"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


Monday, April 15, 2013

CME Raising Gold and Silver Margins

It was just a matter of time before this occurred but coming at this time,it tends to feed into the margin related selling as those specs who are still long from higher levels and have been holding out by refusing to sell while they wait for the market to bottom are now going to be under even more pressure, particularly if this market does not find a bottom very soon.

Here are the new margins, effective as of the close of trading tomorrow (Tuesday). These rates are for speculators.... bona fide hedgers have a new margin rate the same as the maintenance rate for the specs.


Old Margin     Old Maintenance      New Margin    New Maintenance

$5,940            $5,400                    $7,040        $6,400


$10,450           $9,500                    $12,375       $11,250


  1. That's kind of Bold move especially if you consider it as a high margin for a bet on nothing.

  2. Dear Dan,

    I guess by the time you Wake up, maybe prices will be 100 dollars from where they are now, up or down, but anyway :

    you say that the technical damage is huge and it will take a lot of time to recover.
    I agree that 1500 level will be quite hard to reconquer, but we are at 1350 now, and I see forecasts everywhere wondering about 1000 $ !!!
    Now, technically, I see that the Weekly Bollinger down is at 1455!
    So, on a weekly scale of time, we are already Under the Bollinger by more than 100 $.
    Do you think this is sustainable and can get worse?
    I've seen capitulations, but it's hard for me not to consider at least a swift bounce up back towards them in the very short term.
    Am I wrong and can the prices keep plunging?

    Sinclair also said "Gold will go to new highs as soon as they have all they can get in the physical market."

    Don't they have a chance to do so right now?
    Are they able to propell gold like a sky rocket?
    I remember Jim also writing : "Manipulation will NEVER end, but like in 1979/80 it will turn to the bull side." and detailing that all they have to do is change the way they manage their spread positions.

    I'm asking you if you think there is a fair chance of a big V bottom, or if prices are going to yo-yo lag between 1300 and 1400 for a long while.

    Some bulls are already disgusted that they had to sell their precious metals, I'm sure many of them did it after we broke through 1500. If we add insult to injury by letting them see prices skyrocket back today towards 1500 +, I dont't know if it won't have an incidence in the suicide rate statistics... sorry for the dark humour, but I can't help wincing and grinding my teeth after yesterday's rout.

  3. With all due respect, Hubert Du Haut; Do you still believe everything, Mr Sinclair is saying even after his call regarding gold, "the bottom is in".
    As Trader Dan says, "No one, including my dear friend Jim, knows whether or not it will continue to hold." Dan, was very very correct with this remark, and I appreciate this because it allowed me to have a balanced perspective.
    At least Mr Sinclair apologised for his call,
    "Personally, I am horrified that markets are in the hands of such people, but more so that I did not fully appreciate how disorderly they would act in markets that now have no rules for the Banksters. For this I offer my heartfelt apology."

    Being in the hands of such people, only they know if there will be "a big V bottom, or if prices are going to yo-yo"


    1. No SilverReport, I don't "believe everything he is saying" as if were a guru.
      But I also consider that it's not because the man was wrong once that everything he says must be discarded, given his experience and knowledge.
      So at least, I'm analyzing what he is saying and paying it close attention.
      I still can use may brains to decide by myself, though :)

  4. The bears have been able to do basically whatever they wanted in gold really since 1900. The only way this can end is with a 200 point up day to show them that enough is enough. Otherwise they seem to have no fear whatsoever. All the reasons for much higher gold prices are still in place.

  5. I agree SilverReport

    I do respect and appreciate Mr. Sinclair but if someone with his experience and connections can get blind sided, what chance do we have?

    My rose coloured glasses have been smashed to bits and will never be used again to view the gold market.
    Even my long term view has turned dim. Dan is totally right, every market on the planet is now subject to manipulation.
    How can gold ever rally to the lofty heights we have all been lead to believe when it can be so easily smashed by wall street raiders?

    The commentators are trying to rally the troops but some of them are starting to sound outright foolish now.

    1. Lets assume that there were 700 tons of gold sold against the june contract. Which given the volume, has to be the highest amount ever. All that selling was between 1520 and 1321. If , somehow, gold can close above 1520, and the sellers dont have that gold to deliver, the long term gold bull market will certainly make new all time highs. A big if, and this has been a very difficult time for gold bulls, but dont forclose on that possibility.

    2. on a long-term investment position, the question is indeed interesting.
      According once more to Sinclair, Central Banks will revalue gold prices to correct the inbalance of their balance sheets.
      Because it is the only solution to balance these sheets and correct the major insolvency they currently show.
      Are you convinced that this will happen?
      That, or a major sudden loss in the fiat monetary system leading to sudden hyperinflation or devaluation of the dollar.
      I don't see many other reasons to be optimistic about gold...

    3. P.S : except from the two external extraordinary events I mentionned above, I honestly see no hope on the charts for gold, on a pure technical point of view. Seems to me that 1500-1550 will now become a huge resistance overhead.
      The psychology has been affected so hard that I don't see much hope of a rebound.
      That's why I'm turning towards Dan in case I forgot something... :(

    4. I guess if the US can deficit spend all it wants, print all the counterfeit dollars it wants, and keep rates at 0%, then who needs gold? Actually, who needs anything. Its just hard to imagine no consequences to that, unless one thinks that no inflation is a consequence. Seems to me to be a reward, not a penalty, for this course of action. I wonder when the straw that broke the camels back will be applied to the dollar. If 17 trillion didnt do it, maybe 18 21 50. We all dont have forever. So need to see some progress on the gold price before too long.

    5. P.P.S : but turning towards Dan for that question is silly, because Dan is a trader, so he will focus on the day to day action, and won't try to anticipate what if this, what if that, or where prices might be within 3 months. Apologies for asking, I'm just sharing my thoughts in a troubled sea...

  6. 1. Looks like the pain isn't over yet judging from the HUI's lackluster 'rebound' today. We're what, under .20 HUI:GOLD?
    2. I would imagine that the Central Banks have to worry about crushing gold -- with all asset classes interconnected, both through covenants & psychologically--a destruction of the class would likely create a contagion. Especially if the idea of deflation spreads.
    3. Just because the Fed is formidable, doesn't mean it can't fail--2008-2009.
    4. At some point there has to be a reckoning of all the money created. I think the recent Carmen Rheinhardt interview with Der Spiegel was very insightful.
    5. While the Dow & S&P are up today-mostly on Coca Cola, Goldman is down! Things are looking shaky. And when you look at the Dow Transports, it is absolutely ridiculous--group is being taken higher by absurd levels by UAL & the profit-less airlines.


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