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Here’s one for the conspiracy theorists who
thought that the increased margin requirements during a period of high
speculative activity in gold and silver was purposefully done to crush the
prices of the metals. The CME group has announced it will lower margin
requirements for gold, silver, platinum and copper futures at the close of
business this Monday. Therefore, if the theory that the margin increases was
to raid silver longs and cause the sell-off, then wouldn’t the opposite
now apply? Gold is down $18.00 as I write this with silver down .46 cents an
ounce. Back to the argument had here many times in the past. The falls in
silver were not because of what the CME group did (although in part, over
margined speculators had to take action) but were the result of liquidity
driven events and when a market is so full of speculators, it was bound to
get crushed. Just because everyone repeats the same theory doesn’t
necessarily make it true.
I say this because it is important to not be blinded
by the same overly repeated drivel that permeates the internet. One must
always look deeper into the reasons why a particular asset class sells off
not only the same 4-5 web-sites that continue to pound their fists when
silver gets knocked down all of whom use the same rhetoric. ALWAYS examine
the bigger picture and no matter how much anyone likes an asset, there is
always a time to sell it and always a time to re-purchase it.
I ask you this to ponder. If silver sold off because
of margin hikes, shouldn’t it be rallying now in the face of lowered
margin?
Kitco News -Margins will be lowered in CME Group
gold, silver, platinum and copper futures as of the end of business on
Monday, the exchange operator announced late Thursday.
CME Group also
announced margin changes for crude oil, coal, natural gas and refined
products.
A CME Group notice
announcing the margin changes said they are the result of “the normal
review of market volatility to ensure adequate collateral coverage.”
Typically, exchange operators raise margins—which are collateral to
back up a trade—when volatility rises, and vice-versa.
For the 100-ounce Comex gold contract, the margin for “initial”
speculative positions will decline to $10,125 from $11,475. The maintenance
margin for existing speculative positions, plus all hedge positions, will
fall to $7,500 from $8,500.
In the case of the
5,000-ounce Comex silver contract, the new initial
margin for speculators will decline to $21,600 from $24,975. The maintenance
margin for existing speculative positions, plus all hedge positions, will
fall to $16,000 from $18,500.
For Comex copper futures, the new initial margin for
speculators will decline to $6,750 from $7,763. The maintenance margin for speculators,
plus all hedge positions, will decline to $5,000 from $5,750.
The new initial margin
for speculators in Nymex platinum futures will fall
to $3,850 from $4,950. The maintenance margin for speculators, plus all hedge
positions, will decline to $3,500 from $4,500.
Margins were also
lowered for smaller-sized gold, silver and copper contracts. The exchange
also lowered margins for iron ore and hot rolled steel futures.
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