And Like Clockwork, CME Hikes Silver Margins Halting Surge

Tyler Durden's picture

In tried and true fashion, just as Silver was about to viciously destabilize the global capital markets as it surged to new 31 year highs, the CME stepped in and did its usual 3-6 half life intervention by hiking initial and maintenance margins on silver futures from $11,138 and $8,250 to $11,745 and $8,700 respectively. This is merely the latest margin hike in what appears to be a neverneding series designed to reduce speculative "fervor" courtesy of endless liquidity. What it will do is merely provide a better entry point for those who by now realize that silver's next stop in the fiat endgame is $40, then $50, and so forth. Naturally, the price drop in silver caused gold to sell off too. And now that the CME accepts gold as collateral, we can't even visualize the reflexive loops that develop once the metal that is also a collateral currency becomes more and less valuable at the same time.

And while they are at it, the CME decided to remove some of the Uranium volatility by hiking maintenance and initial margins in Uranium Futures (UX) by about 50%.

From the CME:

This is what a coparable margin hike looked like in November.

This is certainly not the last margin increase - by the time this is all said and done, "speculators" will need to overfund cash positions to trade precious metals per executive directive.

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NOTW777's picture

thanks. need to reload

nope-1004's picture

JP Morgue has a new vault to falsify delivery and inventory data, CME hikes margin requirements, next it will be ICE repeating this broken record...... it's all in a days work if you're a white collar criminal-banker, a Cranker.

Another glorious buying opportunity for me.... ;)

Carl Spackler's picture

I see no problem with CME or ICE hiking margins on precious metal contracts.

The exchange has to manage its own credit risks.

cswjr's picture

Uh huh.  Hiking margins during the trading day on a hugely up day when non-commercial specs are WAY long.  Lot's of credit risk there.  And the shorts have Fed cover.


Harlequin001's picture

Once all the margins are gone it'll be dollar for dollar paper v silver.

No point buying paper, market dead.

bring it on!

long juan silver's picture

I like AGQ: 2X silver.

It's an exponential relationship.

Larry Darrell's picture

"No point buying paper, market dead."


I've felt this way for awhile now.


Also, I give this beatdown the same half-life of the radioactive Xe that is blanketing the planet.

In 5.5 days, we will be laughing at this, the EE's latest feeble attempt.

Xkwisetly Paneful's picture

It is hilarious that same folks who want full reserve banking cry abt margin increases.

Robot Traders Mom's picture

I agree with you about seeing no problem with hiking margins, that being said, it is strictly out of manipulation-not credit risk.

Why are people pissed off about this? If you are a believer in silver/gold, you should be happy that this shakes some of the speculators out that are artificially driving up the price and creates more of a true base.

I fucking hate the speculators that make my physical buying that much more expensive.

Also, pay no mind to the dipshits at the bottom of the comments that talk about buying and selling bars of physical palladium. They are unemployed and troll because they are socially inept in the real world (RobotDipshit)


Imminent Crucible's picture

None of this matters. This is what, the 4th margin hike? The Merc is doing us a favor; raising margin rates only drives out the weakest hands, the overleveraged speculators.

The net effect is to concentrate the long side in the strongest hands: Those who will take delivery in cash.

Comex silver default? Can't happen as long as settlements can be made in cash or shares of an exchange-traded silver fund.  But announcing that deliveries will be stopped with cash or SLV will drive the silver market into ferocious backwardation. The physical-to-paper premium will skyrocket.

Xkwisetly Paneful's picture

Right no credit risk while have folks posting here abt how they maxxed out credit cards to buy silver. One of the ultimate signs of a mania.

The Fonz's picture

Ironically and quite predicatably when the market changes old rules do too.  If you believe that the currency is going to be massively devalued borrowing fiat to get commodities makes perfect sence. At this point if I could borrow a million dollars at 25% interest with 5 year terms I would do so.

gosseyn's picture

You mean: I bought the effing Top Reversal.  Uh oh.

gosseyn's picture

Totally agree.  Look at the percentage margin.  Now 6.3%.  In November same rate was ~7%.  Margin factor has stayed flat/declined a skosh despite mkt being up 35% since the November margin hike.  Editor at ZH needs to exercise some diligence.   I CALL BS on this article.

[Edit:  post refers to tht of Robot Traders Mom not Gubbermint]

gkidderman's picture

I agree totally .. this is the APPROPIRATE thing to to as an Exchange. In fact it is exactly what we have been railing against the Greenspan era of NOT DOING.  Can't have it both ways. ... well not unless you are TBTF. 


gkidderman's picture

I agree totally .. this is the APPROPIRATE thing to do as an Exchange. In fact it is exactly what we have been railing against the Greenspan era of NOT DOING.  Can't have it both ways. ... well not unless you are TBTF. 


gkidderman's picture

I agree totally .. this is the APPROPIRATE thing to do as an Exchange. In fact it is exactly what we have been railing against the Greenspan era of NOT DOING.  Can't have it both ways. ... well not unless you are TBTF. 


HoofHearted's picture

There's no problem with raising margins. Just pick appropriate times to do so. Wait for the pits to close and do this after hours so everyone knows first thing tomorrow morning and can start planning. Even better, why not bury it at 5:15pm on a Friday? Oh, because it wouldn't have an effect then...I'm beginning to figure this whole game out...

bobby02's picture

Amen. Margin requirements are actually way down, if you care to do the math. But then, the laws of mathematics should never stand in the way of a good conspiracy theory.


           Initial             Maintenance     Silver

3/24       11745                   8700             37.44

4/26       12825                    9500             47.22

Delta     +9.2%                   +9.2%          +26%

Mark McGoldrick's picture

Seeing JP Morgue reminds me of the December "Crash JP Morgue" celebrations at ZH.  It also makes me wonder why JPM is less than 10% from its 52-week high, and not too far from its 5-yr high (for those with math issues, that would include the 06/7 bubble years) in the face of this endless silver squeeze.  The six month chart is nearly straight up. 

I thought silver was going to bankrupt the Morgue? Everyone was frolicking and partying and toasting each other in this forum in December, as if some sort of victory was being celebrated. Instead, JPM trades like the squeeze doesn't matter, at all.  

To be blunt, this silver story has had NO effect on JPM. Zero effect.  I mean, NOTHING.  

Please advise. 

dryam's picture

Bernie Madoff's fund was worth $50 billion one day & $0 the next.  The word Enron also comes to mind.  Some folks are very talented players of the shell game.  That plus a lot of backdoor money from a desperate chairsatan & you have JPM.

tmosley's picture

Libtrolls can't learn from the past.  They just keep making the same mistakes over and over, making a fine 30 lane highway to hell.

JLee2027's picture

Well Mark it just hasn't dawned on you a rising price of silver forces those like the Morgue with a huge short position to put up billions as collateral to meet margin calls. OF COURSE IT'S HAD AN IMPACT YOU MORON.

yabyum's picture

It has NO effect on them. They play with other peoples money.

Bicycle Repairman's picture

That's right.  I'm here to collect other people's money from JPM.  A win-win.

Pegasus Muse's picture

When you are a Capo di Capo of the La Familia of Wall Street Gangster Banksters --- when you are the FED's bank --- with an endless supply of free-money from the criminal FED, it may take more than silver to bring you down.  

Perhaps a different approach is needed.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights,[72] that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

 Are we there yet?  It sure feels like it.

JoeSexPack's picture

Badda Bing! The Fed Mob makes the La Cosa Nostra look like High School kids.

'They made their bones when the Gambino's were chasin' cheerleaders!' Moe Green.

Need a Like button, Tyler.

Bay of Pigs's picture

Among other things, you apparently don't understand regulatory capture and the ending of FASB. This won't end until the massive concentrated short positions are dealt with. Either the CFTC does it's job or the physical market itself will resolve it by literally blowing up the fraud ridden COMEX.

Ted Butler explains,

TruthInSunshine's picture
I don't know about all of the rest of you, but I love the smell of desperation by the trembling lip sycophant. Bernanke to Hold Quarterly Briefings 4:07 PM ET

WASHINGTON (Reuters) — The Federal Reserve chairman, Ben S. Bernanke, will start holding regular media briefings on monetary policy next month, a shift to greater openness at the traditionally secretive central bank.

Mr. Bernanke will begin a program of quarterly news conferences on April 27 after a regularly scheduled two-day Fed meeting on monetary policy, the central bank said Thursday. It will be the first regularly scheduled briefing by a Fed chairman in the history of the nearly 98-year-old agency.

Future briefings will coincide with Fed meetings at which officials provide their quarterly economic forecasts, which fall in June and November this year.

“The introduction of regular press briefings is intended to further enhance the clarity and timeliness of the Federal Reserve’s monetary policy communication,” the Fed said.

Mr. Bernanke has taken a number of steps to improve transparency at the Fed during his tenure as chairman, and the latest announcement brings it into line with some other central banks. The head of the European Central Bank holds a news conference after each bank policy meeting, while the governor of the Bank of England briefs the media on a quarterly basis.

Congressional and public demand for greater Fed disclosure grew louder in the wake of the recent financial crisis, during which the Fed undertook extensive unorthodox emergency measures.

The Fed has a reputation for conducting its operations behind closed doors and shielding details of its decision-making from view.

Despite a gradual shift to greater openness in recent years, the Fed has fought to keep some of the details of its operations secret. This week, it lost a court battle to withhold the names of banks that had taken emergency loans from its discount window, the lender of last resort for banks, during the financial crisis.

To make its operations more open, the Fed has in recent years begun issuing its forecasts quarterly, rather than twice a year, and moved up the subsequent publication of minutes of policy meetings to three weeks after a meeting from about six weeks.

It did not begin announcing its interest rate moves until 1994.

Since the financial crisis, Mr. Bernanke has stepped up efforts to explain the central bank’s actions to the public, giving two extensive television interviews and delivering speeches at which reporters were able to ask questions.

Janet L. Yellen, the Fed’s vice chairwoman, has led a subcommittee examination of the central bank’s communications practices since November. The Fed said Thursday that it would continue to review its policies “in the interest of ensuring accountability and increasing public understanding.”

StychoKiller's picture

Increasing the number of times one can promulgate lies does nothing to enhance "truthiness!"

I Am The Unknown Comic's picture

Well Mark I see you missed my comment on the Couer d'Alene thread so I will re-post it here for your benefit:

Well this is entertaining and worth a chuckle:

CNBC headline reads "Meredith Whitney Cuts Forecast for Morgan Stanley; Shares Lower" 

She cut earnings per share from 59 to 35.  However, here is the fun part - according to CNBC "Reasons for the cut remained unclear; a copy of the note obtained by CNBC offered little supporting evidence for Whitney's revised conviction on the mega-bank" 

This is just great, fun news.  Looks like JPM is getting fucked hard by PMs, but heaven forbid anybody at CNBC report something so blasphemous as that.  We can all hope that Blythe is out of a job soon.

No word yet on when Meridith will be called before congress for this her latest treasonous, national security threatening, terrorist statement. I bet they have a special place at a FEMA camp picked out just for her.

UninterestedObserver's picture

Advise? Sure you are an idiot for confusing JPM's stock price with their balance sheet - any other stupid questions?

nmewn's picture

"It also makes me wonder why JPM is less than 10% from its 52-week high..."

Ummm...the dollar you will be paid with is down -10% over this same time your down what?...-20% and bragging?...mmmkay...LOL.

Math Man's picture

Bought more puts today...  a nice little gift this afternoon.

The big dump on margin increases shows you how speculative this game has become.

Silver will be below $20 this summer.

It only costs 5 bucks to dig it out of the ground.

And by the way, the backwardation is also declining - -  so much for the short squeeze theory.  And lease rates - also declining rapidly -  So long $36.  It was nice knowing you. 

See you below $20.

Vagabond's picture

Can we set an expiration date on this silly claim of yours?  You claim this summer, so I'll give you until September 1, if we haven't seen this long claimed correction, you go the way of the dodo.  I'm sure you'll be long gone by then anyhow as silver is more likely to hit 50 than 20 this summer.  Come to think of it, a better bet: September 1 or silver 50 you finally move on to troll elsewhere.

Vagabond's picture

To me your $5 out of the ground line is simply more reason to buy up the underpriced miners.

Confucious 222's picture

Ya know what else Math Man?

That $55 Trillion in unfunded liabilities this broke nation owes is going to disappear by summer and Superman is going to fly real fast and make the earth spin backwards and turn back time and make silver go to 20 bucks because you have promised to eat your vegetables.

See you at $45-$55 by the end of the year in the real world, if you're still visiting us mere mortals by then.


Math Man's picture

That is the funny thing about bubbles.  The rationale for the purchase is always there - and usually correct, or at least has some basis in fact.  It is the price that is wrong.  Yes, we have some big problems and the dollar could devalue over the next few years or decades --- but, the problem is, silver has more or less doubled in six months. And you're over paying for something that is more than priced in.

Buying for the right reasons, but paying the wrong price is how a bubble works.

Everybody bought dot.coms because the internet was going to change the world.  It did.  They just paid the wrong prices in 1999.

Everybody bought condos in Florida for 400k becuase the baby boomers were going to retire there.  They are.   They're just paying 150k in 2011. 

Even the tupip mania started as speculation on the increasing economic prosperity of the Dutch in the 1600s...  and they were right, Hollands global dominace continue until the 18th century.

It's always the same with bubbles... that's why they happen.  The reasoning behind the purchase is correct, but people get worked up in to a mania and over pay.

Does anyone really think the nearly doubling in price over the last six months is justified? 

It's not... you're all just victims of a mania, and it is going to end very, very badly.

Mark McGoldrick's picture

That's a great post, Math Man.  I'm happy to see a voice of reason in this libertarian echo chamber of goofiness and fanaticism. 

Can you believe that some silver goofballs actually preach "price doesn't matter?"

Isn't that hilarious?

If there is one common thread in all bubbles, it's the belief that the price today doesn't matter because it's guaranteed to be higher tomorrow/next month/next year.  And your examples fit that perfectly. 

Price doesn't matter.  *LOL*  That's like bobbing for a clue in a vat of Kool-Aid and coming up with a bunch of fish hooks in your mouth.  

RockyRacoon's picture

The price really doesn't matter.  But I'd be pissing up wind to try to explain it to you.  Might as well try to teach my dog algebra.  

Harmonious_Dissonance's picture

How much does it cost to dig it out of the ground? I missed what you said...

StychoKiller's picture

Silver (and every other commodity) is NOT rising in price, the Dollar (and every other Fiat currency) is falling in purchasing power.

Bay of Pigs's picture

On the day we see gold and silver making new highs at 1449 and 38, this PM troll trots out and says this? Your timing couldn't be any worse.

UninterestedObserver's picture

You would think the fucking moron trolls would have gone away when silver vaulted past $35

Bicycle Repairman's picture

The margin increase is a bump in the road that will last a couple of days.  Tops.  The main (and continuing driver) is QE.  Come back when QE ends, otherwise you're wrong.

Bay of Pigs's picture

It didn't even last 24 hours. We are right back where we were yesterday before the margin increases.


Racer's picture

I wish they would be so particular about oil.. that directly affects poor people