The Golden Truth: CME Raises Silver Margins - 4th Time SInce Last Monday

Wednesday, May 4, 2011

CME Raises Silver Margins - 4th Time SInce Last Monday

This is truly unbelievable and, I believe, unprecedented over the last 10 years. The CME has jacked the margins on the contract again from $16,200 to $18,900 - another 17%. Here's the LINK This is a full 61% since last Monday. This can only be seen as a sign of true desperation by the bullion banks - in their war on precious metals - who control the Comex and who happen to be short several multiples the amount of silver available at the Comex to deliver into their shorts if they get called for delivery over the next 12 months.

It will be interesting to see how long it will take for the artificial price discovery system of the Comex to substantially disconnect from more valid price discovery mechanism of the global physical silver market. Right now it takes about $4-5 over spot to buy a 500 oz. box of 1 oz. Silver Eagles - if you can find them. Tulving has been out of them for several days now, which tells me the Mint hasn't indicated when they will resume the next shipment. If the demand for silver in this country via the Mint can not be met at these price levels, doesn't it suggest that the "real" price of silver should be higher? At least higher to the point at which buyers can freely source what they want from sellers at a price somewhat consistent with the spot price as set by the Comex and LBMA...

It also suggests that the vaults holding silver for the SLV trust which are controlled by JP Morgan, by far the largest of the silver shorts on the Comex, are more than likely harboring more dust than they are deliverable physical silver (I contend that it is mostly leased out). Don't hold your breath that it's not, Ted...

16 comments:

halWednesday, 04 May, 2011
Is true price discovery what say for example, a JPM may be paying quietly to buy a contract from certain longs?
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EconomicDisconnectWednesday, 04 May, 2011
Most say this is natural for a volatile thing like silver (raise margins), but seems overdone. Hike margin for TZOO and LULU and lets see what happens! Soo many people in a panic right now. Just relax.
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Dave in DenverWednesday, 04 May, 2011
Hey GYC. Good vacation? You happy with the Saints' draft? I thought the Bronco's draft was one of the strongest in a long time.
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danteWednesday, 04 May, 2011
its like an exorcism---I'm just waiting for Max von Sydow to show up with a badge in the silver pits!
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RuiWednesday, 04 May, 2011
It's still below 10% of a silver contract. I think margins for important items such as gold / silver / crude should always be 50% to begin with in order to keep crazy speculation away from price discovery.
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AnonymousWednesday, 04 May, 2011
Make sure you take a look at this...you ever wonder why the big producers go along with this crap?

An Interesting Theory on Silver for Interesting Times in Interesting Markets, Indeed

And then we saw the repeated late night hits that started in conjunction with the CME's actions to increase margins, market actions that were too obvious to be accidental or coincidental.

I really believe that the core of the problem involves the deliverable ounces at CME, a big looming problem. I think the CFTC knows quite a bit more about the dynamics of this market and its associated and opaque derivatives than they admit. And I believe they are desperately concerned.

I did post a link from Ben Davies this evening in which he speculates that the high prices brought a load of scrap into the market, which is what prices do. But that scrap has not been measured, and it would have happened rather quickly, in a matter of weeks. I do not think the refiners can produce new eligible bars quickly enough even from scrap.

http://jessescrossroadscafe.blogspot.com/2011/05/interesting-theory-on-silver-for.html
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EconomicDisconnectWednesday, 04 May, 2011
Dave, yeas vacation was great. Wife caught a huge barracuda while fishing! I have not had time to recap all the draft stuff but what I saw the patriots get made me confused as to what they were thinking. Please beat out the Chargers next year, I hate that team.
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Dave in DenverWednesday, 04 May, 2011
LOL. Denver could be good next season - if we have a season. Did you eat the barracuda?

I only saw the QB they drafted. He could fit in with Belicik's system.
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Dave in DenverWednesday, 04 May, 2011
Thanks for the link anonymous. Who the hell is Ben Davies that all of a sudden in the last 12 months he gets all this media exposure like he's some kind of metals expert. He didn't even know what gold and silver were when a lot of us were buying it at $300.

I have not read any reports about scrap coming out. the JB report which you can read in the Midas letter every night would have already chronicled that if it were the case. The premiums in India and China right now suggest the absence of a flood of physical selling. The U.S. mint can't supply enough silver to meet demand.

I think Davies has learned a lot in the few years he's been doing this but I don't think he focuses on this sector with 100% of his time and energy the way many of us have for at least 10 years.

I think what you say about the Comex/CFTC is dead-on accurate.
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mabmanWednesday, 04 May, 2011
http://www.zerohedge.com/article/cme-margin-hike-4th-and-5th-charting-parabolic-rise-cme-silver-margin-hikes

400 comments - thats impressive.
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longshoerflatThursday, 05 May, 2011
Wrong ... margin is $21,700 as of Monday ... need to read whole release!
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AnonymousThursday, 05 May, 2011
Ben Davies is a fixed income trader and ran RBS Grenwich Capital into the ground specializing in the agency and mortgage-backed securities. Unsuprisingly this has gone tits up. His CFO started at Daiwa which was an across the board unmitigated disaster in London. He moved to Midland Montagu ran the US trading arm into the ground the US Primary Dealer was wound up 1990 in an orderly fashion. His team are mainly from B of A and JP Morgan.

I think he is given tit bits to gain a credibility and then will be used to spook the cows at the right times. You have to beat the grass to startle the snakes. If you think a gaussian fat tail gives you three to five days notice of a major take down then I've got a bridge to sell you in London. That's a phone call from someone in the know. If you look back over KWN he tried to do it before at $40 with a target of $20.
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AnonymousThursday, 05 May, 2011
@anonymous...between all the shills that come onto the scene with credible statements to all the prophets holding gld (soros, john "can you design me the perfect bet" paulson)...throw in the finks, barclays, the morgue and all the pseudo custodians set up to "protect?" your assets...overlay that with the corrupt watchmen (cftc, sec, fill in the blank)...you get the funny feeling everyone in the middle (the dumb public) is being played by both sides!
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AnonymousThursday, 05 May, 2011
If you don't know who the mark is you are the mark.
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HalThursday, 05 May, 2011
Abby Jo--Buy on the dips

John Chambers-"we see 50% growth for the foreseeable future"

Chambers made his statement in July 2000--Abby Jo --just about anytime.
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AnonymousThursday, 05 May, 2011
It is the liberal government which is waging war against the intelligent. If investors can outsmart them, the government can just burn it. After all, in a planned economy it is a crime to know more than the planners.
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http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

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"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

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