Where Is Gold Going In This Market

[churchill]

i wonder how many smart and savvy investors who bought Gold in september wish they had kept their "fiat paper" instead of losing nearly 20% within three months.

and I wonder how many smart and savvy investors who will be left holding their "fiat paper" when the collapse occurs ( not " if " ) wish they had bought something more substantial with it now instead of being left with a pile of toilet paper ?

Yes I agree .. Now ...

[Naam]

i wonder how many smart and savvy investors who bought Gold in september wish they had kept their "fiat paper" instead of losing nearly 20% within three months.

and I wonder how many smart and savvy investors who will be left holding their "fiat paper" when the collapse occurs ( not " if " ) wish they had bought something more substantial with it now instead of being left with a pile of toilet paper ?

what i mentioned is a fact. what you mentioned is an assumption. but perhaps i am wrong and you are a sent prophet who knows exactly what the future holds. we all know that the LORD works in mysterious ways.

derogatory references as far as "fiat paper" is concerned are a not even worth a penny a dozen. ridiculous is that nearly everybody who uses these derogatory expressions would sacrifice one of their balls or sell their grandmother if in return they owned a mountain of that paper.

[cloudhopper]

i wonder how many smart and savvy investors who bought Gold in september wish they had kept their "fiat paper" instead of losing nearly 20% within three months.

and I wonder how many smart and savvy investors who will be left holding their "fiat paper" when the collapse occurs ( not " if " ) wish they had bought something more substantial with it now instead of being left with a pile of toilet paper ?

If the collapse is deflationary then both gold and fiat bank notes will be useful since vast numbers of people will have neither.

[Naam]

it's only paper... "it means nothing"

[Naam]

If the collapse is deflationary then both gold and fiat bank notes will be useful since vast numbers of people will have neither.

you have mentioned that several times CH but without any explanation. i don't see a valid reason why deflation would reduce the existing availability of cash?

Edited December 16, 2011 by Naam

[Naam]

Yes I agree .. Now ...

Churchill,

would you approve that in an hour or two i might use a pile of worthless fiat money (which means nothing) to buy gold?

[cloudhopper]

If the collapse is deflationary then both gold and fiat bank notes will be useful since vast numbers of people will have neither.

you have mentioned that several times CH but without any explanation. i don't see a valid reason why deflation would reduce the existing availability of cash?

In an environment of increasing unemployment, reduction in available credit and falling prices cash will be hoarded. Cash is the real underlying asset that has been 'rehypothecated' a huge number of times via fractional/zero reserve credit issuance etc. and there will be a huge demand for it when there is a credit collapse. Did you notice El-Erian describing how he called his wife to get cash from the ATM when Lehman collapsed in that Al Jazeera documentary? It really has to end this way IMO, either sooner with the existing currency in a deflationary burst or later with a new one after a hyperinflationary currency bubble/collapse.

[khaan]

it's only paper... "it means nothing"

or this .....

[Naam]

or this .....

why don't you put your money where (according to you) your àrse is and use your money as toilet paper? oh i see! you need some "fiat paper" to buy some food stuff for the weekend, fill up your car and buy some drinks? and that's why the bumspray comes into the picture

all hats, no cattle (they say in Texas)

[Naam]

If the collapse is deflationary then both gold and fiat bank notes will be useful since vast numbers of people will have neither.

you have mentioned that several times CH but without any explanation. i don't see a valid reason why deflation would reduce the existing availability of cash?

In an environment of increasing unemployment, reduction in available credit and falling prices cash will be hoarded. Cash is the real underlying asset that has been 'rehypothecated' a huge number of times via fractional/zero reserve credit issuance etc. and there will be a huge demand for it when there is a credit collapse. Did you notice El-Erian describing how he called his wife to get cash from the ATM when Lehman collapsed in that Al Jazeera documentary? It really has to end this way IMO, either sooner with the existing currency in a deflationary burst or later with a new one after a hyperinflationary currency bubble/collapse.

i only know that friday oct10, 2008 a global paralysis of all financial transactions was in the cards, avoided only by the length of a mosquito's pecker. but that was nearly a month after "Lehman". some bankers (not banks!) advised their clients already on tuesday oct07 to withdraw an "adequate" amount of cash because their could be "some temporary disruptions" of normal banking procedures. i also know a banker who lost his job because it was obvious that he gave that advice.

but concerning rehypothecation you have indeed a valid point. the question remains whether physical gold can substitute the lack of cash if your scenario becomes a fact.

[letitbe]

Despite ALL this waffle, twaddle, claptrap and <deleted>.....

With the recent slight drop in price, ARE WE BUYING OR SELLING?

Regards!

ef

buying all i can and have been doing so for last 3 years before that I told everyone gold is a useless bit of metal no income cant eat it etc but with huge crash thats coming I now convert all available cash into gold and silver and have liquidated 1/2 our stock holdings into gold silver For 35 years I was 100% into property and did veery well then after 2008/09 crash I went 70 property 25% shares 5% gold New targets now are around 60% property 20% shares and 20% gold and silver but I keep raising the Gold silver targets as it gets worse and worse so would not be surprised to find within 1-2 years as end is clear to all that will change to 50% property 20% stocks and 30% gold. Ive also diversified with 25% here 25% in USA 25% in UK and 25% in hong kong and singapore. I was 40% here until it became apparent Taksin and his crocks would be back and risk of real civil war is not minor. Were trying to get that reduced to just 10-15% here. A large proportion of our assets here are now in physical gold just in case which can be taken out on the plane easily should worst happen. In over 15+ years here after several coups and incredibly corrupt governments ive never seen anyone like Taksin who wants it all at any cost and has enough money and clever enough to turn Thailand into a Caddafi or Saddam type state and hopefully not a pol pot or Mugabwie. Relevance to gold better safe than sorry and hold what you have here in physical gold whatever happens to price.

[muchogra]

Gold is of course fiat money. Take your gold and walk into gold shops in many countries, it becomes fiat money. My physical gold is useless, useless in the sense that I will never sell them. They are mostly from 1969 and about - 96.5% and 99.99% - when we got married and our kid was born. Gold in Thailand then was around B400 per baht if my memory serves me right. In later years we also bought gold jewelry - quite a bit to ordinary folks . The last time we bought, I think the gold was around B7,000 per baht. Other form of gold I had owned was with the COMEX. Since I sold the paper gold last time I have never played. Why? I've got better option than 'gambling' in gold since the last juncture I exited. Beside, I need not to play the COMEX anymore, the Thai future exchange is liquid enough but not for silver yet.

As for currency, I have never played and will never be able to get good timing on as a hobby player since I was 20. But one thing I know is that if the USD becomes toilet paper I and all of you will be dead already. I also know that the only way for the Western economy at its present state to sustain is opening up more countries for their so-called free market concept. More countries get corrupted as time goes by. Thailand is now on its way!

For me, I don't care about currency appreciation or depreciation. In countries where I stay, I have parked enough in the local currency for expenses. The best I did some years ago was opening a RMB (CNY) account in HK. I have only withdrawn a little bit when going on for pleasure trips in China.

[muchogra]

TV is full of knowledgeable people in the financial field. They seem to read everything other people write under the sun. They also seem to know many avenues to invest and some do too even at the present juncture. For a hobby kind of player like me, I have learned, albeit a kind of late, to concentrate on a certain part instead of relying on the proverbial infallible concept of "diversifying". Looking at the world today, you are better off parking your money in the bank than diversifying. Wake up and use your knowledge to concentrate on a few rather than following the "experts" telling you to diversify to gain where in fact is lessening your loss.

[waza]

So the rule of thumb is dont buy more gold than you can carry.

[johnbits]

i wonder how many smart and savvy investors who bought Gold in september wish they had kept their "fiat paper" instead of losing nearly 20% within three months.

and I wonder how many smart and savvy investors who will be left holding their "fiat paper" when the collapse occurs ( not " if " ) wish they had bought something more substantial with it now instead of being left with a pile of toilet paper ?

If there is a real collapse like gold bugs seem to want, then guns will be the ultimate gold.

[johnbits]

The problem I have with physical goldis that it can't be easily bot and sold. If you buy gold and try tosell it back, there is an instant 20% or more loss just from the typical bid ask for coins.

The otherproblem is gold is so popular now with retail investors, it now goesup too much then will crash because it gets overbot.

Retailtends to tell people to buy physical gold, this reminds me of thestock touts that used to tell investors to get their certs (stockcertificates) to prevent the stock from being shorted. It is anatural function of supply and demand that if enough people takeownership of gold, the price will go up. The problem is that once youhave physical ownership, it becomes very difficult to sell gold. So Ibelieve the campaign to own physical gold originated with clevertraders as a way to boost the price.

Gold isn't any better an asset than dollars, stocks, copper, real estate, gold seems like the last bubble to be blown in the great search for that perfect asset. Stocks went up from 1980 to 2000, it was a great run. Same for real estate. I don't know if the top is in gold yet, but when the top is set, the price should decline by 50%.

[johnbits]

I believe he explains the root of the problem and the only way that there can be a meaningful recovery so clearly. I know you don't like watching YewTube

i promise to watch YewToob if you tell me that in this clip "meaningful recovery" is defined and explained. but i'm not interested in any additional explanation, besides the 739 explanations i have already read, of the "root of the problem".

waiting patiently...

if you're not interested in listening to his articulate explanation what he is saying basically is

there cannot be a recovery until we end the Ponzi scheme of the last 40 years and the banks should only be allowed to

lend money for the purposes of genuine production rather than only artificially fuelling increases

in asset prices. And for the 740 th time there cannot be a " meaningful recovery "

until they stop kicking the can down the road

So if I have to go in for a heart operation, is that what you mean by kicking the can down the road?

[cloudhopper]

The problem I have with physical goldis that it can't be easily bot and sold. If you buy gold and try tosell it back, there is an instant 20% or more loss just from the typical bid ask for coins.

You don't live here in Thailand then...

[johnbits]

MF global collapse

October 24, 2011

• Mike Procajlo ("Procajlo") speaks with Mike Bolan ("Bolan"), MF Global, Inc.'s ("MFGI") Assistant Controller. Bolan gives Procajlo a heads-up that a downgrade is forthcoming and that the earnings call for MF Global Holdings, Ltd. ("MFGH"), scheduled for Thursday, which is expected to report losses, is being moved up to Tuesday.
• Moody's downgrades MFGH and MFGI.

October 25, 2011

• Procajlo speaks with Bolan via phone; Bolan confirms there has not been a customer run on the bank since the downgrade news.
• CME senior management, including Kim Taylor ("Taylor"), Terry Duffy ("Duffy"), and Craig Donohue ("Donohue") are in Florida at the Global Financial Leadership Conference.
• Taylor is advised by an MFGI customer of rumors circulating about problems at MF Global ("MFG" with respect to information not given as specific to a particular entity) stemming from OTC activity.
• 11 a.m.: Taylor speaks with Laurie Ferber ("Ferber"), the General Counsel of MFGH, and Steve Monieson, another MFG employee, who tell Taylor that the rumor about problems at MFG stemming from OTC activity is not accurate. Procajlo speaks with Bolan about OTC questions.
• 11 a.m.: Taylor, Donohue, and Duffy seek and obtain Jon Corzine's phone number. They do not recall speaking with Corzine.
• 11:54 a.m.: Procajlo emails Grace Vogel at FINRA to see if FINRA has any additional concerns or is imposing any additional requirements in light of the downgrade news.
• 1:30 p.m.: Taylor speaks with Ferber again, who informs Taylor that MFG does not have any large losses attributable to OTC activity.
• 2 p.m.: CME Audit Department members, including Procajlo and Anne Bagan ("Bagan"), as well as CME Risk Department members, including Dale Michaels ("Michaels"), Amy McCormick ("McCormick") and Bryan McBlaine ("McBlaine"), speak with Bolan about MFGH's earnings release and Moody's downgrade. MFGH's net losses reported were $192M. The CME employees ask about MFGH's liquidity resources. Bolan confirms that any further downgrades will only trigger covenants related to interest rates. Bolan also confirms the firm is well-capitalized and states that MFGI has not seen customers looking to transfer.
• 7 p.m.: At this point, CME is taking the following steps to monitor the situation:
  • (1) keeping MFGI on daily financial reporting;
  • (2) monitoring MFGI's positions, exposure, and customer transfer/segregated funds balance changes for signs of a significant loss of customer confidence;
  • (3) drafting a "good standing" press release to have ready if necessary;
  • (4) establishing a process to ensure customers looking for information get answers to their questions;
  • (5) establishing an industry call process to ensure information flows to other affected clearing houses and regulators; and
  • (6) considering whether other financial measures are in order, in coordination with other regulatory bodies.

October 26, 2011

• 4 p.m.: CME arranges an industry call regarding the MFG situation.
• 6 p.m.: Taylor, Bagan, Tim Doar ("Doar") and possibly other CME personnel participate in a conference call with Ferber and Henri Steenkamp ("Steenkamp"), the CFO of MFGH. Ferber and Steenkamp give Taylor and Doar the sense that MFGI is actively engaged in conversations with their customers in an attempt to preserve the business.
• 7:45 p.m.: Taylor emails Ferber regarding CME helping "to ensure a good outcome for MF and your customers. You and your clients are important to us, and the clients' continued protection is paramount."

October 27, 2011

• MFGI and MFGH are downgraded to junk this day.
  Members of CME's Risk Department — Michaels and Suzanne Sprague ("Sprague") — as well as Scott Malcolm ("Malcolm") from CME's Audit Department — meet with MFGI in New York (planned earlier in the week) to do a risk review, the purpose of which is to talk with the firm about their liquidity and assess the situation. At the time, CME is starting to have concerns that MFGI's liquidity is drying up.
  Michaels, Sprague, and Malcolm meet with a number of individuals from MFGI, including Stephen Hood ("Hood"), MFGI's Market Risk Manager, Dennis Klejna, MFGI's Compliance Officer, the CRO Michael Stockman, and the CFO (Steenkamp). Edith O'Brien ("O'Brien"), MFGI's treasurer, may have been on the phone.
• At the conclusion of the meeting, CME- continued to have concerns regarding MFGI's liquidity and the ability of the company to continue normal operations without a sale of all or part of the business, notwithstanding MFGI's assurances.
• 10 a.m.: Procajlo emails Bolan, who is at MFGI in New York, for a copy of the liquidity analysis being prepared by MFGI's broker-dealer side. Bolan responds saying the analysis will be ready later that day. Procajlo never receives the analysis.
• 1 p.m.: CME decides to send members of the Audit Department out to MFGI in Chicago. Silmar Ramirez ("Ramirez") and Jason Guch ("Guch") arrive at MFGI and request documents to tie out the Daily Statement of Segregation Requirement and Funds in Segregation for Customers Trading on U.S. Commodity Exchanges ("seg. statement") for the close of business as of 10/26. They start working on tying out the 10/26 seg. statement, which shows excess segregated funds of $116,164,132. In addition to tying out the 10/26 seg. statement, another purpose of their presence is to have CME people at MFGI to assist in obtaining information quickly if necessary.
  The CFTC — Melissa Hendrickson ("Hendrickson"), Lisa Marlow ("Marlow"), and Tamara Durvin (phonetic) ("Durvin") — is already present on site at MFGI when CME arrives.
  CME begins making contingency plans for transferring MFG customer accounts to other FCMs.
• 2 p.m.: Individuals from MFGH and CME communicate via email to set up a conference call to discuss a number of items including: (1) MFGI's liquidity; (2) repo counterparties update; (3) any issues with transfers of customers to other FCMs; (4) margin calls resulting from downgrades; (5) amount of segregated assets not currently pledged to a DCO; (6) contingency plans.
• 2:50 pm: Taylor communicates with Ananda Radhalcrishnan ("Radhakrishnan"), Director, Division of Clearing and Risk, at the CFTC regarding an FCM that has the capacity to take on some portion of MF Global's business. CME President Phupinder Gill ("Gill") also communicates with Radhakrishnan via email throughout the day.
• 3:53 pm: Procaljo emails a letter to Christine Serwinski ("Serwinski"), the CFO of MFGI, Ferber and Bolan stating "Effective immediately, any equity withdrawals from MF Global Inc. must be approved in writing by CME Group's Audit Department."
• 4 p.m.: CME arranges an industry call regarding the MF Global situation.
• 5:30 p.m.: Ramirez and Guch leave MFGI for the night, having completed work on documents and information supplied by MFGI as of that time. Evening: Procajlo, Taylor, Doar, Gill and others participate in a call with Ferber and Steenkamp, who are in New York. Ferber and Steenkamp provide assurances that MFGI has appropriate liquidity and also that MFGI is taking steps to reduce its securities inventory (not on the FCM side).
  Additionally, CME encourages MFG to pursue a strategic solution for the company. Ferber provides comfort that MFG is aggressively pursuing a transaction.

October 28, 2011

• 7:30 a.m.: Ramirez and Guch arrive at MFGI and continue trying to tie out the 10/26 seg. statement. They still have not received all of the documents they requested from MFGI and that they need to complete their tie out. They are also working on tying out the Daily Statement of Secured Amounts and Funds Held in Separate Accounts for Foreign Futures and Foreign Options Customers Pursuant to Commission Regulation 30.7 ("secured statement"). CME and CFTC are in communication throughout the day about MFGI's 30.7 secured computations and MFGI topping up the 30.7 secured assets. The CFTC — Hendrickson, Marlow, and Durvin — is again present on site at MFGI in Chicago and appears to also be working on tying out MFGI's seg. statement.
  Morning: Duffy receives a call from Radhakrishnan and Gensler. Radhalcrishnan and Gensler tell Duffy that the CFTC has concerns about MFG and ask him about CME's thoughts with respect to MFG. Duffy tells them that he does not have the information they seek, and suggests they speak with CME Clearing House personnel. Radhakrishnan speaks with Gill later that day.
  Procajlo and senior management at CME have another call with MFGH, including Steenkamp and Ferber, who assure CME that they have drawn down all or substantially all of their line of credit — which has a limit of approximately $1.2 billion — but are not yet using the money.
  They confirm that MFGH believes finding a buyer is the best option at this point.
• 3:54 p.m.: MFGI submits its 10/27 seg. statement showing excess segregated funds of $200,178,912.
• 4 p.m.: CME arranges an industry call regarding the MF Global situation.
• 6 p.m.: Ramirez and Guch leave MFGI, expecting to come back Monday and finish tying out the 10/26 seg. statement. At this time, Ramirez and Guch do not yet have all of the documents necessary to tie out the 10/26 seg. statement. Based on their review of the documents they have received, they have no reason to believe that the segregated account is out of compliance as of 10/26 close of business.
• 8:25 p.m.: Taylor emails Radhakrishnan at the CFTC to relay information she received from Ferber. MFGI has a "very motivated buyer" and needs to obtain approvals from the SEC, F1NRA, and CFTC.

October 29, 2011

• Procajlo is in communication with Hendrickson of the CFTC via phone about a potential sale of MFGI's FCM business.
• 2:30 p.m.: Taylor speaks with Radhakrishnan regarding a potential asset sale of MFGI's assets. The CFTC is concerned with a transfer because of the CFTC's rules on bulk transfers, though note that they will waive the rule if an asset sale works out.
• 3:40 p.m.: Taylor forwards to Radhalcrishnan a Bloomberg News report stating that MFGH's Board of Directors will be meeting later that day regarding options to sell the company.
• 4:30 p.m.: Taylor speaks with Radhakrishnan, who states that the SEC told him the FSA in the UK may be starting to panic. Radhakrishnan says he is going to call the FSA to share insights into his thinking and learn FSA's thinking. Taylor and Radhakrishnan also discuss additional details regarding a potential sale.
• 7:50 p.m.: Radhakrishnan forwards to Taylor an email chain between Ferber and Radhakrishnan regarding a meeting of MFGH's Board.
• 11 p.m.: Interactive Brokers ("IB") is the leading candidate, looking to buy either the entire business, or possibly just the FCM.

October 30, 2011

• 8:30 a.m.: Taylor speaks with Paul Brody ("Brody") at IB regarding details of the potential transaction.
• 8:45 a.m.: CME is making contingency plans in case the proposed sale falls through.
• 12:30 p.m.: Taylor receives email correspondence from Radhakrishnan indicating that the CFTC is concerned about having a contingency plan for MFGI if the IB deal falls though.
• 1 p.m.: Conference call between CME and IB regarding operations issues in the event the sale is completed.
• Approx. 1 p.m. - 2 p.m..: Taylor participates in a conference call with the CFTC, SEC, and MF Global.
• Approx. 2 p.m.: Taylor, Procajlo and others arrive at CME offices to work on matters that need to be addressed to facilitate the MFGI transaction.
• Approx. 2 p.m.: Hendrickson, who is present at MFGI in Chicago, calls Procajlo and tells him that she has seen a draft of the 10/28 seg. statement and it shows a deficiency in the segregated funds.
• After 2 p.m.: Ramirez and Guch are sent to MFGI's Chicago office. Malcolm is sent to MFGrs New York office.
• 4 p.m.: CME arranges an industry call regarding the MFG situation.
• 4:18 p.m.: Bolan responds to an email from Procajlo, in which Procajlo had indicated that Malcolm is on his way to MFGI's office in New York, by stating that MFGI has been working with Hendrickson at the CFTC and that he will update Procajlo later. Late afternoon or evening: Taylor briefs the CME Emergency Financial Committee concerning MFGI's status. The CME Emergency Financial Committee is composed of Donohue, Duffy, Taylor, Gill, and CME Clearing House Risk Committee Co-Chairs James Oliff and Howard Siegel.
  6 p.m.: MFGI forwards to CME a draft press release announcing deal with IB.
• Approx. 6 p.m. and into the evening: Procajlo and Taylor engage in a series of phone calls with Ferber, Bolan and/or O'Brien. Initially, Ferber and Bolan explain that there is an apparent deficiency, which they believe is an accounting error. At some point, MFG representatives state that they believe they found the error and it is on the liability side. Procajlo calls Ramirez and Ouch, who are at MFGI's offices in Chicago, to confirm that the accounting error has been identified. Ramirez and Ouch inform Procajlo that MFGI has not found the error.
  Procajlo asks Bolan to explain what the error is in an in-person meeting with Malcolm (CME) and Jerry Nudge (CFTC), who are in MFGI's New York office.
• 30 minutes or so later, Malcolm calls Procajlo and tells him that Bolan says the accounting error is based on a $450M mis-posting. The error Bolan described to Malcolm is not on the liability side. Procajlo again calls Ramirez and Guch to confirm that the accounting error has been identified. Ramirez and Guch again inform Procajlo that they are with MFGI individuals working on the reconciliation, and they are not aware of anyone having found the error.
  Taylor and others at CME have calls with O'Brien regarding the potential error.
• Approx. 6 p.m. - 7 p.m.: O'Brien, MFGI's treasurer, calls a meeting with the CFTC, CME, and MFGI employees present at MFGI's Chicago office and confirms that MFGI has a potentially huge deficiency in the segregated account due to what MFGI states is an unidentified accounting mistake, such as a mis-booking. Later that evening, while at MFGI, CFTC's Marlow gives Guch and Ramirez a disc containing documents the CFTC received from MFGI supporting the 10/26 seg. statement. At this time, however, Ramirez and Guch are assisting with trying to locate the accounting error and therefore do not look at the documents to tie out the rest of the 10/26 seg. statement at this time.
• 8:30 p.m.: Radhakrishnan talks to Gill.
• 8:40 p.m.: Procajlo sends an email to Bagan and Debbie Kokal ("Kokal") stating that MFGI's "explanation of the $900 million shortfall proved to be unsubstantiated."
• 8 p.m. - 9 p.m.: Procajlo arrives at MFGI. He speaks to CFTC's Hendrickson and gets a status update.
• Christine Serwinski arrives at MFGI.
• 9 p.m. - 10 p.m.: Procajlo speaks with Serwinski and O'Brien, who repeat the explanation that the deficiency must be an accounting error and make statements to the effect that it is too big to be anything else.
• 10 p.m.: Procajlo meets with Serwinski and O'Brien again and asks if MFGI has tried to locate funds MFGI can transfer into segregation first thing in the morning as a contingency in the event that they cannot locate the accounting error.
• 10:50 p.m.: CME requests via email that "MF not add any further exposure to your house account." CME does not request MFGI to "liquidate the positions that you have in place, but that you not add to them at this point."
• 11:30 p.m.: The CFTC leaves MFGI's Chicago offices.
• 11:40 p.m.: Procajlo emails Bagan and Kokal, stating that he is now at MFGI's offices and the shortfall, of approximately $950 million in segregation, is still a "huge issue." No one has found the error, but the belief is still that there is an error. Serwinski is looking into coming up with additional funds to transfer into segregation as a contingency in the event that they cannot locate the accounting error.
• Procajlo also states that he understands IB is now aware of the potential shortfall.

October 31, 2011

• 12 a.m.: Ferber emails Taylor, stating only: "we may have it."
• Approx. 12:30 a.m.: At this time: (1) The IB deal is ready to go — apparently including regulatory signoffs; (2) there is still a $900M apparent segregation shortfall and MFGI says it is an accounting error; (3) the transfer cannot happen until it is clear there is no segregation shortfall; (4) MFGI is starting to identify sources of funds available to top up segregation — and the latest report from MFGI is that they may have sufficient funds; (5) IB and MFGI have spoken to CME and both seem aligned on the importance of the transfer occurring promptly, and state they are open to the suggestion of having MFGI top up segregation and TB making corresponding adjustments to the deal economics.
• Approx. 1 a.m. —2 a.m.: CME learns the deficiency is real: Serwinski and O'Brien call Procajlo into Serwinski's office and tell him there is an actual shortfall; about $700M was moved to the broker-dealer side of the business to meet liquidity issues in a series of transactions on Thursday, Friday, and possibly Wednesday. Additionally, Procajlo is told there was a loan of $175M of segregated funds to MF UK.
• CME stops its efforts to look for the accounting error. CME understands that MFGI is attempting to find available funds and get Fedwire to open early so they can start transferring money into the segregated account.
• 2 a.m.: Taylor emails the FSA and CFTC to let them know that IB has gone home to get some sleep, but may still be interested in the transaction.
• 2 a.m.: Procajlo communicates via email with Thelma Diaz from the CFTC Washington D.C. office, who is on a regulatory call at the time, and discusses whether Fedwire can open early so MFGI can start transferring funds into segregation.
• 3 a.m.: Ramirez and Guch leave MFGI for the night. Procajlo stays until 8 p.m. the following day. During the night, Procaljo also participated in a phone call with senior MFG employees wherein one employee indicated that Corzine knew about loans that had been made from the customer segregated accounts. CME Group has provided information about this call and related conversations, and the names of the individuals who participated, to the Department of Justice and the CFTC who are investigating these matters.
• 4 a.m.: Taylor and Gill participate in a call with MF Global and the regulators.
• 4:37 a.m.: Procajlo emails others at CME with a list of potential assets MFGI has identified that it could move into segregation.
• The deal with IB to buy MFGI collapses.
• 6:45 a.m.: Taylor emails CME senior management to inform them that the deal has collapsed, the shortfall is real, and there will likely be a bankruptcy.
• 7:30 a.m.: Procajlo, Ramirez and Guch are on site at MFGI while MFGI attempts to make transfers of funds back into segregation. The CFTC is also present.
• 8:30 a.m.: Taylor and Radhalcrishnan communicate via email regarding MFGI bulk transfers.
• 9 a.m.: MFGH files for bankruptcy.
• 10 a.m.: Taylor and Radhakrishnan communicate via email regarding the amount of shortfall.
• 10:30 a.m.: CME's Emergency Financial Committee orders that all trading of MFGI and its customers be for liquidation only. Taylor's assistant emails a letter from Taylor to Dennis Klejna ("Klejna"), Assistant General Counsel of MFGI, stating the Committee's order. The letter further states that CME will no longer permit floor trading to be guaranteed by MF Global, and that CME will process account transfers at the Friday settlement price but that customers will need to re-margin transferred positions. Moody's further downgrades MFGI.
  S&P and Fitch downgrade MFGH to default following MFGH's filing for bankruptcy protection.
• 11 a.m.: A SEPA proceeding is filed for the liquidation of MFGI and a SIPC Trustee is appointed.
• 12:15 p.m.: CME's Emergency Financial Committee orders that MFGI liquidate its house proprietary positions. Taylor's assistant subsequently emails a letter to this effect to Klejna and Serwinski. The Committee also authorizes CME to liquidate securities held as house and customer collateral under the control of the Clearing House to cash. Throughout the day, Ramirez and CME staff— Guch, Jared Jarvis ("Jarvis"), Procajlo, and Mudassir Arby ("Arby") — attempt to tie out the 10/28 seg. statement.
• 7 p.m.: CME's Emergency Financial Committee approves a rule change releasing members qualified by MFGI, such that those members could become qualified and guaranteed by another clearing member in order to resume trading.
• 7:46 p.m.: CME receives the amended MFGI seg. statement for 10/27 showing a segregation deficiency of $213,062,967.
• 7:55 p.m.: CME's Emergency Financial Committee (i) authorizes the Clearing House to conduct an auction of MFGI's house positions in order to transfer the positions to another clearing member, and (ii) authorizes the Clearing House to accept certain deliveries from MFGI customers through Friday November 4 in order to minimize disruption to the markets.
• 8 p.m.: CME notifies MFGI that it is suspended as a clearing member on all CME Group exchanges. Taylor's assistant subsequently emails a letter from Taylor to Klejna and Serwinski confirming the suspension.
• 8:06 p.m.: CME receives MFGI's seg. statement for 10/28 showing a segregation deficiency of $891,465,650.

[johnbits]

The problem I have with physical goldis that it can't be easily bot and sold. If you buy gold and try tosell it back, there is an instant 20% or more loss just from the typical bid ask for coins.

You don't live here in Thailand then...

No I don't live there, maybe move there next year. I read many bargirls have gold they sell when they need money, I know it is popular to own, but i expected many own jewelry, not bars.

But I never checked into how to actually buy and sell gold in Thailand. How is it typically done?

I would buy and sell futures, much easier for me no matter where i live.

[muchogra]

I have many 1-ounce gold coins of different kinds. I bought them mostly in HK and in the States. That time and for a long time, gold was trading around USD360 an ounce. No internet commodity and future trading then, only by phone calls. Quite a few of the 1-ounce coins my wife had them framed in gold and decorated with diamonds, rubies, and sapphires about 20 years ago. Some were done here and some in HK. Oh yeah these decorated gold coin pendants are beautiful to look at but it was a complete waste of money. Who are you going to sell them to? I hate selling and negotiating anyway. Bare gold coins are alright, it has a base value plus a premium.

In Feb, I asked my son to buy a bunch of uncirculated silver eagles in the States and had him carried 10 pieces to me in Thailand when he came visit us that month. The spot silver price in Feb then was around USD18.5 and I paid USD21 a piece. In April, the spot price went up to around USD50. What an increase! Oh, I did not sell these physical silver. They look beautiful. Now I'm left with only 5 in Thailand. I gave 5 away as gift to some friends and relatives - a great gift item I have since found. They look good to me and sorry for the picture quality.

[Naam]

But I never checked into how to actually buy and sell gold in Thailand. How is it typically done?

you walk into one of the thousands of goldshops and either buy or sell. spread is a miniscule 200 Baht (~£5 / $6.50 / 0.85%) per ounce.

as simple as that. "it can't be easily bot and sold" does not apply!

[johnbits]

But I never checked into how to actually buy and sell gold in Thailand. How is it typically done?

you walk into one of the thousands of goldshops and either buy or sell. spread is a miniscule 200 Baht (~£5 / $6.50 / 0.85%) per ounce.

as simple as that. "it can't be easily bot and sold" does not apply!

OK thanks. I wonder how they check to make sure the gold has not been adulterated. Metails like Tungsten are similar in density (19.25g/cm3) as gold. In comparison the density of pure 24k gold is within 0.26% of tungsten. So plating tungsten with gold has to a popular scam in places.

One ofthe reasons I have never dealt in gold, gems, paintings etc is that I felt it took a fair amount of expertise to be able to avoid eitherfakes or to evaluate the correct price. Then their is the issue of having to protect the asset from crooks that might steal it. I focus on markets where Iunderstand the tricks of that trade. (Tricks meaning scams, overunder pricing, crooked CEO, etc) Interesting enough, scam companiesmake for a great long trade as they typically go up faster than realcompanies. I have no hesitation in trading a company that I think is a scam, just trade it a different way.I know a lot of internet blogs talkabout stealing loosely, meaning the Gov stealing our money viainflation, taxes, or stocks like MF where your money goes to moneyheaven. But I like to keep the word steal as a traditional usage, anduse fraud for other items.

I was surprised at customes of MF global losing money in a cash account, stock trading accounts are insured up to 500,000, but future trading account I don't think they have a similar insurance program. It sure must have shocked a lot of their customers. Over 500,000, you just have to pick the people you do buiness with, but that sort of problem is very rare. Most of the crooks like madoff are pretty obvious, just avoid giving your money to someone else to control.

Anyway, I wonder where gold will bottom and if it will take off again soon to new highs? No idea, I play these things very short term.

Edited December 17, 2011 by johnbits

[fletchsmile]

you walk into one of the thousands of goldshops and either buy or sell. spread is a miniscule 200 Baht (~£5 / $6.50 / 0.85%) per ounce.

as simple as that.

If it's jewellery though and you bought in another shop, they will widen the spread further, so often pays to take it back to the one of thousands of shops you bought from in the first place

[fletchsmile]

you walk into one of the thousands of goldshops and either buy or sell. spread is a miniscule 200 Baht (~£5 / $6.50 / 0.85%) per ounce.

as simple as that.

If it's jewellery though and you bought in another shop, they will widen the spread further, so often pays to take it back to the one of thousands of shops you bought from in the first place

[churchill]

Trustee to Seize and Liquidate Even the Stored Customer Gold and Silver Bullion From MF Global

http://jessescrossroadscafe.blogspot.com/2011/12/attempt-to-seize-and-liquidate-customer.html

[Naam]

you walk into one of the thousands of goldshops and either buy or sell. spread is a miniscule 200 Baht (~£5 / $6.50 / 0.85%) per ounce.

as simple as that.

If it's jewellery though and you bought in another shop, they will widen the spread further, so often pays to take it back to the one of thousands of shops you bought from in the first place

i don't think any gold investor in his right mind will buy jewelry instead of bullion which shows clearly purity and weight.

[Naam]

I wonder how they check to make sure the gold has not been adulterated. Metails like Tungsten are similar in density (19.25g/cm3) as gold. In comparison the density of pure 24k gold is within 0.26% of tungsten. So plating tungsten with gold has to a popular scam in places.

a prudent gold investor always hand carries a little x-ray machine and a tungsten sniffing dog...

[midas]

Trustee to Seize and Liquidate Even the Stored Customer Gold and Silver Bullion From MF Global

http://jessescrossroadscafe.blogspot.com/2011/12/attempt-to-seize-and-liquidate-customer.html

Ann Barnhardt does an excellent job articulating how the futures market works and how its continued operation is in serious trouble. Understand the problem is simply one of confidence, specifically the lack thereof. Decoupling of the gold futures and the cash market

http://matrixsentry.wordpress.com/2011/12/16/ann-barnhardt-explaining-decoupling/

[midas]

Trustee to Seize and Liquidate Even the Stored Customer Gold and Silver Bullion From MF Global

http://jessescrossroadscafe.blogspot.com/2011/12/attempt-to-seize-and-liquidate-customer.html

from the article....

"

How more plainly can it be said? The US financial system as it now stands cannot be trusted to observe even the most basic property rights as it continues to unravel from a long standing culture of fraud."

so we have now had " fraudclosure " in the real estate market and now we have this which some brokers are saying will destroy trust in the futures market.

Good job the dollars bills ask people to have trust in God.... but then does that mean you need to trust Gods workers like Lloyd Blankfein ?