"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


Thursday, April 28, 2011

CMEGroup hiking Silver margins for the second time in a week

The CMEGroup announced that as of the close of trading this Friday, margin requirements are yet again going up in silver.

For speculators, initial margin is increased to $14,513 per full sized silver contract, up from this week's earlier hike to $12,825.

Maintenance margin is moving up to $10,750 from $9,500.

Hedgers margin and maintenance is rising to $10,750 and $9,500 respectively.


  1. I think they did this on purpose. The first hike was to get traders to let down their guard thinking another hike would be at least a few weeks in the offing. Suddenly today's price action makes lots of sense.

  2. Dan when margins are hiked like this which of the chunks of investing groups are affected the most?

  3. when the cme raises margins, then does this raise margin requirements for people tradin electronically in london and hong kong?

  4. The whole trading business is getting so perverse. When the new currency is established I hope new rules are established and enforced globally. We will never get rid of fraud since we have it built in the human gene, but a heavy laxative is good once in a while.

  5. The are getting pretty desperate -- trying everything in their play book -- multiple margin hikes, reclassifying "eligible" silver, massive raids, propaganda, etc. Doesn't seem to be working too well. We might be getting close to a COMEX default this year.

    @ Happyinthewoods -- the people with the really deep pockets (banks, etc) aren't affected by the margin hikes, but the smaller players could be squeezed out of the game.

  6. This hurts those short just as much...

  7. CFTC: Center for Financial Terrorism and Control

  8. Margins don't affect the buyers of physical. Actually a rate hike and dip makes helps us buy even more.

  9. Dan, you mentioned on an earlier KWN Weekly Metals wrap that the smaller specs were the ones primarily driving the bidding at the moment with managed money still on the sidelines.

    Is this still the case and how will the ever increasing margin hikes and account maintenance fees cool speculative behavior and affect the continued participation of the smaller specs in continuing their drive in strength?

    Apologies if the question is flawed in any way.

  10. @JoeKa I would think those with the shallowest pockets are the ones most sensitive to the margin hikes. So the small specs will be crowded out of a market that they probably didn't have the money to stay in anyways.

    It's like sitting down at a 5/10 table when you should be playing 2/4. Your margin for error is really slim and you'll likely go broke.

    Margin hikes are short-term negative and long-term positive.


  11. lord koos thanks.

    On the surface this might appear to make the market more responsible. However if smaller players are effectively squeezed out then it leaves the fewer and larger more able to set the drumbeat doesn't it?

  12. TomL: yeah I definitely see your point and Happyinthewoods touched on what I was actually thinking in terms of implications.

    Would be interesting if Dan touched on it in the next interview with Eric King.


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