"We had a COMEX system failure in November. COMEX was ready to default on gold and silver in November. Rather than honor delivery demands in gold and silver- JP Morgan simply stole the money in the accounts that were going to stand for delivery. They had their pockets picked while they were standing in line at the delivery window. Notices of delivery were replaced at stolen accounts!"
The bankruptcy which brought "rehypothecation" to the limelight. The practice of a broker pledging client owned securities in a margin account to secure a bank loan.
Well, that can't happen again, not after what we learned after MF Global, right?
Wrong!
The practice is still ongoing and a search of the fine print at Fidelity, E*Trade, and Scottrade all include rehypothecation as part of their customer agreement.
Wrong!
The practice is still ongoing and a search of the fine print at Fidelity, E*Trade, and Scottrade all include rehypothecation as part of their customer agreement.
(b) Loan or Pledge of Securities
I authorize E*TRADE Securities to lend either to itself or to others any Securities and/or Other Property held by E*TRADE Securities in my Margin Account to the extent permitted by law. I understand that within the limitations imposed by applicable laws, rules and regulations all of my securities and/or other property may be pledged and repledged and hypothecated and rehypothecated by E*TRADE Securities. This can occur without my being notified, either separately or together with other securities and/or other property of other customers of E*TRADE Securities, for any amount due E*TRADE Securities in any Account in which I have an interest; provided, however, that E*TRADE Securities may not undertake such actions from any Account for any amount due E*TRADE Securities in any retirement Account or from a retirement Account for any amount due E*TRADE Securities in any other Account.
https://us.etrade.com/e/t/estation/help?id=1209031000
I authorize E*TRADE Securities to lend either to itself or to others any Securities and/or Other Property held by E*TRADE Securities in my Margin Account to the extent permitted by law. I understand that within the limitations imposed by applicable laws, rules and regulations all of my securities and/or other property may be pledged and repledged and hypothecated and rehypothecated by E*TRADE Securities. This can occur without my being notified, either separately or together with other securities and/or other property of other customers of E*TRADE Securities, for any amount due E*TRADE Securities in any Account in which I have an interest; provided, however, that E*TRADE Securities may not undertake such actions from any Account for any amount due E*TRADE Securities in any retirement Account or from a retirement Account for any amount due E*TRADE Securities in any other Account.
https://us.etrade.com/e/t/estation/help?id=1209031000
All securities and other property now or hereafter held, carried, or maintained by us in or for your account may, from time to time without notice to you, be pledged, re-pledged, hypothecated, or re-hypothecated by us, either separately or in common with other securities and other property. The values received may be greater than the amount you owe us.
http://www.scottrade.com/documents/formscenter/SF1011_Margin_Agreement.pdf
http://www.scottrade.com/documents/formscenter/SF1011_Margin_Agreement.pdf
Fidelity can loan out (to itself or others) the securities that collateralize your margin borrowing. If it does, you may not be entitled to receive, with respect to securities that are lent, certain benefits that normally accrue to a securities owner, such as the ability to exercise voting rights, or to receive interest, dividends, or other distributions.
http://personal.fidelity.com/accounts/pdf/usingmargin.pdf?refpr=mmg4
http://personal.fidelity.com/accounts/pdf/usingmargin.pdf?refpr=mmg4
Source: The Docs Original Article Found here. E*Trade, Scottrade, Fidelity Fine Print
Obviously with three months gone by since the MF Global bankruptcy, lessons learned are already priced into the market. Screw the futures markets and the paper stuff, everyone is getting PHYZZ. Nobody would want to hold paper stuff, especially not with a pending Greek default. Everyone has closed their margin accounts and gone with direct ownership. Everyone is rushing for safety. The SLV monthly volume would appear to support an argument for rushing into the phyzz as trading volume has decreased since the massive smack down in May 2011.
You would have thought investors paying attention to the developments would have left SLV and resulted in a peak trading volume late October and November. Obviously, the lack of a peak shows that investors still are in candyland thinking SLV actually holds an adequate amount of silver and is totally unrelated to MF Global. Furthermore, the latest reports reminds us that it is business as usual and confirms who is really still running the market. The Doc reported, a quick review of Shortsqueeze.com indicates that the SLV's short interest increased by 6.71%, or 1,670,600 shares (ounces) in the past week! Even more astonishing, the SLV has reportedly had over 3 million ounces of silver withdrawn since the beginning of January- likely deposited directly into COMEX vaults.
Ishares Silver Trust
|
$ 32.96
|
SLV
| 0.53 |
Daily Short Sale Volume - NEW
| view |
Short Interest (Shares Short)
| 26,568,400 |
Days To Cover (Short Interest Ratio)
| 1.5 |
Short Percent of Float
| view |
Naked Short Selling List - NEW
| view |
Short Interest - Prior
| 24,897,800 |
Short % Increase / Decrease
| 6.71 |
At 26.57 million, the short interest in the SLV is a whopping 8.7% of the entire 305 million shares of SLV! As Ted Butler has long argued, such an extreme naked short position of the SLV is pure manipulation aimed at preventing the SLV from holding 26.57 million ounces of silver that would otherwise be required to be held by the fund. 27 million ounces of silver is almost an entire year's US production! Don't expect Blackrock, the CFTC, or the SEC to do anything about this anytime soon however. In fact, if anything- expect the cartel's manipulation of silver via the SLV to only intensify as the COMEX fades into irrelevance.
COT reports also show there has been no change in individuals trading this market. So either the screwed over investors didn't learn their lesson or they were replaced by other naive individuals. Below you can compare the COT report from 10/21/2011 (just before the MF Global debacle) to Doc's latest COT report.
1/27/2012
Silver COT Report - Futures
| ||||||
Large Speculators
|
Commercial
|
Total
| ||||
Long
|
Short
|
Spreading
|
Long
|
Short
|
Long
|
Short
|
27,051
|
10,934
|
20,520
|
35,283
|
60,304
|
82,854
|
91,758
|
842
|
-1,882
|
1,292
|
-3,746
|
893
|
-1,612
|
303
|
Traders
| ||||||
68
|
36
|
43
|
35
|
42
|
126
|
101
|
Small Speculators
| ||||||
Long
|
Short
|
Open Interest
| ||||
20,171
|
11,267
|
103,025
| ||||
969
|
-946
|
-643
| ||||
non reportable positions
|
Change from the previous reporting period
| |||||
COT Silver Report - Positions as of
|
Tuesday, January 24, 2012
| |||||
Silver COT Report - Futures & Options Combined
| ||||||
Large Speculators
|
Commercial
|
Total
| ||||
Long
|
Short
|
Spreading
|
Long
|
Short
|
Long
|
Short
|
27,157
|
8,279
|
44,911
|
48,785
|
77,343
|
120,852
|
130,533
|
46
|
-2,167
|
4,182
|
-2,651
|
1,470
|
1,576
|
3,485
|
Traders
| ||||||
82
|
37
|
65
|
36
|
44
|
141
|
126
|
Small Speculators
| ||||||
Long
|
Short
|
Open Interest
| ||||
22,796
|
13,116
|
143,649
| ||||
1,183
|
-725
|
2,759
| ||||
non reportable positions
|
Change from the previous reporting period
| |||||
COT Silver Report - Positions as of
|
Tuesday, January 24, 2012
| |||||
COT REPORT 10/21/2011
Silver COT Report - Futures
| ||||||
Large Speculators
|
Commercial
|
Total
| ||||
Long
|
Short
|
Spreading
|
Long
|
Short
|
Long
|
Short
|
23,005
|
12,653
|
20,205
|
40,121
|
58,895
|
83,331
|
91,753
|
-566
|
1,030
|
1,377
|
2,531
|
477
|
3,342
|
2,884
|
Traders
| ||||||
58
|
36
|
42
|
38
|
41
|
123
|
100
|
Small Speculators
| ||||||
Long
|
Short
|
Open Interest
| ||||
20,026
|
11,604
|
103,357
| ||||
317
|
775
|
3,659
| ||||
non reportable positions
|
Change from the previous reporting period
| |||||
COT Silver Report - Positions as of
|
Tuesday, October 18, 2011
| |||||
Silver COT Report - Futures & Options Combined
| ||||||
Large Speculators
|
Commercial
|
Total
| ||||
Long
|
Short
|
Spreading
|
Long
|
Short
|
Long
|
Short
|
23,437
|
7,938
|
57,485
|
55,226
|
80,150
|
136,147
|
145,573
|
-1,478
|
434
|
1,654
|
2,362
|
-56
|
2,537
|
2,032
|
Traders
| ||||||
78
|
39
|
78
|
40
|
44
|
153
|
132
|
Small Speculators
| ||||||
Long
|
Short
|
Open Interest
| ||||
24,005
|
14,580
|
160,153
| ||||
-28
|
477
|
2,509
| ||||
non reportable positions
|
Change from the previous reporting period
| |||||
COT Silver Report - Positions as of
|
Tuesday, October 18, 2011
| |||||
The mass media has shoveled the real story of MF Global, rehypothecation, and it's implications under a hundred foot pile of cement similar to the daily Ron Paul operation. The banksters still seem to have a firm stranglehold on the corruption surrounding the precious metal market. One would still have to wonder if their strength comes from the delayed implementation of the Dodd Frank Act and the assured changes to the act which will allow the continued suppression of the PM market. The Wall Street Journal released an article explaining how 1.2 billion dollars vaporized and nobody is going to be held accountable (like we should be surprised.) Gone! Vanished! From WSJ
Investigators also are examining other scenarios that have gained traction in recent weeks, such as the possibility that MF Global suffered steep losses on investments made using customer money. Officials investigating the case have looked into whether such investments were appropriate under rules at the time.
As money poured out of MF Global, much of it likely passed through J.P. Morgan Chase & Co. and other banks where the securities firm had accounts, as well as trade-clearing partners such as Depository Trust & Clearing Corp. and LCH.Clearnet Group Ltd., people familiar with the matter said.
Those companies have denied being knowingly in possession of any missing MF Global money, and any efforts to make them fill the hole would face daunting hurdles. And because the firms usually were middlemen between MF Global and other counterparties, the funds they touched were then scattered widely, complicating the search.
The only way this operation is going to get shut down is for all the precious metal to be taking out of the paper system.
For small purchases, bullion still remains available at reasonable costs. As per our launch of the direct from mint program, the SD Direct Mint Purchase was locked in at 32.45 plus 54 cents over spot to take delivery of 10,500oz at a total purchase price was over $340,000. Readers will have to await three weeks for the silver to be minted rather than receiving it within a couple of days like APMEX. A small price to pay for over $4,000 in savings (APMEX was selling 1oz rounds from Sunshine for 1.29) from what is considered widely to be one of the premier precious metal dealers. If you are planning a purchase over 1,000oz of silver, the Doc and I have a working relationship with a few miners/refineries and can get you 1oz rounds for well under what investors pay at APMEX or other coin dealers. (If you are purchasing below 1,000oz we can still get you the price, but you will have to await the Doc or I making a a purchase for us to bundle your order with. Our next planned large purchase is tentatively scheduled for the middle part of February.)
In summary, we are now 3 months post MF Global bankruptcy and all I see is another instance where the banksters have gotten away with yet another crooked adventure. Until all physical precious metal is out of the paper system, the game will continue. Greece is next up on the chopping block and is a much larger pile to be shoveled under a rug. I do not see this pile getting buried quite as easily. Instead, I envision Greece to be feeding the virus and where the virus is soon to be released throughout all of Europe before crossing into the West. Multiple banks and multiple countries are going down with this round of debt explosion. Rest assured unlike MF Global, $30 phyzz won't cure this virus. We are going much higher. This is the calm before the storm. Now is the time to prepare on the essentials. Back up the truck and take advantage of some great premiums on silver bullion. I do not believe these prices will hang on for very long and I personally believe the end game will be in place soon. What point of history will compare to the next couple of months when entire countries and a large number of banks go bankrupt? Once the virus hits, there will be no time for preparation. Got phyzz??
