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.
Monday, May 2, 2011
Saturday, April 30, 2011
Friday, April 29, 2011
The Saddest Commentary I know of on the United States of America; Requiescat in Pace
The Dollar's Tombstone should be engraved with not only the above words, but with an addendum carved below that stating:
"MURDERED by THE FEDERAL RESERVE" in cooperation with the imbeciles who held public office at that time of its demise.
"MURDERED by THE FEDERAL RESERVE" in cooperation with the imbeciles who held public office at that time of its demise.
Gold versus US bonds - not even close!
Even though the Fed continues to rig and manipulate the US Bond market, artificially distorting long term interest rates in the name of "saving the economy" ( who will save us from the Fed?), the fact is that the US long bond has been a gigantic DAWG when it comes to the smart place to put one's wealth to preserve its value.
Watching the day to day gyrations in the US bond market and the mockery that the Fed has turned it into, I sometimes wonder who in their right mind would even consider putting their wealth into these worthless scraps of paper IOU's or regard them as a safe haven. AS a matter of fact, I cannot bring my mouth to utter the two things together in one single breath - "US Treasury" - "Safe Haven" - without a feeling of total revulsion coming across me.
While the Fed may have hoodwinked some investors into believing that they have placed their money into a safe haven where they may find a store of value, gold is not buying into that claptrap for one single moment.
Just look at the ratio comparing the two and note how gold has left the US long bond in the dust. Now, looking over this chart, which one do you think a wise investor should choose? Or perhaps a less charitable way of saying it: "Who is stupid enough to buy pieces of confetti paper promises to pay when the Federal government is spitting them up like hairballs from a long-haired Persian cat?" The more I think about this, the more I am convinced that the hairballs have more appeal - at least they are healthy for the cat to get rid of out of its system. What can be said about US debt obligations???
Watching the day to day gyrations in the US bond market and the mockery that the Fed has turned it into, I sometimes wonder who in their right mind would even consider putting their wealth into these worthless scraps of paper IOU's or regard them as a safe haven. AS a matter of fact, I cannot bring my mouth to utter the two things together in one single breath - "US Treasury" - "Safe Haven" - without a feeling of total revulsion coming across me.
While the Fed may have hoodwinked some investors into believing that they have placed their money into a safe haven where they may find a store of value, gold is not buying into that claptrap for one single moment.
Just look at the ratio comparing the two and note how gold has left the US long bond in the dust. Now, looking over this chart, which one do you think a wise investor should choose? Or perhaps a less charitable way of saying it: "Who is stupid enough to buy pieces of confetti paper promises to pay when the Federal government is spitting them up like hairballs from a long-haired Persian cat?" The more I think about this, the more I am convinced that the hairballs have more appeal - at least they are healthy for the cat to get rid of out of its system. What can be said about US debt obligations???
SLV running up Enormous Volume
It seems as if Silver has caught the attention of the trading/investing public in a significant way based on the enormous volumes being recorded in both the Comex silver market and the IShares Silver Trust or SLV.
The volume in the Comex, especially on Monday, was so large that I initially thought it was a typo and would be corrected by the exchange. It was not. That day the volume of contracts traded hit a whopping 319,000!
Not to be outdone, SLV registered a volume of nearly 190 MILLION shares. To give you an entire of how massive this was, consider that an average daily volume comes in near 35 - 40 million with an occasionally busy day hitting closer to 50 million.
I find this especially disconcerting as it tells me that there is the potential for a lot of froth forming in the market. Please understand, this is not to say that the bull run in silver is over; far from it, as I fully expect silver to trade closer to $100 before all is said and done, particularly if the Dollar drops below 68 on the USDX. However, with volume this large and so much interest in owning the metal, it might need to take a bit of a breather before moving higher into a new upleg.
That would provide a lot of bulls who are nervous about buying at these levels an opportunity to acquire more of the metal at a better price. Rignt now the metal is unable to move past $50 - that means if a trader buys in now at these levels, he has the potential to make perhaps $1.50 on the trade before it stalls out again while the potential for the market to fall as low as $45 exists, a drop of some $3.00 or so from current levels. That is a risk/reward level of 1:2 to the downside. Those are not good trading odds which is why we are seeing some speculators selling up near $50. They want to see the price clear this level before feeling comfortable coming back in on the buy side up here.
Should the market move lower and especially if it were to for some reason take out $45 on the downside, the risk/reward ratio begins to improve tremendously. Would-be longs will then we looking for an entry point once they feel that the market has established a decent base of support from which to move higher.
The volume in the Comex, especially on Monday, was so large that I initially thought it was a typo and would be corrected by the exchange. It was not. That day the volume of contracts traded hit a whopping 319,000!
Not to be outdone, SLV registered a volume of nearly 190 MILLION shares. To give you an entire of how massive this was, consider that an average daily volume comes in near 35 - 40 million with an occasionally busy day hitting closer to 50 million.
I find this especially disconcerting as it tells me that there is the potential for a lot of froth forming in the market. Please understand, this is not to say that the bull run in silver is over; far from it, as I fully expect silver to trade closer to $100 before all is said and done, particularly if the Dollar drops below 68 on the USDX. However, with volume this large and so much interest in owning the metal, it might need to take a bit of a breather before moving higher into a new upleg.
That would provide a lot of bulls who are nervous about buying at these levels an opportunity to acquire more of the metal at a better price. Rignt now the metal is unable to move past $50 - that means if a trader buys in now at these levels, he has the potential to make perhaps $1.50 on the trade before it stalls out again while the potential for the market to fall as low as $45 exists, a drop of some $3.00 or so from current levels. That is a risk/reward level of 1:2 to the downside. Those are not good trading odds which is why we are seeing some speculators selling up near $50. They want to see the price clear this level before feeling comfortable coming back in on the buy side up here.
Should the market move lower and especially if it were to for some reason take out $45 on the downside, the risk/reward ratio begins to improve tremendously. Would-be longs will then we looking for an entry point once they feel that the market has established a decent base of support from which to move higher.
Subscribe to:
Posts (Atom)