Guest Post: Interpreting The Silver Move Yesterday

Tyler Durden's picture

Submitted by FMX Connect

Interpreting the Silver Move Yesterday

The game is rigged. The small guy cannot compete. Today's margin raise in #Silver is an example. You cannot compete with the unintended consequences of flawed market structure no matter how smart you are.

They have unlimited cash for margin borrowed at fed discount window. You have a 20% rate Mastercard with unredeemable points (capital one lies).

They tell their creditor, the US Treasury, what assets on their books are worth (mark to myth). You get told what yours are worth by the banks or some objective 3rd party and must pony up the cash to cover the difference.

They have no need to assess VaR, their balance sheet is infinite. You have to think about your next pay check and must decide whether 2 cars are really 1 too many.

When the comex raises margins, all these things force you to puke your longs, and incentivizes them to add to shorts.

And somehow the info comes out post floor hours, during the thinnest trading time of all. Not hard to push a market on news like that. But more telling is that the silver market drops precipitously before the close.

Your superior intelligence and bankroll mgt is no match for their fed sponsored balance sheet. You will not win in the long run.

Casinos change decks midgame too you know.

If you’re right, they raise margins, prevent physical delivery, tax sales, make ownership illegal. You cannot win.

Like everything else, those that are in power want only to stay in power. Free competition is a risk for incumbents in fin, pol or govt
Right now levers are being pulled, rules lobbied against and changed, markets managed to make sure they stay in power. Its not a conspiracy, just self interest.

There are good people with good intentions out there trying to keep the markets level and fair, but the money determines the rules now in a significant way. Rules can be gamed.

We are a nation of laws , not ethics, and you cannot legislate morality without leaving a loophole somewhere.

Raising margins was not an exchange ploy to hurt you. But when was the last time margins were raised after a sell off? It has probably happened but I’m willing to bet the action is lopsided to the rally side.

Raising margins was not a scheme to crush you. But why is it needed, when for every long there is a short? And when the shorts have infinitely more capital than you, and there is no short squeeze of physical (as evidenced by the contango in the spreads) Trading SLV doesn’t help, they arbitrage both sides from one account.  You unfortunately do not have a letter of exemption for position limits and  for carrying positions in 2 markets and cross margining agreement with your clearinghouse.

By  Elizabeth Thawne

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umop episdn's picture

Buy physical silver, and keep it out of bankster hands. The banksters don't have lots of silver, but they do have lots of gold. Therefore, buy what they don't have, and take delivery. Silver, female dogz! Arrrrooooooo!

flacon's picture

Maybe we should be ordering from the bullion banks themselves instead of ordering from KITCO/APMEX/GOLDMONEY.COM. We need to get the silver away from the banks. 


I know it's not much, but I've already left ScotiaBank 1000oz poorer. 

SheepDog-One's picture

Sure sounds like sound logic to me!

MarketTruth's picture

You forgot perhaps the best gold and silver dealer of all:


jus_lite_reading's picture

You better buy SILVER AND GOLD NOW before the war begins-- BREAKING NEWS about the missile launch: Reports circulating it was a Tomahawk BGM109, in retailation to Chinese moves.

ArgentDawn's picture

Sorcha Faal is not a credible source. That is who is originating this "reports circulating around the Kremlin today.."

jus_lite_reading's picture

Correct. A year ago I stumbled upon that hokus pokus site after clicking on a link about the "Financial Meltdown". If true, then that "news" has no merit. The subject line in my email caught my attention... should have done some DD on the real source!

SheepDog-One's picture

Could have been what was launched, but it could never make it anywhere near China with a range of 1,500 miles.

unky's picture

Keep ownership illegal?

That may happen in the U.S. but I m sure lots of people got physical PMs outside the U.S.

espirit's picture

Uh, that's just a pewter 4 ought chain I'm wearing.

Hearst's picture


First post here and had to start with that.  Nice to meet you all.  The move yesterday by the CME was an act of desperation.  JPM & HSBC were undoubtedly bleeding because of their nefarious short positions.  Silver in hand is still selling for $30 per oz.  These crooks are being called out and I believe something big is on the horizon.'s picture

Welcome, bitch. Bitch in the singular precludes the use of the cool "z." Damn.'s picture

The banksters don't have lots of silver, but they do have lots of gold. Therefore, buy what they don't have,


There's 3 times more gold held in the form of jewelry than is held by the central banks. Cash for gold exists because the bankers are buying what you have and what they want more of. As for silver, carry on...

Millivanilli's picture

Elizabeth, EAT SHIT.

This game is MUCH BIGGER THAN JPM NOW.  The whole FUCKING SYSTEM IS ABOUT READY TO MELT.  China has decreased silver exports by 60 percent over last year.  These fuckers are losing control, starting with the FED.   The government will never confiscate DICK.   We are a heavily armed nation and about the only thing they'll get is SHOT. 

notadouche's picture

Well am I a fool to believe this weakness is a buying opportunity?

mark mchugh's picture

No way.  But honestly, it's probably not correct to call what happened yesterday "weakness."

The theoretical, day-to-day paper price of silver is noise in the long run.  The stuff is relatively scarce and very useful, so it has intrinsic value (arguably moreso than gold).  The paper money it gets quoted in, not so much.'s picture

The stuff is relatively scarce and very useful

Much like Ron Paul's integrity and courage.

mark mchugh's picture


Examples of integrity and courage from RP are very scarce indeed, but would be very useful.

Example: For as much as St. Ron whines about "auditing the Fed,"  he might be interested to know that the Fed has a government appointed, inspector general who is supposed to "conduct independent and objective audits, inspections, evaluations, investigations, and other reviews related to programs and operations of the Board of Governors of the Federal Reserve System (Board)."

The person charged with the task of auditing the Fed, Elizabeth Coleman can be seen here, in what appears to be a tranquilized fog, not even understanding the questions she's supposed to answer:

Now, you'd think Doctor Paul would be all over this incompetant, cross-addicted stooge like white on rice, wouldn't you?  Calling for her immediate removal, so that we could get a real auditor (maybe one of his Paultards) in there ASAP, right?

Maybe you can point me to a link where RP calls for Coleman's firing, cause I can't find it.  That to me would actually be an example of "integrity and courage."

Until you can find that link, I think it's pretty safe to assume Ron doesn't have any hair on his nuts.'s picture

Until you can find that link, I think it's pretty safe to assume Ron doesn't have any hair on his nuts.


Right. Because you have the master plan and any one who approaches things differently or takes his fight to what he considers to be more important venues is wrong, wrong, wrong.

Please plan my menu for the rest of the month. I realize that you hold the key to everything and I wouldn't want to have my eggs over easy when you and you alone know that they must be scrambled.

mark mchugh's picture

I'm just curious, are you cool with Elizabeth Coleman and the job she's (not) doing?

No one in their right mind is.  Your boy has been (supposedly) championing this crusade his whole life, yet he won't speak up about this?  Why?  Cause he doesn't think the Fed is constitutional, so he doesn't have to speak up against corruption and incompetant oversight?  That's his fucking job and he's too much of a pussy to do it.

But he'll make it all better when he's president....

Dream on, dude


Ludwig Van's picture


I'm still trying to figure out how the Fat Boys dumped Comex silver after the close out into the Globex.


hbjork1's picture

The country isn't going to shut down, inflation or not.  Companies that are making usable quality product will continue to make money whether it is precious metal based or not. 

I agree that it may be a buying opportunity but am waiting for things to get at least slightly oversold.


Quinvarius's picture

Physical delivery of non paper assets is what the world is flocking to.  No way will they stop a rush to physical with a paper game.  The whole idea of leaving paper is why people are going to PMs.  All they did was put silver on sale for 12 hours and make the problem worse.  They need to back off and let silver stabilize at a higher price rather than encouraging more paper shorts come in and load it up with rocket fuel.

Stuck on Zero's picture

All true except for a few factors:  1) The prices of precious metals are being set in markets in Mumbai, Hong Kong and other places just as much as New York and London these days, 2) eBay will tell you what real spot prices are (that's where real metal changes hands), and 3) investors must think long-term e.g. buy and outlast the powerful shorts.

RockyRacoon's picture

Selling prices for Silver Eagles on eBay running well over $30 each, with many being over $33.   'Nuff said.

unwashedmass's picture

ah, but, those of us who have bullion....and paid for it in cash......

Dr. Richard Head's picture

I had some encouraging news this morning.  One of the top sales reps in our company, who has listened to what I was saying two and a half years ago and has noticed what has come to be, just informed me that she bought her first couple of pounds of physical silver.  The unwashed masses are starting to see the seeds, that many of us planted years ago, starting to sprout.  They fear missing the harvest and are starting to act. 

This was the best news I have heard in a long time. Does anyone know the percentage of the US population that holds physical?

RockyRacoon's picture

All of 'em ain't telling -- so any number would be spurious.

Dr. Richard Head's picture

You are very wise for a racoon.  Very wise.

Clycntct's picture

For starters put a number on the % of peeps that can't afford anything.

That will get you closer to what % can.

MGA_1's picture

Hmm.... I think this kind of stuff just slows the bull market down, but seems to me it's still quite intact.  It's possible that a galloping silver price might be more than just JPM.

Bearster's picture

Is this what passes for analysis??

While I have no doubt that regulations are for the benefit of rich, politically-connected incumbents, that didn't change yesterday.

What did is the price of silver. And gold. As stocks. And the Euro, the pound, the CHF, copper, and practically everything else under the sun. All at the same time.

I don't think one can ignore all of the rest. I don't think what happened yesterday has its explanation in the silver market.

rsi1's picture

Simple, if the price goes up, it makes perfect sense to increase margins, since the contract remains 5k oz, so the risk is higher, because the notional is bigger. If you buy something on margin, and they asked for 20% margin initially, and every day they pay you any P&L you make, and the price goes up, if you always have to post 20% margin, your margin will of course be higher every time.. and the opposite if things go against you.. I think its just logical. and margins are still relatively low.

What is interesting was the reaction and the timing, a lot of people were scared and as soon as there was a catalyst, stops went on flying..

London Dude Trader's picture

That's bullshit, the CME always varies margin requirements on any futures contract when there is a significant change in market conditions. $6.5K margin for an SI contract is probably still too low, as yesterday's move would have easily exceeded the margin itself.  

unum mountaineer's picture

xie xie ni benny boy..xie xie ni blythe..xie xie ni jamie..and last and not least, xie xie ni beautiful bastaard!

Charley's picture

QE is a weapon against non-dollar denominated assets. You are being herded lemming-like into other currencies to bid them up. This will force those currencies to squeeze their population to wring out more tribute for the empire. If you run into metals, you are defeating the purpose of the thing.

You are troops being deployed in a currency war, but you want to be home safe in bed. Not happening. Not until China capitulates.

Cathartes Aura's picture

QE is a weapon against non-dollar denominated assets. You are being herded lemming-like into other currencies to bid them up. This will force those currencies to squeeze their population to wring out more tribute for the empire. If you run into metals, you are defeating the purpose of the thing.

worth repeating. thank you.

TradingJoe's picture

Best way to protect yourself, DO NOT TRADE ON MARGIN! I do have a margin account but I use margin very seldom and close out fast, no chance for the pigmen to get me! Not looking to make a killing, rather little by little beat them at their own game! Soon it will be over anyways, markets are setting up for a huge drop, between Nov 15 and Dec 15 it will all be "said and done"! POMO/QE2 or not, this is DONE!

SilverIsKing's picture

Please expand upon the November 15th date.  What happens on or after November 15th and why?  Thanks.

NOTW777's picture

"There are good people with good intentions out there trying to keep the markets level and fair, but the money determines the rules now in a significant way."

really? who?

SheepDog-One's picture

I dont know...and whose business is it anyway to be fairness monitor for silver purchasers? What, shorts weren't getting a fair shake somehow?

FUNNY how the market playground monitors only see a fairness problem when the SHORTS suddenly are getting creamed!

If theyre worried about fair trading go to the FED and shut down the manipulation masters at the source. Hypocrites everywhere.

Steak's picture

random tunes on a random day

playlist throwback

game recognize game (a playlist):

CD's picture

Thanks, Steak. Firin' it on up.

SheepDog-One's picture

I guess the secret was buying silver at $9 and putting it in your own safe, NEVER allow banksters or traders access to your money or trades. Worse than Barbary Coast pirates.

JonNadler's picture

I have it on good authority that silver will colapse to 3.58 by tomorrow.

JonNadler's picture

hey hey, a bit more respect here, after all am a senior ANALyst

TheDriver's picture

Love the new avatar, Jon. I feel like I've seen it before somewhere.

Al Huxley's picture

Thanks for the heads-up Jon.  And here I thought you were only a gold analyst.