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....
dan,
ReplyDeletethe first line of the COMEX press release says that the new mini contract will be physically settled. they already have a cash-settled 1000 oz miNY silver contract.
best,
KD
Kid - thanks for the info... sure looks like it is deliverable. I might call the exchange to check with them and ask as that might be very popular if it can attract more publicity.
DeleteDan:
ReplyDeleteI think that all LBM good delivery silver bars are nominally 1000 oz.
A 5000 oz bar, if any exist, would weigh 155.5 kilograms, or approximately 342 pounds.
Slow Loris Larry - thanks for passing that on.
DeleteDan
Love your blog and pass it on to family/friends. I keep hearing that silver has no support until $19-$20 range. Do you think that's right? Thanks for all your hard work.
ReplyDeleteback to gold - nice channel up from the low 1320 to 1403 down to 1337 and up again to 1425.
ReplyDeleteWe could retest around 1350 if no break above channel. Another good buy op
Didn't know Rodriguez was a fan :)
ReplyDeleteTraderDan
Won't ya hurry
Coz I'm tired of these scenes
TraderDan
You're the answer
That makes my questions disappear
TaderDan
Coz I'm weary
Of these double games I hear
Just found this video while visiting zerohedge.com
ReplyDeletehttp://www.youtube.com/watch?feature=player_embedded&v=QGZ5f1G1Ep0