The recent margin hikes in silver have been 'successful' if the intention was to beat down evil speculators with the naughty stick... Buoyed on by their initial success in silver (20%+ drop so far from highs in less than a week), does this now raise the serious possibility of the grand plan being extended to other commodities, likely targets being oil, and then the range of food commodities, such as wheat, corn, soybeans, cocoa, coffee,..? It would help Bubble Ben ward off inflation, for one, so I'm sure he'd be a fan. Of course, the 'unintended consequences' will loom large in the future, but hey, when did that ever stop a short sighted politician? And would a sudden scramble to meet margin calls by hedge funds and pay for rapidly deteriorating long term commodity positions ultimately lead to waves of selling in stocks and bonds? Nixon's price controls were an abject failure in the 1970s. Will Obama's anti-speculation measures suffer a similar fate?
There should be no margin at all. Anyone should be able to buy 100,000 ounces of silver with nothing but their signature and proof of membership in the tin foil hat club.
Actually, you have a pretty good idea there. Hiking the margin requirements will certainly take the speculative steam out of commodities. Oil back to $40, silver @ $12. Quite possible you have clued in to what would be a very effective Gov't strategy. Lots of speculators would be crushed but.. so?
Addendum: Yes, a mad scramble for cash would result in mass selloffs in everything but if the margin requirements are graduated over several months it could be quite orderly. But how to insure that the mad money stays in circulation and we don't get deflation?
Right. The speculators are "no good, stinking capitalists"... and we know how Odumbo and the Left hates THEM guys! (Not to mention... if it weren't for successful capitalists, the Leftists tit-suckers would have no teat from which to parasitically suckle...)
Hey.. speculators aren't evil but they are gamblers; if they weren't trading commodities or futures or options they'd be at the track.
Aha! This is where the PLUNGE PROTECTION TEAM steps into battle to buy up stocks. Bubble Ben provides the cash, freshly minted. Next step : - Raise margins on selling ES futures, decrease margins on buying ES futures!!
I get the feeling the climate is one whereby politicians need to re-learn some old lessons. Margin hikes are coming across the board. Read between the lines here and Obama's recent remarks about oil price rises. If this happens we're going to get some great volatility. Perhaps a good idea to get some cash on hand to play some big moves? I've been adding to LONG VOL positions today. We'll see...