Market Curiosity: Exploring Markets And Systems

November 12, 2011

WARNING: If you still have “money” in futures account or brokerage accounts, well, WHY?

Filed under: Editorials — Tags: , , , , — Jeff Fitzmyers @ 8:56 pm

Gerald Celente: My MF Global Gold Positions Have Been Confiscated by the CME I got a call Monday by my broker, that I needed to meet a margin call for my gold positions. I said what are you talking about? I’ve been playing this thing for a long time. All I do is I keep my profits in my account. Well the profits aren’t there anymore, and neither is the account. They took all my money and they put it in the hands of a trustee. I said are you kidding me or what? They’re not trading for me, this is my own money in my own account! It’s my money! No, it’s not. Who decided this? Oh, the CME group.

If Mr. Celente can be stolen from and stiffed, unless something changes, the same thing can happen to anyone.

Peter Brandt: I have been in the futures business since the mid 1970s. The industry always spoke about how client money was protected by the independent clearing corporations of the exchanges and by the segregated account banking arrangements… This apparently false assumption of protection was reaffirmed in 2005 with the collapse of Refco due to reputed fraudulent activity by its CEO. While general creditors of Refco recovered slightly more than 30 cents on the dollar with the dust settled, Refco’s segregated account holders had full recovery – after some time delay… The failure of MF Global”s segregated account to be made whole would be the biggest financial disaster since 1929 and would spell the end of the futures industry as we know it. Folks in the financial industry should take this matter seriously — very seriously. Do not underestimate the importance of this matter.

I CONSIDER THIS A SHOT ACROSS THE BOW. My account is now at a bare minimum until this situation improves drastically and stabilizes. I’m not holding my breath.

Many people will just sit, watch, rationalize and deny — and don’t ACT until it is too late. The leverage is very high. First there are smoldering areas (rumors), then puffs of smoke (visible proof), then, unless the sprinklers turn on fast — since there are about 100 smolders — the whole building erupts in flames.

The Tiker Guy offers one way to attempt to protect wealth. MF Global, Risk Management And You I don’t agree with it. It’s all about counterparty risk so why not get precious metals and have no counterparty risk? I don’t care if the buy/sell spread is large. It’s worth not having the risk to me.

Related
+ MF Global allegedly pilfered segregated accounts: Counter party risk back in fashion.
+ Interesting Google Trends for “fake gold, “fake silver”, and “counterparty risk” In fact, an updated chart:

Wanted to add:

MF Global customer $ apparently found Bottom line: The money has apparently been found, but there are many serious questions that remain to be answered. The main question is why segregated funds might have been stolen under the watchful eye (in fact, with the active involvement) of federal regulators. Until this and other questions are answered, the real issue is what will happen next time … and there will be a next time.

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