Wednesday, November 17, 2010

CME raises precious metals margins requirements--again

In another desperate attempt to knock down the futures prices of gold and silver, the CME raised the margin requirements on gold and silver futures contracts.

I hope they raise the margin requirements to 100%, so there will be no leverage allowed. Although that would bankrupt the GLD and SLV ETF's, which are not 100% backed by physical inventory.

The more they play the price suppression game, the tighter the noose around their own necks. Buy physical.


  1. All I can say is be careful what you wish for. If memory serves correct, I remember Bunker Hunt saying just about the same thing before the exchanges changed the rules and forbad silver purchases. What followed was a spectacular crash in the price of silver. I doubt Bunkie is trading gold today-at least from the long side.

  2. Agreed, that's exactly how the government brought the Hunt's up for charges of cornering the silver market. The reality is they perhaps had 10% of the market. Today's big commercial shorts control up to 80% of the market--only on the short side. I have no idea why the CFTC doesn't enforce existing position limits, other than they are protecting their biggest institutional constituents.

    As trading on silver becomes more volatile, the CFTC can continually increase their margin requirements, thus forcing margined longs to liquidate, which has a dampening effect on silver prices. But this time it will be different, as physical demand will prop up prices, and the remaining longs won't be as margined. In other words, they will be long and strong, and will buy the dips. And more longs will demand physical delivery in lieu of cash settlement.