to forfeit 28% of the value.
Investors are furious that they can't get back the gold and silver they stashed with the failed brokerage.
It's one thing for $1.2 billion to vanish into thin air through a series of complex trades, the well-publicized phenomenon at bankrupt MF Global. It's something else for a bar of silver stashed in a vault to instantly shrink in size by more than 25%.
That, in essence, is what's happening to investors whose bars of silver and gold were held through accounts with MF Global.
The trustee overseeing the liquidation of the failed brokerage has proposed dumping all remaining customer assets—gold, silver, cash, options, futures and commodities—into a single pool that would pay customers only 72% of the value of their holdings. In other words, while traders already may have paid the full price for delivery of specific bars of gold or silver—and hold "warehouse receipts" to prove it—they'll have to forfeit 28% of the value.
Subscribe to:
Posts (Atom)