A Sunday Vertical Drop of Gold, Silver, Platinum and Palladium

asiablues's picture

By EconMatters

I was fully expecting a non-eventful Sunday afternoon when out of no where, precious metals started their contest of vertical drop, as shown int the following live charts from Kitco.com as of Sunday, May 1, around 7:00 pm EST. 

As expected, silver is the undisputed champion, dropping about 10% from the previous day's close, glod, platinum each went down about 7.5%, while palladium lost about 2%.




For now, there does not seem to be any significant event that could prompt such a move in precious metals. So, my best guess is that this Sunday sell-off is most likely related to the recent margin hikes by CME and MF Global that finally took their toll on the Silver market, forcing some big players to liquidate positions triggering a cascading stops to be executed.

According to Inside Futures, MF Global implemented a 175% margin increase over the CME's recent 9% margin hike.  Moreover, Bloomberg reported on the evening of Sunday May 1 that the CME imposed another incrase of the initial margin by 13% to $14,513 per contract from $12,825, to take effect after the Friday close.  Margins were $4,250 a year ago.

Such a huge margin increase typically will trigger a mass liquidation and reduce traders' participation in the silver market, which would also trigger sell offs in other commodities.  Crude oil and copper were both traded modestly lower, partly responding to the movement in precious metals.

Meanwhile, amid silver's recent huge runup, some investors are moving ot take profits, while U.S. Commodity Futures Trading Commission data showed hedge-funds and other large speculators cut their net-long positions in New York silver futures by 26% in the week ended April 26. 

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mogul rider's picture

Ask yourself one question

If it goes to 30 bucks or lower what will I do?

Sell the fall, buy the dip, buy the value trap to 30 or lower? Or simply hold long

You fucktard pump and dump trolls will be yapping about 55 bucks or some stupid fucking thing.

But those of you who are serious about your physical precious be clear with yourself.

Like 2004,2006,2008 your convictions about 100 dollar silver are about to be tested, IMHO. Your reversal is in, now what do you do?

You would be wise not to be leveraged here. Cause if you are Blythe will be calling

THE DORK OF CORK's picture

Stella concepts called this market (silver) beautifully - he thinks maybe$27 to $33 dollars to reenter .... maybe.

I think Gold is a different beast now however

esibz's picture

Was out mowing the lawn, and came back to that sudden drop. Needless to say I about shit my pants but I was able to lock a order in online @ $44 dollar spot. I figure it's a good as time as any to start adding some more physical to the collection.

ivars's picture

But not gold. Ratio is going to be restored. Money just goes to gold from silver.

SIlver behaving as my charts ( and many people ) predicted. How about a flash crash from 48 to 42,3 this ? Not very stable growth visible. Now its about 44, 85, back to where it was before Bernankes USD devaluation speech. For it to crash to 30 in 1 month it only need to go lower 0,6 USD/day. No more crashed needed.


I guess killing of OBL somehow has improved USD position, temporarily.

nathan1234's picture

I also think it is time that action is taken against those who have been manipulating this market.

And against the so called Overseers like the CFTC who have refused to put position limits and who have been permitting the banksters to get away with their manipulations.

A dirtier lot and those in cahoots need to be put behind bars


Mr Lennon Hendrix's picture

See the forest and the trees, little asiablue, for otherwise you miss the part and the whole.  'But they are one and the same?', you ask.  Two sides of the same coin, yes, but the coin  is nothing without you. 

Volatility is about to up end the dollar, and with it, Keynsians all.  Goodnight little asiablue.  I wish you dreams of each forest and every tree.

mogul rider's picture

What would happen to your thesis if we had a .90 dollar?



likesfood's picture

Next week people will be saying "Bin Laden who?"

Zero Govt's picture

next week they should be questioning the bill $000,000,000,000.00

nathan1234's picture

Very intriguing

When the blast comes out of Obama's birth certificate release and its fall out, we have Osama's death being announced.

And then silver is hammered down.

But Gold is firm.

Stock Markets are up.

The Euro zone and countries are still in big trouble or rather getting worse.

The US Dollar about to be dumped by the world gets another revival.

The games people play!

Which means possible this is a last ditch effort by the banksters to cover their shorts

George Huxley's picture

Obama's birth certificate release is followed closely by Osama's death. Things that make you go hmmm...

Zero Govt's picture

$80,000,000,000.00 per annum to find a handful of terrorists (most died on 9/11 afterall) and they've got one after 10 years ...the most expensive bounty hunt in history (i'm worried about US Govt productivity, aren't you!) ....and another $20m on top for the informent 

...any chance the US Govt could just put up a few multi-million Dollar 'Wanted' posters (ie. say $6-$9m) rather than pissing away $80,000,000,000.00 per annum on the most lathargic, expensive and inept witch hunt in history in the future??? 

Fail2Deliver's picture

Margin Hikes and the announcement of Osama being headshot might have people wanting back into the stock market. After all, maybe the US wont be shooting as many guided missles with a reported X amount of silver used to make each of them.

I am hoping to catch silver under $40. I am very bullish on silver but would like to catch it a little lower.

Chuck Yeager's picture

Osama Bin Ladin is Dead (no, eally, check the news).  Someone knew early and sold...  This is the only plausible explanation

Zero Govt's picture

BS ....if you can find a single Silver investor that's sold because of Bin Hidings topping i'll eat the whole transcript of Bernanks worthless press conference last week!

Goldtoothchimp09's picture

so why the hell don't they jack up the margin requirements for crude?!?!  Hell make it a 100% cash contract!

Fail2Deliver's picture

Oil doesn't compete with Uncle Bens currency as gold and silver does.

nathan1234's picture

Yes Oil and can go to $140/$200 from $38 because the banksters are behind it and rhe CFTC is their baby.

They wont kill their golden goose.

White.Star.Line's picture

Paper silver is an investors game that rewards in floating fiat. The overleveraged silver market will pay its investors back in unfilled deliveries, watered-down currency, or possibly in total losses.

REAL Silver looks purty.
It may bring riches someday, or maybe not.
Who cares? Miners work harder than printers.

casaananda's picture

Fabulous opportunity to buy silver and gold. A necessary correction to kill off the weak hands, destory the froth. Tomorrow I'm stepping it up. And yes, it's an opportunity to kill paper PM's. More buying = less physical supply. Just great.

lawrence1's picture

People need to understand at the deepest level that the specific dollar
price is important only to the extent that it influences one's to buy PMs to preserve our savings. It's the ounces we own that counts. Period.

Money 4 Nothing's picture

I emailed my brief in this morning about this event.. Guess you didn't read it again. You want the link? This is what I sent in.


Hey folks,
Just wanted to do a preemtive May PM update, I usually wait for a week in but there is too much news in the financial sector that will go into play by Monday.

Well, we have had one hell of a ride since last month, PM sectors Bulling off as if in Pamplona Spain with the bankers out front!

Our USD is on the skids with no future of pulling out of a nose dive anywhere in the near future, That event that happened in Arkansas, Mississippi, Georgia usually will help the USD (sic) but in this case, the Federal Govt. will step in and buy all damaged property from the survived home owners, another land grab if you ask me. They are all in our prayers and hope for their better future.
As of close on Friday, we are sitting on .73 14 with a new low of .72 83 to reverse the buck back to "08" territory.
Look for that pull back in the PM's like I mentioned last week, the CME (Jon Corzine) raised PM Margins, more notably Silver futures 2 times last week and thats un heard of till now. This was done to artificially induce a "short" because Silver and Gold are going Parabolic in a natural function, they want to try to tamp down the action and get spot under control before anyone notices whats going to happen to the USD this week IMHO. PM's are a leading indicator of USD strength, or in this case, lack there of. The last time they raised oil margins on March 10th to drive away speculators, it lowered the price for a few days then sent the prices north of $108.00 a barrel to top out at $114.00 a couple weeks later = futility.

By raising margins, it really doesen't serve them well in the long game, by week 2, investors and other Big purchacers like Countries will jump all over that dip sending PM's past record spots... again, before the end of the month, there actions are futile and their caught up in a catch 22 because of real demand, not speculation = China, India purchacing Tonns off the market..
It's just a temporary "fix" to help Metal houses.. or should I say paper houses? like COMEX and the JP Morgue to ease there April delivery pressure in my opinion, to drop the spot from an unreasonable spiked $49.+ an ounce on Silver, and another record breaking $1569.00 on Gold!
They are now doing acquisitions from other Metal Houses around the world (Scotia) and the open market using customer buy back incentives to fill there orders and to avoid a partial default. It's going to cost them Billions to cover there shorts and honor there delivery resposibilities. Settelment will be physical delivery, partial delivery with half cash or all FIAT cash along with incentives to there clients not to take physical delivery adding a bonus to there customers to roll there paper into the next month. Tonight at 6:00 EST, the opening bell will dictate where this will be going, I expect a medium volume opening without too much drama till tommorow.

. The Unraveling .
Here is Big Corperate CEO's scrambeling to cash in before the end of April and it's not options expiration either. Basically inside trading, but the SEC will turn a blind eye as usual. This is one of the last heads up IMHO. They are bailing on personal stock holdings. In the top right side corner, toggle "sales" and the list goes on and on and coincedently, all personal sales "stock options" within the same dates. Hmmm.. Revisiting Enron? Lehman Bros? Profit taking is not unreasonable, The mass of Big Corperate taking profit off the table all at the same time is strange non the less, check the dates. This isn't profit taking season, that was a couple months ago.


This week, our Congress Kritters have to get the National Debt vote in, they will vote to raise it, and will create a considerable rift in the Treasury bond sector, PIMCO's Bill Gross has his finger on speed dial to warn his customers to bail on there T bond investments when and if the vote to raise the National Debt limit is made. Tiny Tim is trying to portend his actions but at the end of the day, Bill Gross works for his clients best interest.. Refreshing isn't it?


So, were really going to see some interesting moves this month, their game is so transparent right now it's like ants scrambeling out of a kicked over hill.

Regaurds as always and keep your powder dry.

Joe Prince. Last edited by Joe Prince; Yesterday at 03:18 PM.


The Bad Guy.



disabledvet's picture

now that we know "there was the predicted ZH margin hike on silver" as the cause of the sell-off "would ZH please take off the Bolivian Bullshit."  And would this author please drop the words "as predicted" from all writing henceforth.  the fact of the matter is "if Gensler can't nail silver with a 30% increase in margin rates in one week" then clearly "he's got issues."  apparently "so does MF Global" as well, "yet another Goldman fiefdom."

Goliath's picture

Margin was just doubled at thinkorswim for /SI and /YI



monopoly's picture

I got an order in at 40.25 for another buy on Silver. So far not looking good. Maybe in the morning, not selling anything. Long way to go, me thinks.

TaxSlave's picture

Drop, drop!  Been waiting to BTFD.

Musta been someone leaked the Osama news.

Bazooka's picture

have you seen the Nikkei?

Following it's March plunge, it retraced in ABC....the 50 MA is about to cross the 200 MA down.

Nikkei led the decline in 2008 and I believe it is doing so again...except, next, Nikkei will be wave 3 down.

optionx's picture

Ben Does it again.

Jay_Son's picture

Bin Laden dead --> No need to be in Afghanistan --> Less military spending --> better U.S. fiscal position --> stronger dollar --> lower commodities, especially ones that went parabolic.  Check EUR/USD.

Freddie's picture

The one muslim is defrosting the other muslim's (Osama) corpse as we type.


Zero Govt's picture

Jay Son  -  Silver toppled before Osma Bin Hidens' slaying hit the newswires ...Silver dived for some other reason 

Bazooka's picture

Exogenous cause rationale is purely linear extrapolation.

Silver did not plunge because of this or that event...social mood changed.

Elliot Wave showed Silver to have completed 5th of 5 waves, and so a down....this down could be more than expected as it could be a primary 3 down.....

Zero Govt's picture


the goon squad at Elliott Wave International have been trying to pin wave 5's on Gold and Silver all the way through 2010... they have failed (miserably) every time. That should tell you their techniques do not work

President Robert Prechter failed so badly he has now given up. He was smashed out of the ball park by all his peers last year. Arrogantly he knocks all his peers constantly thinking he knows something they don't but had nothing to say about his total incompetance throughout 2010, not a word to fleeced fuked over subscribers for getting it wrong month after month. So was his goon Steven Hochberg who failed everytime (my count, 14 out of 14, 100% failure on the PM's)

When someone fails to pedict time after time after time it proves beyond all reasonable doubt their techniques and loony wave theory cannot predict. It is a failed technique proven by its constant repeititive failure to predict

The Elliott Wave clown show not only cannot predict, they also cannot even put wave counts on the past without having to chop and change them. It's a comedy of errors and failures week in week out and a fraud to keep peddlig this bunch of shit to investors... so wake up and smell the stink of Prechters failure throughout 2010 calling wrong tops on Gold, Silver and all the stock Indexes (a complete 100% failure rate)


mogul rider's picture

Elliot Waves don't necessarily work in manias

Realize something very clearly, this is a massive concentration of silver wealth being done here. The banksters are out and are looking to get in. They will peel off weak hands faster than hookers on a friday night party binge.

In this mania, banksters are out which is rare, it won't be for long. Expect a smashdown of huge propertions to shake you out.

It started last week. It'll be banksters, most likely taking silver over 100 not you.

Zero Govt's picture


the failure of Elliott Waves was not just PM's last year, it was right across all markets.... Prechter and Hochberg failed as miserably trying to pin 5's on Gold and Silver tops as they did on the S&P, Dow and Nasdaq... they also spent the entire year screaming the US Dollar would turn and rally (Prechter said USD would head to the stars but it dived toward the toilet, along with all the other EWI predictons) 

Nobody tripped over their predictions and fell flat on their stupid face more in the entire investment community in 2010 than these Idioticians

That 2010 was an absolute disaster all year and a complete across the investment board wipeout demonstrates unequivicably (100% proof) that Elliott Wave theory is a dead parrot, it cannot predict even close to accurately

...and for Rob Prechter to continue peddling this quack sham garbage as 'expert' investment advise is testimony to his character, his colleagues and his organisation 

Considering EWI spends all year gawping at industry peers and how incompetent they are (all of whom smashed EWI out of the ball park in 2010) it's about time he turned his snotty know-it-all analysis in on himself

Rob Prechter & Elliott Wave Theory RIP : dead and buried in 2010 

Freddie's picture

Someone I know has a friend of a friend at a big hedgie.  He got the call on Thursday that they are taking silver to $37.  This is all manipulation folks.  They are probably fleecing the newbie suckers.

Apostle of Unknown's picture

Yeah I know that guy too. Major party animal!

stitch-rock's picture

"Elliot Wave showed Silver to have completed 5th of 5 waves"

Try using grand-super cycles instead of minuettes as your systemic parameters...


cpzimmon's picture

Truly a Goonsman Sucks move. They're trying so hard to suppress the price, but the effort is so futile. Like the Third Reich at the end of WW II.


disabledvet's picture

what happened to silver at the end of the 3rd reich?

Bicycle Repairman's picture

Someone shot Hitler with a silver bullet.  I saw the video on UTube.

DavosSherman's picture

NO idea if this is a hedge, some genius who topped the market or maybe the same @$$ faces are doing the same $hit on the COMEX.



Everybodys All American's picture

Watch the US dollar if you want to trade the metals.

reachsb's picture

A few months from now, folks will view this event in their rear-view mirrors and rue this 'golden' opportunity to snag up some precious metals at these distressed prices. The Comex is on the verge of a default and they are playing these games to stall the inevitable. Where's the physical available at these prices? We have just handed the Asians the opportunity of a life time to buy the physical at the price set in the manipulated paper market. The irony is that most of the physical will be bought from the US based dealers.

Godisanhftbot's picture

  Are you in distress? Are these distressed prices? 



Advoc8tr's picture

Gold is down no where near 7.5% ... more like 1.5% ?  1570 > 1545

Silver has recovered almost 1/2 the drop already 48 > 42 > 45


Lord Koos's picture

Silver was overdue for a correction, it was taking a parabolic run up to $50 that could not be sustained. Big fucking deal, it dropped back to where it was 10 days ago.  I hope it drops back to $35 this summer so I can load up. No QE3 will be announced in July, metals will drop, time to BTFD.  Come fall, more QE will be announced, interest rates will not be raised any significant amount, and it's to the moon, Alice.  Throughout the rest of the year central banks will continue to buy gold.

Lord Koos's picture

Silver has due for a correction it was a parabolic run up to $50 that could not be sustainged. Big fucking deal, it dropped back to where it was 10 days ago.  I hope it drops back to $38 so I can load up.