CME Hikes Gold Margins By 22% And Gold Drops by....0.4%, Resumes Climb

The commodities exchanges are doing everything in their power to knock down the price of gold, including raising margin requirements, which was successful in torpedoing silver prices back in early May.  They do this to protect the large exchange constituents who are naked shorting the precious metals in the futures exchange.  Of course, artificial suppression by changing the rules of the game only have temporary effect when there is heavy demand, and those effects are having a shorter and shorter half-life, as physical buyers bid up prices as they drop.  In the past, leveraged longs would liquidate in a panic sell.  Today, physical buyers are more than happy to load up when the price drops, as they can buy at lower, more attractive prices.  These buyers include big institutional buyers in Asia and Europe, and lately, sovereign wealth funds and central banks themselves.  The big bullion banks naked shorting the PM's are coughing up blood, because they can't shove around the small speculator longs anymore.  The counterparties have just as much capital as the commercial shorts, and aren't flinching when bear raids are manufactured.

Of course, the CME will reason they must hike margins as prices soar "to reduce volatility and risk", and that is true to some extent as prices rise, but the unwritten reason is they are coming to the aid of the large bullion banks who are getting crushed by their naked short positions.  These shorts will also claim they are net long in other markets to justify their outsized short positions, but that's just a veil to hide behind their surreptitious suppression schemes.  There isn't enough physical gold or silver--or even paper contracts to offset their huge short positions.

And due to the 100:1 leveraged nature of the paper schemes over physical inventory, every bar that gets taken out of the markets by longs demanding physical delivery, means 99 other derivative claims must be accounted for--or "covered."  There just isn't enough physical inventory to account for all the paper trading that occurs on a daily basis.  A default must surely occur at some point, as the world runs out of silver and gold.  We all know how that end game will play out. 

http://www.zerohedge.com/news/cme-hikes-gold-margins-22-which-gold-ignores-completely-resumes-climb-above-1800