Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

MF Global: Heed the Warning

  by    0   4

Joel BaumanThis article was submitted by Joel Bauman, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.

Unfortunately, too few people remember or know of the story of MF Global Inc.

MF Global was one of the most respected primary dealers for stock, bond, and futures trading. The firm had been operating over 200 years, formerly known as Man Financial. In 2010, the company was directed by Jon Corzine, who was a senator, governor, and at one time was the CEO of Goldman Sachs. MF Global was second-to-none, and it serviced some of the wealthiest private traders and institutions.

In the fall of 2011, 38,000 accounts were adversely affected when MF Global illegally transferred $1 billion in funds out their clients’ trading accounts. MF Global used these funds to cover the company’s personal trading losses after some European bond investments went belly-up.

As with all US brokerages, client funds legally supposed to be segregated, separate from the company’s operating capital. But account segregation only works if brokerage firms actually honor it.

In December of 2014, the funds were finally recovered. During this time, customers of MF Global had to hire their own attorneys, and they waited over three stressful years to find out the fate of their money.

MF Global’ s bankruptcy is a stark reminder that brokerage accounts aren’t as safe as they appear. When investors buy a stock, they do not have direct ownership, but rather an agreement with their broker. This is why the MF Global crisis took three and half years to sort out legally.

This story foreshadows of what’s to come. Unfortunately there will be many more “MF Globals” as we run into the next liquidity crisis. Under the current dysfunctional monetary system, we are poised for a game changing crisis larger than the 2008 recession and the depression of the 1930s.

Risk free assets do not exist. There is always counterparty risk when owning tertiary wealth, property not in your physical possession. Do not hold most your wealth in your brokerage account, or even worse, your bank account. Owning primary wealth, such as silver and gold, is the best way to eliminate or minimize counterparty risk.

As the wise Solomon once said “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.” Ecclesiastes 11:2

WhyBuyGoldNowBanner.070815.590

Get Peter Schiff’s most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning more about physical gold and silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

GDP Creates the Illusion of Fed-Fueled Economic Growth

Joe Biden keeps touting the “booming” economic recovery. And of course, he’s taking credit for it. But is the economy really booming? If you look at GDP growth, it certainly appears the US economy is in the midst of a robust recovery. But economic growth is relative. And when your baseline is an economy that […]

READ MORE →

Peter Schiff: The REAL Reason Gold Hasn’t Gone Up and Why It Ultimately Will

Inflation in the US is at historically high levels. So, why hasn’t gold taken off? We hear this question over and over again. In this video, Peter Schiff answers this question and explains why the markets will eventually wake up to their misperception.

READ MORE →

Ireland Buys More Gold as Inflation Pressures Mount

Ireland has added more gold to its reserves as inflation worries mount. According to the latest data, the Central Bank of Ireland purchased $88 million ($78 million euros) in gold in November, adding to the two tons it added to its holdings in previous months. With the latest purchases, the Irish central bank has boosted […]

READ MORE →

What Happens If the Fed Takes Its Thumb Off the Housing Market?

We talk a lot about how the Fed keeps its big fat thumb on the Treasury market. But it also has its big fat thumb on the housing market. And if the Fed really does follow through with its taper and its plans to shrink its balance sheet, it will have a big effect on […]

READ MORE →

Consumer Debt Charts Biggest Gain in 20 Years

The Federal Reserve is talking about raising interest rates. Well, that’s going to be a big problem for American consumers who are running up debt at a torrid pace. This is yet another reason why the Fed can’t do what it’s claiming it will do. Consumer debt jumped 11% year-on-year in November, according to the […]

READ MORE →

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Call Now