"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

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Monday, May 2, 2011

CME Group hikes margin requirements for Silver - AGAIN

For the third time in a week, the exchange has hiked margin requirements for trading silver futures contracts.

New margin requirement rises to $16,200 from $14,513. Maintenance margin moves up to $12,000 from $10,750.

Hedgers pay the maintenance margin as their initial margin requirements.

It looks as if the exchange is extremely worried after seeing a nearly 10% plunge in silver prices overnight. It will make it more and more difficult for small specs to participate and as I have said previously here, will tend to magnify downward moves in price as margin calls escalate rapidly.

Small specs - be extremely careful in this market right now. There is an attempt going on here to rid the general public of its positions leaving only the big boys to play.

That will also aggravate the volatility even more as open interest drops off and liquidity begins to shrink.

7 comments:

  1. next week oboma coming out to media on gold and silver confiscation,that should get everyone to sell and put it in ponzi stocks

    ReplyDelete
  2. Dan,

    Seems that the cartel can exercise their will on silver with liquidity drying up and the long specs currently out of the market. Do you have an insights on where this market is going next?

    Thanks

    ReplyDelete
  3. Exactly. A Tsunami of paper is all it takes to control the price of commodities. An unlimited supply of paper order tickets can be unleashed at the COMEX to spook all the specs out of their positions. What is amazing is how Joe Six saw this coming and were selling their bullion in droves at the coin shops last Thursday and Friday. Smart money guys like Sprott's performance oriented clients may end up panicking late. When was the last time that the small guy got out in front of the whales to lock in profits? Pretty rare occurrence, but it happened. Now the small guys will use their ill gotten gains to go buy more LULU outfits, drink some $5 coffee at SBUX, or book another vacation on PCLN.

    ReplyDelete
  4. The commercials are pulling out every dirty trick in their manipulative bag of tricks to shake every leveraged long speculator possible from the market. Sunday eve's drop showed that the CME Group allowed the big commercial insiders on the COMEX to engineer a price smash when silver trading conditions were at the lowest liquidity possible.

    ReplyDelete
  5. Here's a bulletin message from interactive brokers:

    To NYMEX,NYSELIFFE traders:
    Tue May 3 04:38:47 2011 EST

    In light of the recent extreme volatility on the silver contracts, the
    various exchanges that trade silver derivatives are expected to increase
    margin requirements on these contracts. As the increase is anticipated
    to be approximately 20%, we will be requiring an additional 25% cushion
    of margin on top of the exchange-mandated maintenance margin
    requirement. We anticipate this change will become effective as early as
    12pm EST on 3 May 11.

    For example, for the SI futures on NYMEX, as the expected NYMEX-mandated
    margin requirement will be US$12,000 for each contract, we will be
    requiring US$15,000 maintenance margin for each contract.

    To anticipate the sudden increase in these margin requirements, our
    initial margin requirements on the affected contracts were raised to
    180% of current maintenance margin levels. The aim of this preemptive
    change is to avoid adverse impact from the expected maintenance margin
    increase. Thank you for your understanding.

    ReplyDelete
  6. Per MF Global Comex Silver initial margin requirement is being increased to $25,397 (from $12,825.)

    ReplyDelete
  7. It was a awe-inspiring post and it has a significant meaning and thanks for sharing the information.Would love to read your next post too......

    Thanks

    Regards:

    Commodity Market

    ReplyDelete

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