Feature: Barron's| SATURDAY, DECEMBER 17, 2011
The Silver Rush at MF Global
Investors are furious that they can't get back the gold and silver they stashed with the failed brokerage.
That, in essence, is what's happening to investors whose bars of silver and gold were held through accounts with MF Global.
The trustee overseeing the liquidation of the failed brokerage has proposed dumping all remaining customer assets—gold, silver, cash, options, futures and commodities—into a single pool that would pay customers only 72% of the value of their holdings. In other words, while traders already may have paid the full price for delivery of specific bars of gold or silver—and hold "warehouse receipts" to prove it—they'll have to forfeit 28% of the value.
AND GET THIS: Of the 28% haircut, attorney and liquidation trustee James Giddens has frozen all asset classes, meaning that traders have sat helplessly as silver prices have dropped 31% since late August, and gold has fallen 16%. To boot, the traders are still being assessed fees for storage of the commodities.
In other words, MF Global is charging customers rent on the gold and silver they've stolen from them. That's brilliant. The Fed should declare that MF Global is now a bank and then award them a huge bonus for creative theft.
DON'T THINK FOR A SECOND THAT M.F. GLOBAL IS ANY DIFFERENT FROM M. LYNCH, G. SACHS, or N.Y. FED.