NEW YORK (Commodity Online): Silver positions are being liquidated by COMEX traders after the MF Global fiasco uncovered the fragility of paper assets.
COMEX silver trading volume is up by 39.3% in November at 1,327,376 contracts as compared to 952,314 contracts in October. However, Open Interest during the period declined by 8% from 110,024 in October to 101,225 in November, indicating that traders are reluctant and concerned with the safety of their assets. The drop in open interest and rising volume has been accompanied by falling prices. Silver is down by about 4% in November.
The issue has been worsened as the CME Group has been unable to refund investor money even after a month after the MF Global filed for bankruptcy. Many traders have pulled out their money from the markets while many are advising others to close their paper trading accounts and instead focus on the physical metal itself.
The most vociferous has been international trend forecaster Gerald Celente, whose trading account was wiped out in the M F Global episode.
Coming weeks will give a clearer picture whether the CME group is able to restore confidence in the markets or traders opt to stay out of paper futures.
