Fortune

CME to change Comex gold, silver settlement procedure

 

Monday, February 22, 2010

 

 

NEW YORK -- CME Group Inc. will switch the procedure for settling Comex gold and silver futures to a method based on average price and volume rather than a specific price point, the exchange said Monday.

 

As of Friday, staff will settle the most-actively traded month of each contract at the volume-weighted average price -- which skews toward more heavily traded lots -- of outright trades on the CME Globex electronic trading platform. This is a change from the current method of settlement, where the lead contract month for gold and silver are settled to the midpoint of Globex trades during the settlement time range.

 

The settlement time periods are 1:29 p.m. ET-1:30 p.m. for gold and 1:24 p.m.-1:25 p.m. for silver.

 

If there are no outright trades during the settlement periods, the settlement price will be the best bid or offer in the expiring contract at the close of the market that is closest to the last traded price.

 

If there is no bid or offer in the expiring contract at that time, the settlement price will be implied from the bid/offer in the active spread at the close of the market, at the price that is closest to the last outright trade price in the expiring contract.

 

Contract months other than the active month will be settled by staff in conjunction with market participants based on spread relationships on CME Globex and the trading floor.

 

The greatest weight will be given to spreads traded in larger volumes later in the trading day, either on the trading floor or on CME Globex. In the absence of trading activity, spread bids/offers actively represented either on the floor or Globex will determine the settlements.

 

If there is insufficient activity to make the calculations, staff may rely on earlier data or other available market information to determine an appropriate settlement price.

 

If staff determine that anomalous activity yields results that are not representative of the fair value of the contract, staff may determine an alternative settlement price.

 

The changes will likely have little, if any impact on the market.

 

"It certainly doesn't seem like any big shake for speculators or users of the market," although it may have some bearing for commercial or other participants who take delivery of the metals, said Frank Lesh, broker and futures analyst with FuturePath Trading. Most participants do not take delivery from futures contracts. Rather they tend to roll positions they want to hold into farther forward contracts.

http://gata.org/node/8387

Can someone translate this latest rule change into English? I really can't get my head around this...

Just goes to show unfortunately that 'busting' the Comex is nothing but a pipe-dream when they change the rules mid-stream. And they use this so-called exchange when quoting the price of gold and silver. What a scam the Comex is. Still, I'm neither shocked nor surprised.

Slap her

Wow, you're such a charmer. Tell me your secret with the ladies.

Does any knowledgable folks out there know when the option expiry date is? I believe it's sometime this week. Lots of options at $1100 so the 'dark side' are going to go all out to smack it down below this number.

EDIT: Whoops just goes to show how much I'm behind the curve....GIM board gives the low-down:

Originally Posted by 'stateofjefferson'

What a week in gold. The strength in the face of lots of difficult news suggests to me that we are almost leaving the starting gate for a new run. However there are according to GATA today 500 option contracts at $1,100 due to expire on Tuesday and today we saw the stocks down a bit. My guess is that Monday the price gets pounded down to 1098 or so and next week will end up with a higher close than this week.

When oh when is silver going to step up to the plate?

Still holding my physical I bought circua 8 quid, by the way. My next pile of cash is going into gold not silver.

Slightly off-topic. I wonder if anyone picked this up at the end of last year....

Mark Pittman, Reporter Who Challenged Fed Secrecy, Dies at 52

 

Nov. 30 (Bloomberg) -- Mark Pittman, the award-winning reporter whose fight to make the Federal Reserve more accountable to taxpayers led Bloomberg News to sue the central bank and win, died Nov. 25 in Yonkers, New York. He was 52.

 

Pittman suffered from heart-related illnesses. The precise cause of death wasn’t known, said his friend William Karesh, vice president of the Global Health Program at the Bronx, New York-based Wildlife Conservation Society.

 

“He was one of the great financial journalists of our time,” said Joseph Stiglitz, a professor at Columbia University in New York and the winner of the 2001 Nobel Prize for economics. “His death is shocking.”

Read the rest on Bloomberg http://www.bloomberg.com/apps/news?pid=206....8yo&pos=12

The comments on Zero Hedge are very interesting to say the least:

Mark Pittman, the Loeb Award-winning Bloomberg journalist, a personal friend, a legendary financial reporter and the first person to sue the Fed (in conjunction with Bloomberg News) and win, passed away on Wednesday. He was 52. Our thoughts are with his family. Zero Hedge staffers met with Mark days before his death at which point we discovered he was working on a major financial expose. We would be humbled to pick up the torch and bring his last opus to closure.

 

We are sure Bloomberg News will keep Mark's spirit alive, and will continue his lifelong pursuit of eliminating secrecy and opacity, and bringing truth and justice to all corners of high finance.

 

Mark shall be missed.

A response from his daughter can be found here: http://www.zerohedge.com/article/mark-pitt...#comment-144919

I think the bottom has gone and past. DOW just broken out of the falling wedge. 'Risk' is back in vogue, so expect gold to retest the previous highs. I think resistance is at 1100, 1160, 1180, 1200, and 1224. With support at 1040 and 1055. In sterling, resistance is at 700 and 724. Major support at 680 and 666 (!).

It's a bit simplistic, but I think of gold as having a peak season floor now of around $1040 - with $1080 the first major support level above this. I can see perhaps a journey back under $1000 during this summer doldrums but not in peak Sep-Mar season.

 

I prefer holding silver to gold early in this peak season (better upside potential from Sep-Dec) but like to hold gold more than silver late in the season ('The Ides of March') and during the Dreaded Doldrums of the summer.

 

I have no idea or feel for the floor price in silver either now or in doldrums season, although that may just be me.

 

EDIT - used £ symbol instead of $

Its a credit to GEI that, these days, we seem to intuitively feel what the markets are going to do next. The online forum education was definately worth it, even if we could be wrong.

I couldn't have said this about myself a year ago.....

Maybe its not so much an 'either/or'....

It is undoubtedly true that many regular folk are cash poor and are attempting to pay back as much of their debt as much as possible. On the other hand the PTB are flooding the world with credit (cash) in order to counteract the deflationary beast. If they get the timing just right then they just might be able to pull a rabbit from a hat. Knowing human nature, the chances of this is perhaps less than 2%.

However what seems to make this situation really different this time is that this is a war of exponential losses (derivatives) versus exponential credit (money printing) growth. I don't think there are any historical parallels to the elemental forces currently in battle. So who knows how this is going to end - just prepare for the fact that both deflationists and inflationists could be right. Well that's the way I'm playing it.

Crazy times we live in.

By any chance, you are not Silver Sammy, or are you? Because in that case, I would really have to load the boat.

Nah no relation, just call me unlucky

Of course if this does occur I'm going to load up my boat as well. The only problem is will there be any physical to buy at that price? These comex shenanigans will ensure that the dealer and refineries will be cleaned out should this transpire.

I'm going to stick my neck out here:

1. $1033 gold will hold for now and we will see another test of the all-time high. Armstrong's key turning point - April 16 - will see the start of the PM decline; possibly visiting Roman's three figures in dollars and 500's in pounds along the way. Silver the dog will follow in sympathy. Wouldn't surprise me to see the 12's again. Silver bugs you have been warned.

2. Possible testing of the crash lows in the DOW in May (around the 11th). Gold bug newbies will jump over the cliff and Jim Sinclair will be swamped (no pun intended) with hate mail.

3. Miserable gold and silver consolidation all spring and summer until the epic rally begins in the fall (Oct).

You can nail that to a mast.

In fact, I would like to suspend DrBubb for a while because he never uses the quote tags.

Now you've gone and done it

Most of the Fort Knox hoard is in the secret underground vaults of the Rothschilds and Rockerfellers. The same goes for most of the other central banks gold supplies 'swapped' into the market over the years. At least, that what I heard.

She goes up, she goes down, she goes where the wind blows. Where she stops, noboby knows.

Did I get that right? I've forgotten the exact lines.

The fact that silver held on to $17 pretty well says to me that there is more of this leg yet to come. Silver is usually the whipping boy for any perceived deflation/deleveraging and it stood up to those forces quite bravely. Looks like Pixel8r's on the money with $1300+ by March/April - concurs with Armstrong turn date for gold (April 16). The ugly correction will follow after that.

Gold and silver are holding up surprisingly well. This is a fakedown if they can't beat silver below 17. The real financial apocalypse begins on April 16 (Armstrong's turn date) - gold and silver will test the major lows from that point on. I think. But what do I know?

I think silver will tell us what will happen next:

If it drops through the trendline at 17, I think might be about to experience 'deleveraging part 2'. The DOW is already starting to say PANIC!

And I thought the stocks would crash in April....

Interestingly enough, Armstrong points to 2015 being the terminal peak year for the DOW: price target is 30,000. Could we see Gold at $30,000 as well?

Combining Alf Field's EW counts with Martin Armstrong's timing:

Armstrong sees consolidation beginning from March / April, lasting until October 2010. The monster rally we have all been salivating for could begin from October 2010 all the way through to June 2011. That price target is $3500 or 2200 GBP. The bull will end in 2016, a year after the implementation of a new global monetary system (NWO?) in 2015. The real action begins now. Better hold on.

Sounds great, Fortune! I only asked because I am in japan in a similar situation to yourself by the sounds of things. I've got plenty of wood but am looking for paddies at the moment. Maybe we should start a collective not so local cohesive community.

 

Are paddy fields there sold in set measurements/yield like here? A standard field will yield you about 300kg's which is enough to feed a standard family for a year. You use Japonica rice I suppose-the short grained sticky stuff? I wonder how costs compare for rice fields. A tsubo here (3.3msquare will cost about 3500-5000 yen). Or it is now easy to rent a field or two. A good option maybe?

 

Anyway good luck out there! It's nice to have a neighbour nearby

Thanks Tsubo is the equivalent of pyeong which is the same measurement (3.3m square). Land prices vary wildly in Korea: if you want anything near a big city (especially Seoul, Busan, Daegu) then expect to pay around the same price (5000 yen = 62000 won). However where I am is dirt cheap which is about 10000 won per pyeong (less than 1000 yen) mainly because its location (almost in the centre of the country) and demographics (huge retired population, one of the highest in the country) - so basically its no fun for young people. Just like Japan, Korea is facing its own demographics time bomb especially in the countryside. From my perspective its great: there is no 'hoodie' problem, people are generally polite and civilised. Its the kind of life where you don't want to be bothered by anyone.

I'm not sure how renting land works in Korea, but I'm sure its a fairly straightforward process. The one thing I would say is if you are not married to a local or possess a Korean passport it is an almighty amount of hassle to own or do anything in Korea. In fact I would say don't even bother. I have a feeling its probably the same in Japan. Homogenous culture and all that.

In terms of rice yield, I haven't reached the stage where I can say how much yield you could get from a single patch. I grew some last year and the yield was less that 60% - which is pretty crap. I'm still learning though...

Well anyways good luck with your efforts!

No euphemism - its the real deal. I'm living out in a province about 3.5 hours from Seoul (in the middle of Korea) with the missus. Even though I already live on a small patch of land (about 2 acres) I wanted to buy some more to be completely off grid. Not quite reached that goal yet but I'm getting there...

Since the climate and the environment supports rice farming, that was where I wanted to focus on. Just having a patch of field is not enough to grow a varierty of crops (for instance, rice paddies need an area with a constant supply of water) nor is it enough to be energy independent. I'm still looking for forestry to accumulate wood burning trees because firewood can be sustainable (if you cut them the right way); plus other energy alternatives still seen too pricey to me.

As I keep repeating over and over again, shiney lumps of metal is not enough: you also need a Plan B and this is my Plan B. Not that I would recommend living in Korea because the cultural difference can be overwhelming at the best of times (and I have lived here for years). Just as long as most folks have their own idea of independence from the 'system' then that is good for me. After all, isn't buying gold and silver sticking two finger up to the governments and powers-that-be of this world? I'd like to think so.

Well I have gone and done it - I've sold some silver. I just couldn't face selling some gold so I went for the other option. Sure, its probably too early to sell but this offer is just perfect for my circumstances. Actually most of this silver came from a ratio swap I did in december 08 so was very profitable and all good. C'est la vie.

I've just had a great offer proposed to me. It involves some agricultural land (including rice paddies). However I'm in a bind as to whether I sell some Gold or Silver. I have a 75% position in gold with the rest in silver. So any useful advice? Which one should I sell?

http://www.reuters.com/article/idAFN1220552820100112?rpc=44

 

US gold ends 2 pct lower on China's reserve hike

 

Tue Jan 12, 2010 3:34pm EST NEW YORK, Jan 12 (Reuters) - U.S. gold futures ended below

$1,130 an ounce on Tuesday, losing 2 percent as the news of

China's tightening monetary policy curbed economic optimism,

triggering heavy technical selling.

 

I would like to see a real divergence of the de facto and de jure Gold markets but whilst the ETF's are still in play Gold is cheap for any body looking to accumulate physical.

I wonder what deal they have cut behind the scenes now? Only newbies are likely to get motion sickness, though.

no worries on the edit thingy then, let's move on...

 

some words from swampy for you RH:

 

'Obviously nobody wants or needs to know RH's net worth - we don't need to know if he is playing with a few WON converted into toilet paper DOLLARS or YEN or POUNDS, or a few MILLION name your pieces of TP (like Bubb) - what RH owes the forum is an explanation for all his miraculous trades - after all, RH has just declared that he has only ever made one trade in his life that has turned sour (GOM's words: since edited & appears that RH meant only one silver trade had lost him money) - so all RH has to do is document all his currency and metals trades since he opened his GoldMoney account - after all, everything is on record there so it is not quite telling the truth when RH says he can't remember exactly what his trades were, average buy in price etc etc etc, currency swaps etc etc etc - it obviously is all in the GM history file. One last thing - RH has declared for a very long time now that he has kept 30pc of his net worth in toilet paper currencies (please see the chart in the link below), whilst most is in silver bought at circa $12 an oz - this means that RH has missed out on the one third profit upleg that silver has made in recent times - so, RH has made the second worst trade of his life, that is, not being part of the silver bull run-up from $12 to $18 - this means that RH, by staying in toilet paper, has failed to maximise his earning potential in metals - he has lost a huge opportunity cost profit play, lost out very badly indeed. Of course RH can post all his trades here direct from the GM archives so that we can all see exactly how his trading strategy works - it is all in his GM personal archives, every buy and sell of metals and currencies, with dates and commissions charged by GM, so why should RH suddenly be so shy about his gains, when he has been boasting day in day out for so long here about what a wonderfully astute trader he is?

 

Vedanta Trader - as you very well know there is a huge difference between boasting about net worth (which Bubb does all the time) and

boasting about wonderful infallible trading strategies - this is RH's opportunity to tell us all EXACTLY how he has done it. He doesn't need to name precise amounts, all he needs to do is spell out the percentages, the currency values, and the metals buy and sell values etc etc. Very simple indeed.

 

The problem RH has though is that none of his claims will stack up in reality, as double-agent, IRS, myself, and many others have noticed. the ball is in RH's court now.'

 

a nice chart for you RH

It really does boggle the mind why you lot are so interested (or should I say obsessed) with RH. All these childish, ganging-up, playground attacks are really something. I'm sure most GEI readers are mature enough to read and come to their own conclusions, so trying to show the truth and convert those to your side is frankly lame This is not war, its just an internet forum. Life is too short for all this 'he said she said' bunk.

1080 looks like the floor before christmas. We should rally next week to test the 1100s again. Finishing the year with a close about 1033 will be the major bull signal for the new year.

And by the way, merry xmas to you all at GEI.