The bankruptcy if MF Global is creating ripples. The outfit was high leveraged, using commoidity futures. The managers used customers’ money — cash basis, no debt — to cover losses in its own speculations. The customers cannot get their money back. They must wait. They may suffer 50% losses.
Always before, the clearing house assured customers that no customer had ever lost money do to a broker’s failure. That is no longer true.
One commodities hedge fund has closed up shop. It returned the customers’ money. The head of the form said that she would no longer operate in a market where the rules have been changed. Read her statement here: http://barnhardt.biz.
Gerald Celente, who has predicted a financial meltdown, had $100,000 at MF Global. He thought it was in gold. No, it wasn’t. It was in digital IOUs. He can’t get his money.
He made these mistakes: (1) he bought a promise to invest in gold; (2) the promise was based on the futures market, not physical gold; (3) the outfit giving the promise was leveraged at least 40 to 1.
Be aware that the rules have changed. Read what Celente found out too late.