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There are 49,436 contracts currently open for the next delivery month which is March 2012. Each contract represents 5,000 ounces. That is 247.18 million ounces of silver being traded for March delivery against a registered 36.56 million ounces. This is a subset of all the contracts going out over the year.
The is leverage of about 6.8 to 1. It 'works' because most contracts are speculative and settled for cash. Comex is not where one goes for the delivery of a large amount of silver.
I think that over time the US markets will become increasingly less relevant as a price-setting mechanism for a number of commodity prices including the metals.
The failure of MF Global and the blatant cheating of the customers, both before and after the fact, will accelerate the process of failure.
It really is shocking, all the more so because so few people see it and understand its significance in the coming crisis of confidence in the US markets.
Great leaders see the big changes coming and harness them. There is no one on the horizon that fits that prescription. What I see is failure repeated, but as history indicates, not endlessly.
There are still two trading days left in the month so it is obviously too early to book the results.
And it may not be quiet next week, or the rest of the year, as Fitch issued a new downgrade on five European nations.
Fitch downgraded the sovereign credit ratings of Belgium, Cyprus, Italy, Slovenia and Spain on Friday, indicating there was a 1-in-2 chance of further cuts in the next two years. In a statement, the ratings agency said the affected countries were vulnerable in the near-term to monetary and financial shocks. "Consequently, these sovereigns do not, in Fitch's view, accrue the full benefits of the euro's reserve currency status," it said. ...
The old saying is, "As goes January, so goes the year."
If that is the case it may be a record year for precious metals but hard on traders' nerves.
It should be noted that the metals sector took an extraordinarily heavy handed pounding in December.
Let's see how the month ends.
Here's how things stack up so far.
Silver +22%
Gold +10.8%
SP500 + 4.7%
US$ - 0.1%
There was a really nice push up into resistance today.
Next week could be dicey unless there is some settlement in the European debt situation.
There were additional rumours of the Facebook IPO coming out next week. If that happens the Street will probably prop the major markets in order to get it priced and out the door.
The market was wobbly today, with a late push in the financials failing to turn the markets green.
