Often, smaller investors have been shut out of actually asking for deliver of physical silver from the Comex given the relatively larger contract sizes (5000 ounces), so, a retail investor standing for delivery would need to pay for 5,000 ounces of silver at minimum which could be quite out of the normal retail investor’s allotted capital.
The CME group has unveiled a new 1,000 ounce contract that would enable investors to stand for delivery of 1,000 ounces of silver at the settlement price. Not bad if you can get a friend or two to go in on that contract with you.
According to the announcement from the Wall Street Journal,
CME Group, the world's leading and most diverse derivatives marketplace, today announced the launch of a new physically delivered Silver (1,000 oz.) futures contract, scheduled to begin trading in June 2013. This contract will be listed with, and subject to, the rules and regulations of COMEX.
"We're introducing our new 1,000-oz. silver futures contract in response to demand from our customers, who are increasingly looking for cost-effective ways to manage risk," said Robert Ray, CME Group Managing Director EMEA. "The smaller size will provide market participants with greater flexibility to manage their silver price risk, and serve as a more cost-effective tool for individual investors or others looking to hedge against economic uncertainty. This is the first contract of its size that will be fully fungible and deliverable against our existing benchmark silver futures contract."
At one-fifth the size of the existing 5,000-oz. Silver futures contract, this new contract will be conveniently sized for market participants seeking to trade physical silver in smaller increments. It will be fully fungible with the full-sized Silver futures contract, which means that customers who accumulate five warehouse depository receipts of the 1,000-oz. contract can convert them into one 5,000-oz. Silver futures contract.
The addition of a deliverable, 1,000-oz. silver futures contract to the exchange's deep and liquid benchmark precious metals products is expected to provide new trading opportunities for market participants around the globe.
This contract will be available on the CME Globex electronic trading platform, for over-the-counter (OTC) clearing through CME ClearPort and open outcry on the trading floor in New York, beginning with the September 2013 contract month.
This sort of puts a dent in all those rumours flying around that the Comex has no silver for delivery given that they have just made it easier to actually obtain silver. Ask yourselves a very logical question; If Comex was facing a default do you think they would make it easier to stand for delivery of physical silver or do you think they would have made it harder?
This is a great product for silver investors looking to forego the premiums charged by dealers.
