CME Lowers Gold Margins, Hikes Corn, Hogs

Tyler Durden's picture

Well, all that bitching at the Comex over PM manipulation has paid off. The Chicago exchange just lowered its initial and maintenance margins by 10% from $6,751 to $6,075 and $5,001 to $4,500 respectively. In addition to GC, the CME lowered MGC, CGT, QO and 8Q contracts. Yet while it also dropped a bunch of irrelevant petroproduct margins, the CME is now targeting the Corn and Hogs speculators, apparently doing China's job for it, by hiking margins by 50% for the same crop year in C and lean hogs LN all months by 66%. Other products that saw a margin hike were Wheat, Soybean, Lumber, Dry Whey and Live Cattle. But back to gold: is this the catalyst for the next big move up? We should know within a few days...

Full report (pdf)

Margins 6.16

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DNB-sore's picture

title says it all

Vagabond's picture

Can't hike forever, you'll surpass 100%.  They have to occassionally lower margins so they can go on another margin raising spree later when price is rising uncontrollably.

Or perhaps they want to attract more investing in gold to move investment away from silver?

Or both.

gmrpeabody's picture

I didn't know you could speculate in corn dogs.

JW n FL's picture

they would allow a ramp up.. with the market(s) crashing soon(ish).. so that when they pull the rug out from retails feet next time.. they may create larger panic than this go round.. is the goal.



JW n FL's picture

They keep pretending that this problem can be solved like in the 1980's.. it can Not! be solved with the same game(s).. which leads us to an eventual confiscation by the Federal Government.

Pegasus Muse's picture

Not trying to be alarmist here.  But just listened to Jim Sinclair's latest (16 June) KWN interview.  I've never heard him this worked up about the current state of financial affairs.  He feels we could well be at the cliff's edge. 

Rynak's picture

Precisely - if it were about what i prefer, then they should hike ALL margins to lets say 50%, and then make that the minimum. This way, only something like a badass crash/surge could trigger margin hikes.

tiger7905's picture

Rick Rule see's current gold prices as a floor due to scheduled mines coming into production being based on $1400 gold. Also see's Mexico and Indonesia ceasing to be oil exporters within 5 years.

tiger7905's picture

Rick Rule see's current gold prices as a floor due to scheduled mines coming into production being based on $1400 gold. Also see's Mexico and Indonesia ceasing to be oil exporters within 5 years.

tmosley's picture

Not really.  It's not the margin level that is important, it is the fact that it doesn't change every damn day.  They need to manage their risk, but they need to do it in a way that makes sense, not by changing the rules every 24 hours for a week.

Rynak's picture

Full agreement.... which is the reason for my above post. Margins simply shouldn't change except of in highly unusual situations - and for this to work, margins need to be high enough to cover "almost everything" to begin with. Margins simply shouldn't go as low as they currently are.

TheGoodDoctor's picture

Did they ever pull back on silver?

LongBalls's picture

I don't know if they will. The inventory is dropping like a rock.

Long-John-Silver's picture

That's what happens when you put something on clearance sale.

mynhair's picture

Higher margins a'coming...

NotApplicable's picture

Anybody else read that headline as corn dogs?

For a second, I thought things were getting serious.

Dr. No's picture

people would grab their "sticks" and head for the streets!!

I think I need to buy a gun's picture

dollar devalution shortly....gld had formed a pennant(for analyzing purposes only) to the moon

gnomon's picture

I see more food price inflation on the way.  This is a pre-emptive strike courtesy of drought and floods in all of the wrong places, (and the certainty of more QE in some shape or form).

DoChenRollingBearing's picture

"Paper food" ETFs might be for you (ticker symbols below):

DBA: several different food commodities

JJG: grains only

CORN: corn only

I believe all are unleveraged.

TruthInSunshine's picture

Let's see how long such benevolence and charity on the part of the CME lasts.

In the meantime, Greece is a true land mine but not an actual threat to the integrity of the Eurozone, according to Fitch (yes, the same Fitch that rubberstamped dumpster grade mortgages as prime&plus for Goldman & John Paulson), and assuming such rubbish had an ounce of integrity, there's no follow up mention of the monsters much larger than Greece still lurking underneath the bed (and fiscally just as FUBARED):

If Greece is all that, I can't wait till we get on with the remainders of the alphabet soups that is PIIGS+UK, and I'm sure that neither can you.

swissinv's picture

maybe the starting point for a continious controlled increase of gold price

unky's picture

Its the catalyst for the big move down when QE2 finishes in the end of june. COmex wants to make it easy for the little guy to short called with fewer margin requirements. SO beccause a leg down is coming for sure, they lowered the margins.

When the gold inevitably rises in autum they will increase the margins once again.

onarga74's picture

I heard that Paulson got on the blower today and told em he needs to find a home for his gold tonnage

Quinvarius's picture

Gold is the logical place for them to funnel inflation that will eventually raise the value of US gold reserves to a point where they will balance out the US debt.  Eventually the Fed and the Treasury will figure that out.  High gold prices = US solvency.

ReallySparky's picture

If the gold is still at Ft. Knox.  There have been many articles about the fractional gold system.  That gold may have been borrowed or pledged by TPTB.

richard in norway's picture

only if you have gold


do you punk do you have gold


i mean the US govt, not you personaly

Greeny's picture

Yeah, punk, if will ever need gold they will

get it one way or the other. They can simply knock down

miners like they doing it lately, and buy few of them

for fraction of the cost and get Gold at production cost,

simple as that. Or confiscate it from ZH punks

for $20/oz (set and release price) :))) *LOL*

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Yes, nationalizing the miners is something they will do and probably put a huge tax on precious metals sales and whatever other things demons "attempt" to do.  But, their days are numbered.  Just think Romania 1989!


Tuco Benedicto Pacifico Juan Maria Ramirez

DoChenRollingBearing's picture

Then it's off to the black markets.

No way they'll get much of the gold in private hands.  FDR only got some 10% I read.  

I also concur that the demons' days are numbered, but it might be messy along the way.

Quinvarius's picture

Actually, no.  I don't think they have any.  After seeing how willing they were to dump US paper on the market to save the banks, I have no doubt they were just as willing to dump gold to protect that idiotic carry trade that was going on.

Dr. No's picture

which is why i encourage the gov to sell all its gold now!  get that gold into the hands of the people!

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Dr. No, I don't know if you met Goldfinger before his unfortunate exit from his jet, but in any case you should know that there is no gold in Ft. Knox.  On June 23rd congressman Paul is going to have a committee meeting with some bureaucrats and push for a real audit of Fort Knox.  Last audit of Ft. Knox was in 1953 by order of President Dwight D. Eisenhower.  In 1974 six congressman and one U. S. Senator got did a PR walk through of Ft. Knox but that was it.  (I wonder if that pool table is still in there, the one that flipped over and had a miniature model of the Ft. Knox grounds?)  Anyway, there is no there, there except for those two one gram pamp suisse gold bars (one missing its assay card) that I have been telling people about.


Tuco Benedicto Pacifico Juan Maria Ramirez

theMAXILOPEZpsycho's picture

this is absolutely not the plan...but I wish it was because I'd be rich, rich, rich richer than my wildest dreams!

gall batter's picture

rich?  rich?  so what?  what good are riches when fukushima is fuking the people, the pacific, the marine life, the west coast, and more?  what are riches, anyway?  

JW n FL's picture

riches are a healthy, happy family!


anything outside of a healthy, happy family.. that a man is lucky enough to enjoy are truly blessings of the Republican Party.

gall batter's picture

plus loving and being loved.

theMAXILOPEZpsycho's picture

yeh but at least I'll be turning high class whores every night

DoChenRollingBearing's picture

Shell Game

+ $1530 today on FOFOA

+ $55,000 in 2 - 3 years?

ReallySparky's picture

So I guess the plan is to lower margins on gold, sheep/retail wade/pile in - Greece defaults around 6/21, Banks bail/sell commodities to cover CDO collateral (over the course of 3 weeks), some money rushes to Amerika, stocks, dollar increase in value briefly - China buys all commodities at discount with Treasuries that briefly increase in value due to Fed capping price - and then it all falls apart around August when CONgress/SINate can't get together on the debt ceiling/budget.  Everybody then moves to Australia/China/Canada.  

99 bottles of beer on the wall, 99 bottles of beer...take one down, pass it around 98 bottles of beer on the wall.  Rinse, Repeat.

Keep stacking the physical.  Party is almost over.

swissinv's picture

Who knows but people tend to underestimate the power of central banks - even in this incredible f.... mess it's likely to kick the can down the road again for months... I rather tend to see hyperinflation accompanied with a hard landing.

DoChenRollingBearing's picture

I agree with you both.

Protect yourselves with gold.  The best wealth preserver in town.

If you see a grim future, get started ASAP on survival preparations as well.

Food & water, guns & ammo, meds & first aid kit, etc.  A big job.

Read all about it at my blog.  Send me a gmail and assure me you will behave and I will send the link (I ask this as I use my real name there).

Long-John-Silver's picture

Keep stacking the physical.  Party is almost over.

It's so nice of them to put physical Silver on clearance sale, BTFD!

rayban's picture

If I recall correctly ES margins were lowered at the end of May...

user2011's picture

COMEX lower the gold margin is because of the competition from Hong Kong.   Hong Kong market has less manipulation.   Now  Comex want to lure traders back.