From SD reader and former MF Global client Andy:
A firsthand account of a complete loss of confidence in the paper futures markets, in the wake of the CME/CFTC refusing to make MF Global clients whole after their assets were stolen and rehypothecated by MF Global.
Read as a gold and silver futures trader discusses what he was told by his introducing broker could be done with his assets, vs. what very clearly has been done with them, and the conclusions he draws regarding returning to trading futures vs. turning to the only true safety of physical ownership of gold and silver.
I’m getting confused about what MF, a Futures Clearing Merchant (FCM), is allowed to use my brokerage account for. Lets assume a simple example:
1.Cash I put in my account $100
2.Portion allocated to initial margin -17
on a silver contract
3.So called cash “surplus” 83
A. MF could legally take my collateral and invest it in certain prescribed assets (eg Treasuries, AAA rated corporate/sovereign debt etc). The income/capital gain from such investments was for MF’s benefit, which allowed it to offer cut rate trading commissions, which benefited customers, which was the rationale behind this CFTC rule. But what amount was allowed to be thus invested – was it 100 or was it 83? If it was 100, then my silver contract counterparty’s security of 17 was at risk – surely that can’t be right? And if the same was being done with my counterparty’s 17, then my security was at risk?
B. Now I read about hypothecation, and rehypothecation, and I don’t technically understand it. Using the simple example above, can anyone explain how my $100 is further utilized by MF, over and above the investment allowed under A. above? I read that in the US, 140% of my account can be further used by MF as collateral for hypothecating……what exactly that means I can’t work out!!
C. In the UK, there is no 140% limit, in fact no limit at all. Was MF allowed by the CFTC to transfer my $100, originated and based in my US account, to it’s UK subsidiary, via an inter-company loan account, where it could escape the 140% rule? Does that mean the USA 140% rule could be so easily loopholed – surely the CFTC would not allow it?
D. There is so much talk now, but nowhere can I find a simple arithmetic example of how my $100 is used, and to what risk of loss it is exposed. When I signed my MF account forms, it seems I gave permission to MF to do these things with my $100. My introducing broker assured me my $100 was “segregated” and at no risk. In light of these new facts coming to light, it seems the word “segregated” had absolutely no meaning when it came to the risks of loss my $100 was truly exposed to. Is it possible that the professionals in the Futures Industry knew all these things, but chose to not fully inform customers, and that the hypothecation merry go round was always known about, and is actually “surprise information” only to the customers? This thing stinks, and the entire Futures Industry is on shaky ground now. I have my 60% returned from MF with a new FCM, but am fearful of continuing with Futures, because I have no way to fully understand my risk of loss. This is bad, really bad. The outcome of the HSBC/Fine lawsuit may have profound implications on gold/silver prices – so I’m stuck and paralyzed into inaction and indecision, except the realization that physical ownership and possession is the only true safety.
As anticipated, the gold and silver paper futures smash has continued and intensified into the NY COMEX session. Gold is now down a cool $50, and silver is down 4%, and has just broken below $31.
Gold has found some support at $1650, but looks to want to drop to $1600 at a minimum, and silver looks likely to test $30. We will keep a close eye on PHYSICAL PREMIUMS, as a paper sell-off was anticipated with futures traders losing all confidence in the futures market in the wake of MF Global.
Martin Armstrong reveals that the MF Global bankruptcy Judge Martin Glenn is the very lawyer that argued that Armstrong should be confined indefinitely without conviction in order to cover up the rehypothecation of assets committed by Republic National Bank & HSBC.
Do you think Martin Glenn will now rule in favor of MF Clients, or the NY banksters!?!
MF Global and virtually all of its Wall Street counterparts have been circumventing U.S. securities rules at the expense of their clients for decades, and people like Judge Martin Glenn is by no means about to change the game or expose what has been really taking place. Client funds were by no means just inadvertently misplaced or gobbled up in MF’s dying hours as is being desperately portrayed by the NY media once again covering up the truth. These were losses created by manipulation of brokerage rules that allowed for the wholesale acquisition and sale of client funds through re-hypothecation.
I was aware of this for decades and purposefully purchased Fannie Maes, which were NOT AAA and could not be re-hypothecated by either posting them as collateral at the exchanges or in the REPO market. MF Global, as other NY firms, used clients’ funds to finance an enormous $6.2 billion Eurozone repo bet that was approved personally by Corzine. What this has amounted to is any win was to MF Global’s benefit, while the losses belonged to clients.
That client money should be taken back from the banks it was used for trading. In basic law, if someone steals your car, repaints it, and resells it, once found, you still have the title. In this case, MF Global NEVER had TITLE to those funds and they have to be returned to the clients and the counter-party bankers as a fundamental matter of law cannot keep them.
Giddens and several federal authorities are investigating the cause of the shortfall but they are not likely to reveal the truth of what has become standard practice in trading with other people’s money. The nightmare was customer accounts with open positions that became frozen. While Kobak is being optimistic that total recoveries could be as much as 70 percent of accounts, he will not clawback funds from other brokers or banks letting them keep their illegal gains.
In the instant case of MF Global, there is a legal loophole in international brokerage regulations that is time to explain before you leave a dime in ANY New York operation. You should DEMAND from any broker a signed agreement that they will NOT invest your cash or assets in any market, exchange, or transaction where your property is up for grabs based upon their covert use of your money!
Click the PDF below for the rest of Martin Armstrong’s rant on MF Global
MF Global Disaster
Trading with other people’s money
Collapse of the world’s financial system
With concerns about liquidity and solvency in the European banking system, there is lending and possibly even selling of gold by banks to raise much needed cash. This may be creating short term weakness in gold bit is bullish for gold in the long term. The FT reported last week that “gold dealers” said that banks – “primarily based in France and Italy – had been actively lending gold in the market in exchange for dollars.” The key question is who is lending and is their lending simply liquidity driven – to raise dollars or euros? John Dizard, who frequently comments on gold in the Financial Times wrote on Saturday that, “Gold market people say European commercial banks are being driven to lend gold for dollars at negative interest rates just to raise some extra cash for a few weeks. There’s not a lot of transparency about where the banks are getting the gold they are lending out, but it could be lent to them by either their national central banks, or by gold exchange traded funds.”
Gold is trading at USD 1,680.90, EUR 1,267.70, GBP 1,075.30, CHF 1,564.40, JPY 130,750 and AUD 1,659.0 per ounce.
Gold’s London AM fix this morning was USD 1,680.00, GBP 1,077.06, and EUR 1,266.49 per ounce.
Friday’s AM fix was USD 1,712.00, GBP 1,094.49, and EUR 1,281.34 per ounce.
Gold in USD – 2 Yrs (100, 144, 200 DMA)
Gold was steady in trade in Asia until 0322 GMT when sharp selling saw gold fall 1.3% from $1,708/oz to $1,684.75/oz in minutes. The fall may have been technical in nature after last week’s 2% fall in US dollar terms. The selling had the hallmarks of a large sell order or liquidation and Reuters reports that “the approaching year-end and funding difficulties caused by financial market turmoil have reduced liquidity in the gold market.”
Market reaction to the failed EU Summit was that gold, the euro, European equities and ‘PIGS’ debt all came under selling pressure this morning.
Gold is again testing support at the 144 day moving average at $1,674/oz. Below that is the major support of $1,617.25/oz (see chart above).
Gold Spot $/oz (30 days)
With concerns about liquidity and solvency in the European banking system, there is lending and possibly even selling of gold by banks to raise much needed cash. This may be creating short term weakness in gold bit is bullish for gold in the long term.
The FT reported last week that “gold dealers” said that banks – “primarily based in France and Italy – had been actively lending gold in the market in exchange for dollars.”
The key question is who is lending and is their lending simply liquidity driven – to raise dollars or euros?
John Dizard, who frequently comments on gold in the Financial Times wrote on Saturday that,
“Gold market people say European commercial banks are being driven to lend gold for dollars at negative interest rates just to raise some extra cash for a few weeks.
There’s not a lot of transparency about where the banks are getting the gold they are lending out, but it could be lent to them by either their national central banks, or by gold exchange traded funds.”
Cross Currency Table
If this is the case it will raise further concerns about the possibility of double accounting of gold and concerns that much of the gold investments in the market are in fact ‘paper gold’ and not backed by physical as is believed by investors.
It will add to deepening concerns about the emerging scandal of rehypothecation where some banks, brokerages and dealers have been reusing the collateral pledged by its clients as collateral for their own borrowing.
Owners of gold exchange traded funds (ETFs) would be surprised and worried to discover that certain banks might be lending out gold that they have bought and believe that they own.
The leading gold ETF, GLD has been criticized by many analysts for its extremely complex structure and prospectus. Critics have also pointed out the possible conflict of interest in its relationships with HSBC and JPMorgan Chase which are believed to have large short positions in gold and overall lack of transparency.
If as has been suggested, European banks are lending gold into the market that has come from exchange traded funds then this would validate the many concerns raised about the gold ETF market. Questions would again be asked as to whether many of the ETFs are fully backed by the gold that they claim to own in trust on behalf of clients.
Already some hedge funds managers and investors have liquidated their ETF positions in favour of allocated physical bullion and we would expect that trend to accelerate as prudent investors rightly seek to avoid counter party and systemic risk.
● The flow of gold from Hong Kong to mainland China rose 51 pct in October to a record 85.7T, bringing the total amount of gold shipped for the year to October to 286.6T. (Reuters)
● Economist Dennis Gartman said he’s “being taken out of the remainder” of his gold position and investors should not own the metal priced in euros. Gartman had previously owned bullion priced in euros “Those not already out of the gold side of this trade should be out immediately,” he said today in his daily Gartman Letter. (Bloomberg)
● Gold could hit $2,500 if Euro fails in what would be a ‘horror story’ said Citigroup in a note. The Euro failing is a “low probability” event. Citigroup emphasizes it’s not forecasting $2,500/oz, though it says this could occur were the Euro to collapse. (Bloomberg)
● Gold’s premium to platinum may widen in months ahead, UBS Says. Gold’s premium to platinum “has room for further widening over the next few months,” Edel Tully, an analyst at UBS AG, wrote today in a report. The premium was at 12.4 percent today, Bloomberg data show. (Bloomberg)
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Silver is trading at $31.13/oz, €23.51/oz and £19.93/oz
PLATINUM GROUP METALS
Platinum is trading at $1,483.75/oz, palladium at $662.75/oz and rhodium at $1,450/oz.
Gold falls 1% on technicals, Europe worry lingers
Gold prices ease amid firmer U.S. dollar
HSBC Sues MF Global Over $850,000 of Gold
HSBC-MF Global, AT&T, Sabre, Apple, AMR Corp. in Court News
‘Cash for Gold’ buyers tempt Greeks to sell family gold facing hard times
Gold “Rehypothecation” Unwind Begins: HSBC Sues MF Global Over Disputed Ownership Of Physical Gold
Why You Shouldn’t Trust Your Gold to a Banker
Robert Fisk: Bankers are the Dictators of the West
Eurozone leaders deluded if they think this ‘sticking plaster’ treaty can solve the debt crisis
Is A Physical Silver Shortage Spike Imminent?
MF Global and the Great Wall St Re Hypothecation Scandal
This afternoon we wrote to expect a sell-off in gold and silver paper futures prices in the aftermath of the HSBC gold rehypothecation lawsuit, as investors and futures traders run for the physical hills.
If the first 5 hours of futures trading are any indication, we are seeing the beginnings of just such action. Silver is down 2% to $31.50, and gold is down 1.5% to $1685.
Of note is a FLASH SMASH that occurred in the gold market, with gold plunging $25 from $1710 to $1685 in nanoseconds! Check out the chart action of the move below:
Silver treated to a traditional escalator decline:
With less than an hour until gold and silver trading opens on the Globex, we will soon find out what, if any, HSBC’s lawsuit against the MF Global trustee and Jason Fine has on gold and silver futures prices.
For those who missed it, Jason Fine, an MF Global client, demanded delivery for 5 gold contracts (500 ounces) and 3 silver contracts (15,000 ounces) from HSBC, the custodian of the metal. Fine had used the warehouse receipts of his PHYSICAL METAL on deposit at HSBC as collateral for his account at MF Global. MF Global’s liquidation trustee James Giddens (i.e. Jamie Dimon) said WHOA THERE PARDNER!, NO CAN DO! MF Global rehypothecated your gold and silver collateral when it purchased CDS contracts from us, so we’ll be taking the delivery of said gold and silver thanks to our SENIOR creditor status.
HSBC subsequently filed suit Friday against both Jason Fine and the MFG trustee, in effect to allow a judge decide who gets the phyzz.
This weekend has seen rampant speculation that the markets will open with a collapse in GLD, and a spike in gold and silver, as all the paper holders rush to get out of paper gold and into phyzz.
Personally, The Doc disagrees.
From how I understand it, the lawsuit doesn’t mean anything- yet. The real fireworks should come when the judge decides whether the phyzz belongs to the actual holder of the futures contracts, or the counter-party of the CDS contracts purchased with Fine’s rehypothecated collateral by MFG.
This could play out in 3 ways:
1. Judge orders Phyzz liquidated for cash, and all parties receive a haircut and a portion of the assets. This is most likely in The Doc’s opinion- and at this point, holders of futures contracts may well panic and dump futures positions for phyzz, causing a collapse in COMEX futures prices of phyzz, with a corresponding evaporation of physical inventory as the physical metal becomes unavailable.
2. Judge rules in favor of Jason Fine, and all phyzz is delivered to the rightful owner. JP Morgan instantly panics, crashes paper futures prices, and scoops up all available phyzz. Least likely outcome in my mind.
3. Judge rules in favor of MFG Trusee James Giddens (i.e. Jamie Dimon, Blythe Masters, and The Morgue). Jason Fine told to F*** off, you are an unsecured creditor as JP Morgan holds senior status to your rehypothecated collateral/ assets. For aftermath, see No. 1 only magnified 100 fold. Futures traders instantly lose all confidence in the system, and the COMEX implodes not from a delivery default, but from a loss of confidence among futures traders.
I may be wrong, but I don’t see an outcome to this that results in PAPER gold and silver prices rocketing. All three possible outcomes seem to mean major sell-offs in the PAPER futures markets, while at the same time, physical inventory dries up and becomes unavailable. Again, it appears to me that this is more likely to happen when the judge makes a ruling in the case, rather than imminently on the announcement of the lawsuit. I could be wrong, as should a futures trader similarly think through the likely possible outcomes of this HSBC suit, the smart ones will get out now and not wait for a verdict. We’ll see whether the speculative futures traders panic now, or wait for the handwriting on the wall before they panic and attempt to get out. My money is they’ll wait for the handwriting on the wall, Belshazzar style, when it’s too late to get out!
Your Paper is Weighed in the
Balance, and Found Wanting
Interactive Brokers Issues Official Denial- Claims it has not Rehypothecated $14.5 Billion in Client Funds
Did Interactive Brokers just deep-six JP Morgan?
Interactive Brokers has released an official denial of Reuters’ claims that the firm has rehypothecated $14.5 Billion in client funds. Until now, Reuters’ claims of rehypothecation of client assets at Goldman Sachs ($28.17 billion re-hypothecated in 2011), Canadian Imperial Bank of Commerce (re-pledged $72 billion in client assets), Royal Bank of Canada (re-pledged $53.8 billion of $126.7 billion available for re-pledging), Oppenheimer Holdings ($15.3 million), Credit Suisse (CHF 332 billion), Knight Capital Group ($1.17 billion),Interactive Brokers ($14.5 billion), Wells Fargo ($19.6 billion), JP Morgan($546.2 billion) and Morgan Stanley ($410 billion) have been completely ignored by all firms named in the report, in hopes that the story would just fade away.
That’s all just changed as IB has now issued the first official denial.
As JP Morgan has reportedly rehypothecated 3,767% more of clients’ funds than IB has at $546.2 BILLION, Mr. Dimon cannot be pleased.
Below the response we have put forth regarding the Thomson Reuters article:
Recently, much has been written about the safety of customer assets held by brokers and we believe that customers are justified in their concerns. And so, we are writing to help clarify your understanding of how brokers are permitted to operate and, in particular, how Interactive Brokers protects its customers assets while servicing their needs to trade on margin.
To start, and so as not to leave any confusion as to the position of IB vis-à-vis the Thomson Reuters news article, IB DOES NOT, in any way:
1. Circumvent U.S. securities or commodities rules at the expense of our customers;
2. Invest customers’ segregated funds in foreign sovereign debt or utilize in-house repurchase agreements;
3. Commingle or utilize customer segregated assets for proprietary operations;
4. Enter into agreements which are designed to take advantage of supposedly unrestricted U.K. re-hypothecatio n rules; or
5. Engage in transactions deemed as “hyper-hypo thecation”.
More specifically, regarding hypothecation and the level of such activity at IB: – The hypothecation and re-hypothecation of customer assets is a standard and essential practice, which U.S. brokers employ in the course of financing customer activity. The rights to do so are longstanding, have been explicitly provided by regulation and one should not be surprised to see boilerplate consent language in each broker’s customer agreement acknowledging this.
For example, a customer who incurs a margin debit by virtue of the fact that they have purchased securities with only partly their own money, thereby relying upon the broker to lend them the funds to pay the balance at settlement, subjects a portion (up to 140% of the amount borrowed, also referred to as the margin debit) of those securities to a lien on behalf of the broker. The lien is also known as hypothecation. The broker, in turn, may pledge or re-hypothecate the securities upon which they have a lien to replace the cash.
In the case of IB, this re-hypothecatio n typically takes place in the form of a stock loan. In simple terms, IB borrows money from a third party, using the customer’s margin stock as collateral, and it lends those funds to the customer to finance the customer’s purchase. –
Similarly, a customer who carries a futures position must place a margin deposit with IB. IB may pledge the customer’s cash deposit to a futures clearing house in support of the margin required on that position.
While IB is not in a position to comment on the practices of others and whether they comply or fail to comply with these regulations, or do so in a manner which introduces unwarranted risk to the firm and its customers, we can state that we comply with all regulations and utilize investment policies that tend to be more conservative than those permitted under the regulations.
The Thomson Reuters news article alleged that IB, among other brokers, engaged in a practice that the author categorizes as “hyper-hypo thecation” (apparently a term used to describe a process in which a broker alters the risk of one financial instrument into the exposure of multiple other instruments and perhaps multiple counterparties through a daisy-chain series of pledges) at an amount of $14.5 billion.
While we are not sure of the author’s source for this number, we would refer interested parties to footnote 10 (“Collateral ”) on page 17 of our June 30, 2011 financial statement, which is posted on the IB website (http://www.interactive brokers.com/d…Unaud_Finls .pdf) and reads as follows:
“At June 30, 2011, the fair value of securities received as collateral, where the Company is permitted to sell or repledge the securities was $16,817,859,287, consisting of $13,022,386,422 from customers, $2,886,934,605 from securities purchased under agreements to resell and $908,538,260 from securities borrowed. The fair value of these securities that had been sold or repledged was $4,526,153,369, consisting of $2,583,920,633 deposited in a separate bank account for the exclusive benefit of customers in accordance with SEC Rule 15c3-3, $761,740,278 securities loaned, $877,478,486 securities borrowed that had been pledged to cover customer short sales and $303,013,972 securities that had been pledged as collateral with clearing organizations.”
A closer examination of this $16.8 billion balance reveals the following:
1.$13.0 billion represents the amount IB is authorized to pledge (largely based upon 140% of customer debit balances), of which only $0.8 billion has been repledged, largely through stock lending.
2.$2.9 billion represents the investment of customer’s cash balances in reverse repurchase agreements where the underlying collateral is U.S. treasury securities. These transactions are conducted with third parties and guaranteed through a central counterparty clearing house (FICC). $2.6 billion of this collateral, technically a repledge (i.e., part of the $4.5 billion “sold or repledged”), is not re-hypothecated and it remains in the possession of IB and held at a custody bank in a segregated Reserve Safekeeping Account for the exclusive benefit of customers. The remaining $0.3 billion represents collateral pledged to clearing organizations.
3.$0.9 billion represents short sale transactions whereby the sales proceeds have been pledged as collateral to fully secure the borrowed securities. These transactions are classified as securities sold (i.e., part of the $4.5 billion “sold or repledged”).
Based upon this information, which reflects prudently risk-managed broker financing transactions, we believe a fair-minded author would have drawn a different conclusion regarding IB and hyper-hypotheca tion given a minimum level of investigation and contact.
MUST WATCH video on the shocking demand/supply statistics in silver.
The price suppression has become a gift to investors- as investors flood into the physical silver market, the currency crisis of 2012 will potentiate a massive silver supply shortage by 2015, causing ALL HELL TO BREAK LOOSE IN THE PHYSICAL MARKET.
An SD reader has submitted an article on the “Gold Problem” penned in 1967 by Secretary of Agriculture, Ezra Taft Benson.
His haunting words sound like they could have been penned today:
“The pending economic crisis that now faces America is painfully obvious. If even a fraction of potential foreign claims against our gold supply were presented to the Treasury, we would have to renege on our promise. We would be forced to repudiate our own currency on the world market. Foreign investors, who would be left holding the bag with American dollars, would dump them at tremendous discounts in return for more stable currencies, or for gold itself.
The American dollar both abroad and at home would suffer the loss of public confidence. If the government can renege on its international monetary promises, what is to prevent it from doing the same on its domestic promises? How really secure would be government guarantees behind Federal Housing Administration loans, Savings and Loan Insurance, government bonds, or even social security?
“Even though American citizens would still be forced by law to honor the same pieces of paper as though they were real money, instinctively they would rush and convert their paper currency into tangible material goods which could be used as barter. As in Germany and other nations that have previously traveled this road, the rush to get rid of dollars and acquire tangibles would rapidly accelerate the visible effects of inflation to where it might cost one hundred dollars or more for a single loaf of bread. Hoarded silver coins would begin to reappear as a separate monetary system which, since they have intrinsic value would remain firm, while printed paper money finally would become worth exactly it’s proper value–the paper it is printed on! Everyone’s savings would be wiped out totally. No one could escape.
“One can only imagine what such conditions would do to the stock market and to industry. Uncertainty over the future would cause the consumer to halt all spending except for the barest necessities. Market for such items as television sets, automobiles, furniture, new homes, and entertainment would dry up almost overnight. With no one buying, firms would have to close down and lay off their employees. Unemployment would further aggravate the buying freeze, and the nation would plunge into a depression that would make the 1930s look like prosperity. At least the dollar was sound in those days. In fact, since it was a firm currency, its value actually went up as related to the amount of goods, which declined through reduced production. Next time around, however, the problems of unemployment and low production will be compounded by a monetary system that will be utterly worthless. All the government controls and so-called guarantees in the world will not be able to prevent ! it, because every one of them is based on the assumption that the people will continue to honor printing press money. But once the government itself openly refuses to honor it–as it must if foreign demands for gold continue–it is likely that the American people will soon follow suit. This in a nutshell is the so-called ‘gold problem.” (The Teachings of Ezra Taft Benson p 639-640.)
A July 2010 Working Paper by the IMF titled The Sizeable Role of Rehypothecation in the Shadow Banking System is a MUST READ for those wishing to know just how deep the rehypothecation rabbit hole runs in the global financial system.
It appears that the rehypothecation issue is even worse in the UK than in the US:
A defined set of customer protection rules for rehypothecated assets exists in the UnitedStates, but not in the United Kingdom. In the United Kingdom, an unlimited amount of the customer’s assets can be rehypothecated and there are no customer protection rules. By contrast, in the United States, Rule 15c3–3 limits a broker-dealer from using its customer’ssecurities to finance its proprietary activities. Under Regulation T, the broker-dealer may use/rehypothecate an amount up to 140 percent of the customer’s debit balance.
Re Hypo the Cation Shadow Banking
I just came across your website today as a reference regarding an article about the “re-hypothecation” of assets by the on-line brokerages; SCHWABB, ETRADE, FIDELITY, etc.
My first question is: Who in the HELL can we trust for use as a broker? Any recommendations, or is having just a “cash” account safe?
Second Question: I have been trying to “donate” to you site but the “DONATE’ button doesn’t take me to a page to contribute! I think it is broken. I would like to contribute if possible.
Thanks for all your work!
Excellent question. If you haven’t already, please read this article by Jim Willie , as well as listen to this interview by Jim Sinclair . As Sinclair says, the system is broken.
Every securities broker I have researched this week states in their fine print that they rehypothecate your margin collateral. This means that they use it to back up their own risky trades in the derivatives market. Thanks to the new bankruptcy legislation passed by Congress in 2005, credit default swap holders are SENIOR to all other creditors, even bond holders and senior even to brokerage customers whose assets the brokerage rehypothecated to purchase the derivative.
This means that in the event of a bankruptcy/ failure of your bank or brokerage, the counter party to the derivatives your bank/brokerage rehypothecated your funds with will seize your assets as your broker’s collateral- as per bankruptcy law, they hold senior status. This is what we saw with JP Morgan seizing MF Global clients’ assets within 30 minutes of MF Global’s bankruptcy. Look for this to happen to every single Bank of America savings/checking account holder when BOA finally blows due to $50 billion in bad Merrill Lynch derivatives.
I have received numerous reports from readers that their 401k, IRA, and even general savings accounts allow the rehypothecation of their assets in the fine print.
As far as whether your personal bank/ brokerage has rehypothecated your assets, I would start by pulling up the online version of your account agreement at your bank/ securities brokerage, and do a document search (control + F) for the word hypothecate.
Personally, it appears to be time to get the heck out of Dodge. I am working on extracting the 8% or so of my assets that remain in paper mining shares into physical metal. Trust in the clearing system is evaporating, and once confidence is broken, the system will continue to rapidly implode. MF Global had over 140,000 clients whose assets were stolen. Do you think these 140,000 investors will be opening any new paper brokerage accounts in the near future? No, they will be holding cash and the smarter ones will be going to PHYZZ.
Ultimately, as Jim Sinclair has recommended, you need to be YOUR OWN CLEARING HOUSE AND YOUR OWN CENTRAL BANK. This means holding your own physical gold and silver in your own personal possession.
To answer your second question, we have had reports that the Donate button sometimes does not work with certain browsers when viewing the site using silverdoctors.com. It should work fine when viewing through www.silverdoctors.blogspot.com . If not, The Doc’s email address is email@example.com , the donate button simply takes you to the paypal donate page with firstname.lastname@example.org already populated. Here’s a direct link: https://www.paypal.com/us/cgi-
Or you can simply use https://www.paypal.com/ and type in email@example.com
Hope this helps, ultimately you need to take the necessary steps to protect yourself and your loved ones from the coming complete collapse of the system.
With Silver Eagle sales dropping off to a 4 year low, we thought it was time for another local coin shop open thread. Does your local dealer have plenty of gold and silver in stock, while PM bugs hold their dry powder in hopes of $25 silver and $1500 gold?
In the wake of the buzz this week regarding rehypothecation of client assets, which appears to be rampant throughout the financial industry, we’d also love to hear SD readers’ experiences of closing their brokerage, securities, or savings & loan accounts. If you decided to pull the plug on paper this week, we’d love to hear your story.
Godspeed in your journies to convert your remaining paper “assets” into PHYZZ.