The CME Group announced today that they will be launching a new 1,000 ounce silver contract in June of this year. The September 2013 contract will be the launch contract.
As some of you may know, a full sized silver contract at the CME is 5,000 ounces.
The CME appears to be after some more smaller spec business. The interesting thing about this contract is that is will be fully fungible. That is a big deal if you ask me. If you accumulate FIVE of these smaller contracts, you can exchange them for one full sized contract.
I am going to be extremely interested to see how the volume and interest does in this contract. It might be a way that some of those who are interested in playing the silver paper game can get involved. Oftentimes, the extent of the price swings in silver and the relatively high margin rates can put the benchmark contract out of the reach of many smaller players.
I have not had time yet to see if a single contract will be able to be held into delivery. My guess is that it will require FIVE as I am unsure whether there are any 1,000 ounce bars at the warehouses that could be used to satisfy the delivery requirements any way.
Keep in mind, this is for trader primarily, not those who are only interested in the actual metal. One neat thing about this new size is that it might enable some smaller holders of the metal to hedge their holdings if they are expecting a period of price weakness....
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
Trader Dan's Work is NOW AVAILABLE AT WWW.TRADERDAN.NET