Quite possibly. I dont have the full details on the LME Nickel trade - but all the other clearinghouses have had trouble with spread trades. They way they price risk encourages traders to use spread trades, so they can have large gross position, but small net, and very little initial margin. I will take a look at how they are pricing precious metals
So if Silver/Gold is more of a when not if question, is this a sign to take delivery rather then say GLD? In this case its better to have control of it then have exposure to it?
IMO, silver is the best long term trade in the U.S. right now. The gold to silver ratio favors silver and the governments and central banks will continue to debase the currencies. The U.S. is financing 1/2 of the $6.9 trillion annual debt while a liquidity issue seems to be occurring. The FRB already has to many balls it's juggling. Once the Chinese, Russians, Indians, Iranians, Venezuelans, etc. start trading oil in other currencies, a whole new ballgame. With Forex, everyone knows the current value of everyone's currency. Set up a system where the counterparties can be prepared when someone needs to trade. How hard of a trading platform can that be to create. Everyone is pretty much trading with everyone these days, so it a matter of putting the right parties together. That's where block chain is perfect.
Preaching to the choir Skip. They can keep the price of PMs down as long as people accept paper with the word "GOLD" or "SILVER" written on it. As soon as that con game is up, the entire house will fall. Seems like that could be any day now.
Which if any of Clearing houses are listed, so that could be shorted? Or some other institutions at risk? I already checked for trading houses but all are private. I assume that that is not a coincidence.
Well Trafigura bonds got smoked in March - but are now rallying. Most clearing houses are owned within listed exchange businesses - LSEG, CME, HKEX, Nasdaq ,ICE, Euronext all have clearing businesses. I would caution on shorting - if you look back at the GFC, the really guilty parties were Moody's and S&P - but both got away scott free - and the market recognises their implicit guarantee that this has bestowed on them. I dont see regulators rushing to change clearinghouse rules... so bad behaviour may well be rewarded again here. The LME debacle shows that the main clearing banks may be the ones at risk... and regulators tend not to be nice to banks...
I bet you TD Ameritrade will be the first to blow up. This is also what's wrong with the mortgage lending market. No longer owned by banks but clearing houses like Rocket Mortgage that don't have the same stress requirements as banks. The market fall will be precipitated by higher rates, that'll have the same effect on stock clearing houses as mortgage clearing houses. Question is, when the FED comes to the rescue, who owns what? Maybe the upcoming Klausian cyberpandemic can take care of all the ownership issues as the Great Reset happens.
TD could well be a client of a clearinghouse - but it is not a clearinghouse. CME, ICE, LCH, LME are all clearinghouses. They are designated by regulators, and then get special treatment. My problem is that they have very little skin in the game, and price risk badly
The internet says they are large enough so they are their own clearing firm. What is the difference between being a clearing firm and a clearing house?
So to be a member of a clearing house you need to have substantial financial resources. https://www.lch.com/membership give you details. Traders who wish to trade through a clearinghouse will use a member of a clearinghouse which is what I think you mean by clearing firm. The clearing firm will then manage the risk with the clients. So in Nickel, the clearing firm was JPM, the clearinghouse was LME, and the ultimate clients was "Big Shot".
Russians are the best at chess: They moved a pawn (invaded Ukraine). The west moved their queen in response (declared economic war....sanctions... and military war...providing weapons to be used by Ukraine against Russians). Purpose of the pawn achieved: (Russian citizens now isolated from the world..and now the only hope is to conquer the external problem). The pawn succeeded in aligning the population with the goal of the megalomaniac(s). Your identification of the achilles heal of the clearing houses is probably very appropriate at this time. And with Biden elected in 1972 with USSR front organization money, placed on the arms services committee to fight Reagan initiatives, does it even matter.....the King was already theirs.
Why TD Ameritrade? What is the characteristic of them that makes them the most risky. My money is with them...so your reply is very concerning. Hope you can give some reasons. Their platform is slick and their customer service is the best. I got my money out of MF Global just before they went belly up.
Suppose TD Ameritrade was the first one to "blow up"... what if anything does that mean for those of us who use them? Yes, I use them for trading equities etc... Would that imply I could lose my shares/investments or am I way out in left field?
If TD blew up (i have no view) it would be a problem for clearinghouses only if they had position with clearinghouses, and could not meet a margin call. So far, it has been unregulated speculative traders that have tended to be the problem. The one area that could cause problems are ETFs, but that is another note, for another time
I used to have an account at TD until the March 2020 melt down. I grew concerned that in a pinch TD would do to my account what John Corzine did to MF Global.
I do not know if TD does or does not segregate accounts. I just did not trust that in a world wide financial crisis when firms become desperate the account holder's interests would come last. During the 3-2020 melt down when I called TD while waiting on hold the recorded message was instructing account holders to make their margin calls. I do not trade on margin, so I moved to Fidelity, not that I have much more trust in Fidelity.
John Corzine used funds from their clients segregated accounts as margin for Mf Global's proprietary trading desk. When those trades went south and MF Global could not meet the margin call, John's illegal trading strategy was exposed (legally, segregated account funds can not be co-mingled). Side note, he has since started, and blown up 2 hedge funds.
I was making a general statement that poorly run firms in stressful times will do peculiar things with client accounts. This coming crisis will as Warren Buffet has said " When the tide goes out we will see who has been swimming naked." I do not want my account tied up with a firm I suspect will have problems.
I moved to Fidelity, because they are huge and better managed. My concern is we are headed into what Jeremy Grantham said would be equal to 2000 Tech crash or 2008 financial crash. Remember AIG, & Lehman crashed CITI was technically bankrupt. So I want to be with a large well managed firm
Leaning more to the market having to resolve this and when it can't that Central Bankers have to step in to provide liquidity and/or underwrite settlements between selected counter parties. Keenly watching markets and Repo for March 31st and whether there is a sizable deleveraging.
The commod that will blow up the LME is silver.
Quite possibly. I dont have the full details on the LME Nickel trade - but all the other clearinghouses have had trouble with spread trades. They way they price risk encourages traders to use spread trades, so they can have large gross position, but small net, and very little initial margin. I will take a look at how they are pricing precious metals
So if Silver/Gold is more of a when not if question, is this a sign to take delivery rather then say GLD? In this case its better to have control of it then have exposure to it?
I dont know about silver gold. But the blowout on the timespread in diesel looks like another clearinghouses problem...
IMO, silver is the best long term trade in the U.S. right now. The gold to silver ratio favors silver and the governments and central banks will continue to debase the currencies. The U.S. is financing 1/2 of the $6.9 trillion annual debt while a liquidity issue seems to be occurring. The FRB already has to many balls it's juggling. Once the Chinese, Russians, Indians, Iranians, Venezuelans, etc. start trading oil in other currencies, a whole new ballgame. With Forex, everyone knows the current value of everyone's currency. Set up a system where the counterparties can be prepared when someone needs to trade. How hard of a trading platform can that be to create. Everyone is pretty much trading with everyone these days, so it a matter of putting the right parties together. That's where block chain is perfect.
Preaching to the choir Skip. They can keep the price of PMs down as long as people accept paper with the word "GOLD" or "SILVER" written on it. As soon as that con game is up, the entire house will fall. Seems like that could be any day now.
Which if any of Clearing houses are listed, so that could be shorted? Or some other institutions at risk? I already checked for trading houses but all are private. I assume that that is not a coincidence.
Well Trafigura bonds got smoked in March - but are now rallying. Most clearing houses are owned within listed exchange businesses - LSEG, CME, HKEX, Nasdaq ,ICE, Euronext all have clearing businesses. I would caution on shorting - if you look back at the GFC, the really guilty parties were Moody's and S&P - but both got away scott free - and the market recognises their implicit guarantee that this has bestowed on them. I dont see regulators rushing to change clearinghouse rules... so bad behaviour may well be rewarded again here. The LME debacle shows that the main clearing banks may be the ones at risk... and regulators tend not to be nice to banks...
I bet you TD Ameritrade will be the first to blow up. This is also what's wrong with the mortgage lending market. No longer owned by banks but clearing houses like Rocket Mortgage that don't have the same stress requirements as banks. The market fall will be precipitated by higher rates, that'll have the same effect on stock clearing houses as mortgage clearing houses. Question is, when the FED comes to the rescue, who owns what? Maybe the upcoming Klausian cyberpandemic can take care of all the ownership issues as the Great Reset happens.
TD could well be a client of a clearinghouse - but it is not a clearinghouse. CME, ICE, LCH, LME are all clearinghouses. They are designated by regulators, and then get special treatment. My problem is that they have very little skin in the game, and price risk badly
The internet says they are large enough so they are their own clearing firm. What is the difference between being a clearing firm and a clearing house?
So to be a member of a clearing house you need to have substantial financial resources. https://www.lch.com/membership give you details. Traders who wish to trade through a clearinghouse will use a member of a clearinghouse which is what I think you mean by clearing firm. The clearing firm will then manage the risk with the clients. So in Nickel, the clearing firm was JPM, the clearinghouse was LME, and the ultimate clients was "Big Shot".
Thank you! Any idea what might be the strongest clearing firm?
Impossible to answer - as you need to know what risks their members and then their clients are taking
Russians are the best at chess: They moved a pawn (invaded Ukraine). The west moved their queen in response (declared economic war....sanctions... and military war...providing weapons to be used by Ukraine against Russians). Purpose of the pawn achieved: (Russian citizens now isolated from the world..and now the only hope is to conquer the external problem). The pawn succeeded in aligning the population with the goal of the megalomaniac(s). Your identification of the achilles heal of the clearing houses is probably very appropriate at this time. And with Biden elected in 1972 with USSR front organization money, placed on the arms services committee to fight Reagan initiatives, does it even matter.....the King was already theirs.
Why TD Ameritrade? What is the characteristic of them that makes them the most risky. My money is with them...so your reply is very concerning. Hope you can give some reasons. Their platform is slick and their customer service is the best. I got my money out of MF Global just before they went belly up.
TD could blow up, but it is not a clearinghouse
Suppose TD Ameritrade was the first one to "blow up"... what if anything does that mean for those of us who use them? Yes, I use them for trading equities etc... Would that imply I could lose my shares/investments or am I way out in left field?
If TD blew up (i have no view) it would be a problem for clearinghouses only if they had position with clearinghouses, and could not meet a margin call. So far, it has been unregulated speculative traders that have tended to be the problem. The one area that could cause problems are ETFs, but that is another note, for another time
I used to have an account at TD until the March 2020 melt down. I grew concerned that in a pinch TD would do to my account what John Corzine did to MF Global.
Are you saying that as with MF Global, TD does not segregate their clients accounts?
I do not know if TD does or does not segregate accounts. I just did not trust that in a world wide financial crisis when firms become desperate the account holder's interests would come last. During the 3-2020 melt down when I called TD while waiting on hold the recorded message was instructing account holders to make their margin calls. I do not trade on margin, so I moved to Fidelity, not that I have much more trust in Fidelity.
John Corzine used funds from their clients segregated accounts as margin for Mf Global's proprietary trading desk. When those trades went south and MF Global could not meet the margin call, John's illegal trading strategy was exposed (legally, segregated account funds can not be co-mingled). Side note, he has since started, and blown up 2 hedge funds.
I was making a general statement that poorly run firms in stressful times will do peculiar things with client accounts. This coming crisis will as Warren Buffet has said " When the tide goes out we will see who has been swimming naked." I do not want my account tied up with a firm I suspect will have problems.
Interactive Brokers any better or do you have anyone you like?
Interactive Brokers any better?
I moved to Fidelity, because they are huge and better managed. My concern is we are headed into what Jeremy Grantham said would be equal to 2000 Tech crash or 2008 financial crash. Remember AIG, & Lehman crashed CITI was technically bankrupt. So I want to be with a large well managed firm
👍
Leaning more to the market having to resolve this and when it can't that Central Bankers have to step in to provide liquidity and/or underwrite settlements between selected counter parties. Keenly watching markets and Repo for March 31st and whether there is a sizable deleveraging.
March 15 is looking like bailout day - with China supporting markets, and nickel opening lower