Monday, April 25, 2011

CRIMEX Defends $50 Silver

Regarding margin hikes on Silver futures positions today:

This morning we saw this -

Rein In Rampant Speculation Or Face The Black Silver Swan
Dian L. Chu, EconMatters
The easiest way for the CME to lessen the probability of an epic crash in the Silver market, and the subsequent public and regulatory inquisitions, would be to raise margin requirements by at least 30%, as the starting point.

Actually, the CME could be a little late based upon the manner in which silver speculation has gone bizzerk, especially over the last trading week--the market has simply become parabolic. The CME could have raised margin requirements once Silver broke $40 an ounce, and without a doubt they should have raised margin requirements on the 14th of April, before this latest 12% weekly move.

The longer the CME fails to address the problems in the Silver market to rein in excessive speculation, the more risk there is of an extreme market crash. Just as I said before--"The white metal appears overbought and could be heading towards a bubble stage," and without QE2, that bubble would have formed and burst by now.

This afternoon we saw this -

Silver Margin Hikes Begin... And Nobody Notices

by Tyler Durden, ZeroHedge
As expected, the Shanghai Gold Exchange just announced it had raised the level of deposit required for its silver forward contract by 3 percent and may roll out further measures to curb excessive speculation and manage price volatility. According to the SGE, margins on its silver [Ag (T+D)] forward contract would be raised to 15 percent from April 25 compared with the previous 12 percent, according to a notice posted on its website. Silver did not even pretend to react on the news.

Then this evening we saw this -

CME Lifts Gold, Silver Margins by 50%
CME Group announced yet another series of margin requirement increases for gold and silver futures contracts.

Effective after the close of business today, initial and maintenance margin requirements on gold and silver will increase 50%, according to CME Group. CME is the owner and operator of the New York Mercantile Exchange and Commodity Exchange (COMEX), on which precious metals futures contracts are traded.

Today’s announcement follows several margin increases over the past year, as the exchange seeks to limit speculation as precious metals continue to surge higher.

Silver!  No market is more volatile.  No market is more crazy.

Talk of Silver Bubble Is 'Silly,' It's Tied to Declining Dollar, Other Currencies
By JS Kim
While it is true that silver will pull back and consolidate after an enormous run higher (a mind-boggling 162% since the end of last August!) at some point probably in the not-so-distant future, and while it is true that silver will likely experience some very volatile dips to the downside as well this year, the next significant dip in the price of silver will not mean that the silver bubble is bursting as the disinformation bots in the media will assuredly report when it happens. In fact, I expect the silver bears to proclaim this recent huge move as a "blow-off" top that marks the inevitable bursting of the silver bubble. I would be disappointed if they didn't. My take? I will use any significant dips in silver price in the future to convert more of my savings into physical silver. Let's wait until silver reaches the mid-triple digit range before we start talking about a silver bubble.

1 comment:

  1. Found a chart comparing today's silver bubble with that of the 1970s