They're doing their best to hold them back. CME Raises Gold Futures Margins By 6%, Hikes Silver Margins For Second Time In Under A Week Tyler Durden's picture Submitted by Tyler Durden on 11/16/2010 08:09 -0500 If at first you don't succeed at killing the higher beta stock short hedge, try again. The CME has just raised its margin requirement on silver again, bringing maintenance margins up from $6,500 to $7,250, after hiking it less than a week ago for the first time and preventing silver from surpassing $30. Of course, why the CME is raising it more after the spot price of silver is now far lower than where it was at the first raise is a good question, but is most certainly due to the exchange's "risk mitigation" concerns, and has nothing to do at all with the intent to continue killing PM prices. Far more importantly, the CME has finally relented and also raised gold margins, as we had expected. The new maintenance margin is up from $4,251 to $4,500, a minimal increase just to allow the CME to have the option (and making speculators well aware of this) of hiking rates again at any point it so chooses. All in all, all is now fair in fighting excess record liquidity. Look for a second round of imminent margin hikes in cotton, sugar, coffee and wheat, as the exchanges are suddenly very concerned about what retail margin collapses may mean for the non-existent wealth effect.
Ouch. Gold got rocked. Buy the dips guys. Avg down straight to 700 an OZ. Forget the fact there's a ton more in the ground and it's just a shiny piece of metal.
It's shiny though, so that counts for something right? Surely the glitter alone should make it worth at least 750.
The margin requirement applies to shorts too. IMO the higher margin requirements are good and should be raised further. Put the contracts into strong hands, fully capitalized. The main difference in the gold market vs. 1930s and prior and the reason for this current bull market's longevity is the internet. People are finally figuring out the money scam and we will likely see an end to fiat in our lifetime. In 1930, perhaps 1-3% of the population understood. Today that % is much higher and growing.
LOL! Contracts get assigned delivery by the exchange. You have no control over who your counterparty is unless you are doing an OTC deal directly with a producer.
Looks like the time to exit longs here. If you are holding ala my prescription, then sell 20% and look to buy silver in the $35 area. Seasonally we probably won't see much but downside until the Fall. If you overleveraged, got lucky, and have enough to retire, then exit 80%. Hold 20% for fun. You know... resistance is a funny thing. $50 silver from 1980. Why is that resistance? Well, some of the top of the "elite" believed they were immortal. They leave instructions with lawyers and trusts and brokers that go back 30 years. Most are probably dead by now, but their orders go on executing.
After a bit of thought... you might update my trading plan and assume a $700 floor on gold for calculating margin and risk.