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.
next week oboma coming out to media on gold and silver confiscation,that should get everyone to sell and put it in ponzi stocks
ReplyDeleteDan,
ReplyDeleteSeems 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
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.
ReplyDeleteThe 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.
ReplyDeleteHere's a bulletin message from interactive brokers:
ReplyDeleteTo 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.
Per MF Global Comex Silver initial margin requirement is being increased to $25,397 (from $12,825.)
ReplyDelete