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War On "Speculators" Goes Global: Shanghai Gold Exchange Hikes Silver Margins For Third Time In A Month

Tyler Durden's picture




 

Globalization sure can be fun: just as the Fed has now ordained Japan to carry out the global reliquification scheme in the form of a new, and powerful batch of QE, so the regional war on (Fed liquidity engorged) speculators has just gone global. Following 5 consecutive silver margin hikes by the CME (which oddly did nothing on yesterday's price collapse even as the silver vol surged to near record levels) at which point it would appear silly for the exchange to continue its speculator eradication campaign, the memo has now been sent to foreign bourses. Sure enough, the Shanghai Gold Exchange has just announced it is hiking both the silver margin to 19% as well as the price limit on gold to 13%.

From Marketwatch:

The Shanghai Gold Exchange said Thursday it will raise margin requirements for silver futures as part of risk-control measures, its third round of increases in less than a month, according to a statement posted on the exchange's web site. Margin requirements will rise to 19% of a contract's value from 18%, while the daily price limit for the one kilogram silver forward contract will rise to 13% from 10% above or below the previous session's close. The new trading requirements will be effective from May 13. The exchange announced previous rounds of increases to margins and price limits on May 5 and April 25.

And the googletranslated release:

Today, silver Ag (T + D) price fluctuations, the night market transactions occur daily limit. Under the Exchange "deferred settlement trading rules" and "risk control and management measures" the relevant provisions, if Ag (T + D) contract to seal the close limit down, the exchange will enhance the Ag (T + D) contract margin ratio while price limits amplification range, please deposit an additional member to prepare well in advance of work and customer notification.

Enhance Ag (T + D) ratio and price limits margin contract specific content: May 12 at the end of liquidation, the silver Ag (T + D) contract to increase the ratio by 1 percentage point margin to 19%, May 13 the date of Ag (T + D) ratio of the contract price limits adjusted to 13%. If the Ag (T + D) Contract close open daily limit, no implementation of the above adjustments.

And so the heretofore localized war on "speculators" all of whom are merely trading with the trillions in excess and free liquidity created by the Fed, goes global. Bernanke will have you buying shares of Lulu instead of silver, if it's the last thing he does.

 

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Thu, 05/12/2011 - 08:32 | 1267108 johnnymustardseed
johnnymustardseed's picture

Wow!  Concerted world wide effort to pretend that printing huge amounts of money does not create inflation......let me know how that works out!!

Thu, 05/12/2011 - 08:40 | 1267142 LawsofPhysics
LawsofPhysics's picture

Yep.  The "paper" world brushfire is will escalate and is out of control.  Total disconnect between the paper and the physical.  I see paper is well on its way to zero while things in the physical world are most excellent.

Thu, 05/12/2011 - 08:43 | 1267167 Xibalba
Xibalba's picture

I can't find Silver eagles for less than $40 for immediate delivery. 

Thu, 05/12/2011 - 08:52 | 1267190 augie
augie's picture

Short Paper, Long Physical. BTFD

Thu, 05/12/2011 - 08:54 | 1267206 spartan117
spartan117's picture

Never used them, and don't know how their service is, but they're under $38 here:

http://www.silver50.com/AmericanEagles.html

 

Thu, 05/12/2011 - 09:04 | 1267266 writingsonthewall
writingsonthewall's picture

The UK has many of them - it seems the American citizen is getting ahead of the game.

 

http://www.atsbullion.com/One-Ounce-US-Eagle-Silver-Coin-p-85.html

 

The war on speculators is going global - and so, the reaction must be a global response too. Suck in the silver from wherever you can - don't worry too much about the FX loss as this will soon be made up when QE3 is finally announced.

 

This exercise is a test....a test by central banks to see how tough their opposition forces are. They cannot fail to go for QE3 now - look at the bad econommic news, look at the stock market's reaction to even the hint of an end of QE and think about the 1930's legacy "nobody wants to be the Fed chairman who takes the US back into depression"

I cannot see how QE3 will not be implemented. They're just trying to burn off any silver holders who are not committed to the cause - the cynic in me says this is so they can get themselves back into the market - right before they devalue the dollar once more.

They claim these margin hikes are to reduce volatility - but strangely this isn't a requirement in any other market - and not really a requirement in the PM market....until now.

 

The gloves are off folks.

Thu, 05/12/2011 - 10:26 | 1267609 Gavrikon
Thu, 05/12/2011 - 09:12 | 1267310 writingsonthewall
writingsonthewall's picture

I like that site - an advert pops up after about 20 seconds and says

 

"every day you wait your dollar is worth less"

 

That just about sums it up - Rogers is right, this is a plateau where we have base camp and we're just about to set off for the peak.

Fri, 05/13/2011 - 15:32 | 1272617 vipobviously
vipobviously's picture

my base camp just got 20 oz ag heavier

boo yeah

Thu, 05/12/2011 - 12:57 | 1268311 Atlas Shrieked
Atlas Shrieked's picture

Re-post:  United States Gold Bureau are crooks.  None of their toll-free numbers work.  The "customer service rep" on chat "Bret" is totally shifty, giving phone numbers that don't work either.  I've reported them to law enforcement.

Thu, 05/12/2011 - 10:33 | 1267646 DosZap
DosZap's picture

Ordered 200 Rounds last week, and was wondering where they are.

Called yesterday and said min 3-5weeks.

I said I have not had to wait on bullion from you guy's since '09, ASE's were 6-8wks out,as were Maples.

Drop that price bitchez, truck is empty, a fiat is burning a hole..

If this drops to where Armstrong say's, I may go insane, and FILL the truck.

Want a SHORTAGE?..........Heheheheheh, they have seen nothing yet.

This will backfire right in their ass.

1oz Silver?, $150.00 please?

COMEX my arse, DOSZAPEX.

Thu, 05/12/2011 - 08:48 | 1267187 Cash_is_Trash
Cash_is_Trash's picture

Total disconnect between the paper and the physical.

Much agreed, yet seems that investors and speculators don't grasp the idea that the dollar's intrinsic value, store of value and medium of exchange are worthless.

Out there, many trillions of dollars believe FRN's are "money", which is a bogus claim.

In recent weeks, we've seen the opposite to be trading and therefore in the short term markets are irrational.

Thu, 05/12/2011 - 09:08 | 1267289 ZapBranigan
ZapBranigan's picture

 

Irrational?  Absolutely, but I succeeded in correct timing and finally pulled a recent, decent haul in the sub thirty-two's baby.  Had to be up early for that one gents!

And save your breath Bath Fan, 'cause I'll continue to execute the same contract all throughout the twenties, teens, and single-digits.  Got it?!  Even though “the shit is fucking everywhere”, it's still costing me more than five dollars to pry out of the ground.  Too bad Au premiums instantly rise as spot goes down, otherwise Fourteen-Eighty would have been delicious.

 

Thu, 05/12/2011 - 09:02 | 1267233 blindfaith
blindfaith's picture

Humm, likely but things have a way of taking a long time to play out.  In the mean time the 'little guy' ( especially in China) is being encouraged to buy metal, but only if they can afford to...translation, keeping the price down lets more in to spread the base.  But we all forget that we are only allowed to play so long as the political and powerful permit it.  They control all the rules, not you or me.  Think, if you will, that the big banks can go short or long and not cover either bet, nor reveal their positions thanks to George Bush declaring their 'books' closed from a national security point.  And everyone thought they were going to kill JPM by buying sliver...JPM does not have to cover!  So, with such situations created by and for the rich and powerful, ask yourself how long will it be before trading in metal will be a crime (less medical and specific industrial exemption grants) because they make it so.  Everything is a moving target, nothing is static, and everything can be replaced by something else, and there is no blindfaith without costs.

Thu, 05/12/2011 - 09:07 | 1267290 Cash_is_Trash
Cash_is_Trash's picture

how long will it be before trading in metal will be a crime ... because they make it so.

Agreed. The idea of a "barbarous relic" is deeply entrenched in the bureaucratic and political elite's mindset. The politicos will outlaw the hoarding and trading (barter) with metal as a medium of exchange.

We are being squeezed into serfdom (via inflation) by using government ordained paper with little or no savings in real money.

Thu, 05/12/2011 - 09:21 | 1267344 LawsofPhysics
LawsofPhysics's picture

Won't matter.  Black market trading is increasing as fast as the fiat fire is growing.

Thu, 05/12/2011 - 09:54 | 1267459 Cash_is_Trash
Cash_is_Trash's picture

A black market is only named so outside of state control or power, therefore, in asbsence (or state collapse) it is logical to say that black markets would not exist.

Yet, the kleptocratic, arbitrary power wielding state, usurped from uneducated, ignorant and unsuspecting subjects sets policy to the people's disfavor during its existence.

Thu, 05/12/2011 - 10:31 | 1267622 Gavrikon
Gavrikon's picture

I'd move to Switzerland where I doubt that sort of thing would be tolerated.

Except that I don't have the price of admission.

Thu, 05/12/2011 - 10:43 | 1267688 DosZap
DosZap's picture

Yes, they (Swiss) and MOST countries are making it impossible nearly to expat.

Cost's are unreal.

Two places left for citizenship asap.......and you lay down $300-$400k to get there.

Thu, 05/12/2011 - 08:43 | 1267164 Doña K
Doña K's picture

As I have posted before, China helps the US to supress PM prices for different reasons.

The US wants prices lower so that the printing is less visible and for political reasons. China wants prices lower, so that it can load up on all finite commodities. When Benny wakes up on what's happened, it will be too late.

Thu, 05/12/2011 - 08:48 | 1267173 Ray1968
Ray1968's picture

exactly what I believe.

Just when you think you know the game, the rules change. I like physical because it still will not be worthless. (Despite Soros and Blythe, and Kung Po Chicken)

Thu, 05/12/2011 - 09:04 | 1267263 Vincent Vega
Vincent Vega's picture

Completely agree with Dona K and Ray 1968 and will add this: the US debt ceiling is the gorilla in the room. The bankster's and politico's haven't figured out how to sell the world on the fact that they need to raise the ceiling by at least $2T to keep the ponzi alive. Fiat's are just that...fiat's. I'll gladly take more metal's at supressed prices.

Thu, 05/12/2011 - 09:24 | 1267345 fockewulf190
fockewulf190's picture

Well, the insider trading stats ZH put out the other day shows 565 sellers for every 1 buyer.  Although this isn´t the all-time sell to buy ratio (only because so many insiders have long hit the high road), it´s obvious the Wall Street ponzi spiel is about to bust and these people are running for the exits.  These cash flushed insiders now have depressed PM prices to load their personal yachts with and sail to safe havens.  How convienient the timing.

Thu, 05/12/2011 - 09:26 | 1267355 LawsofPhysics
LawsofPhysics's picture

Believing in "safe havens" will be their downfall.

Thu, 05/12/2011 - 11:24 | 1267931 firefighter302
firefighter302's picture

"Believing in safe havens will be their downfall".

Roger that, C'mon.

Firefighter302

 

Thu, 05/12/2011 - 09:14 | 1267314 Cash_is_Trash
Cash_is_Trash's picture

When Benny wakes up on what's happened, it will be too late.

Ben can't wake up nor someone perturb his sleep. The man is too blind a follower of Keynesian policy that he knows of nothing else than to increase printing.

As noted before on this thread, PM's may one day become banned from use in private transactions, making 'we the people' utilize a fiat currency that will die like all paper currencies have.

The elites hate metal, they dread it, the bansksta's depise it because it ruins their little game of playing god.

I think we need a thread discussing the implications of hoarding and transacting metal at a time when it's deemed illegal.

Thu, 05/12/2011 - 09:56 | 1267472 TaxSlave
TaxSlave's picture

Ha! Try making silver coins contraband when you have a generation of people who grew up defying pot laws.  Let's see how that works out.

Thu, 05/12/2011 - 10:41 | 1267689 spudboy
spudboy's picture

"The elites hate metal, they dread it, the bansksta's depise it because it ruins their little game of playing god".

Actually, I think the elites both love and fear metal, it's just that they hate it when the little guy has some too. They perfectly understand the role of AU/AG in preserving purchasing power, but want it all to themselves, and thereby strongly discourage its accumulation by all others.

Thu, 05/12/2011 - 08:30 | 1267111 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

The New World Order is here. What? You thought it was all a conspiracy 'theory'?

Thu, 05/12/2011 - 08:33 | 1267114 achmachat
achmachat's picture

Please help me out here... isn't raising the margin requirements on silver an awesome thing for people who are very long silver?

Thu, 05/12/2011 - 08:36 | 1267135 Catullus
Catullus's picture

Falling prices are an awesome thing for people who are very long silver. 

Thu, 05/12/2011 - 08:37 | 1267141 bob_dabolina
bob_dabolina's picture

lol

Thu, 05/12/2011 - 09:05 | 1267269 web bot
web bot's picture

Bob,

So you're good at calling the silver market. What in your opinion do you see as the bottom?

 

Thu, 05/12/2011 - 09:06 | 1267285 bob_dabolina
bob_dabolina's picture

When it stops going down in price.

Thu, 05/12/2011 - 09:19 | 1267327 web bot
web bot's picture

lol

Thu, 05/12/2011 - 08:39 | 1267149 tmosley
tmosley's picture

In the long run, yes, because it encourages people to stand for delivery and drains physical supply between the time of the price crash and the time that retailers raise their premiums.

The COMEX is now doomed.  They won't be able to bring silver onto the market at these prices, so they won't be able to make delivery.

Despite the ranting and celebrating of the trolls, this is the endgame for them.  Anyone caught without gold and silver is going to be very sorry.

Thu, 05/12/2011 - 08:47 | 1267154 bob_dabolina
bob_dabolina's picture

STFU, STFU, STFU

Remember making fun of me for going short silver a day and a half ago? Guess what? You called the top 24 hours before a new low was made. 

Good job Kemo Sabe. If you keep up this kind of track record you're getting me a fleet of Bentleys.

Thu, 05/12/2011 - 08:52 | 1267189 Bicycle Repairman
Bicycle Repairman's picture

So you were aware two months ago that margin hikes were coming?  I don't think so.

Thu, 05/12/2011 - 09:02 | 1267222 bob_dabolina
bob_dabolina's picture

I'm aware of everything. If you look at my track record for making calls (which I occasionaly do here publicly), it is close to immaculate

And yes, two months ago I was saying to sell silver and laughing at people like tmoe (and his yuppy followers acock and Flaccid Head) predicting $60 when it was trading @ $49...

And if tmoe is going to keep hitting the button like this, I'm taking early retirement on my privately owned island.....he is THAT good.

Thu, 05/12/2011 - 09:19 | 1267306 wirtschaftswunder
wirtschaftswunder's picture

 

They can only see the bubble months afterward because they are neck deep in shit.

Any asset that is centrally priced from an exchange is a rigged price and subject to speculative mania and game changing moves by the exchanges, i.e. lenders..

Conditions for an asset bubble:

1-An easily understood asset 2-Easy credit to fund purchases and leverage the asset 3-Wide media encouragement to acquire the asset 4-Banks creatively assist in the enhanced supply of the asset 5-Wide public aceptance of the wisdom and safety of ownership


 

 

Thu, 05/12/2011 - 10:29 | 1267624 fiftybagger
fiftybagger's picture

Hahahahaha.  Hey genius, silver fails all 5 of those conditions.  Wow, what a maroon!

 

The Silver Bubble Debunked

http://www.youtube.com/watch?v=3lVCtIiMveE&list=PL29AA60A5C1C9E96A&a...

Thu, 05/12/2011 - 11:33 | 1268001 firefighter302
firefighter302's picture

Bob Dabolina said,

"I'm aware of everything".

"If you look at my record, it is close to immaculate".

-------------------------------------------------------

LMAO.

Thu, 05/12/2011 - 09:09 | 1267296 tmosley
tmosley's picture

And yet the day before that when I said I was bearish because it looked like intervention was going to continue (which it is now apparent), that paper would trend towards zero on high volatility, but it went up a little bit, you claimed victory then too.  That is called VOLATILITY.  That means that any little shit like you can tell me how "wrong" I am, even though I predicted exactly what is happening.

It seems clear that the COMEX is in its death throws.  Paper will continue to trend towards zero on extreme volatility, Bob will continue to tell me that I am wrong by picking points (this being a traders market literally anyone could make a bunch of money), my physical will continue to sit happily in my safe as I continue to add more until the COMEX publically defaults within the next two months, because the low paper price has made it impossible for them to source metal.

Also, funny that on one hand, you are telling me to "STFU STFU STFU" while on the other hand you claim to be making so much money off of me.  Seems like a contradiction.  But then, trolls like you are nothing but contradictions.

Thu, 05/12/2011 - 09:17 | 1267320 wirtschaftswunder
wirtschaftswunder's picture

You were calling for $49 by last Friday urging all ZH to buy! You said you had a 400% profit last nite and today its 240%. You are a liar. You think taxes are paid on physical gains. You dont know fuck. You think physical prices are not tied to futures prices. You are the world's biggest fool because you are incapable of being a half-assed con man.

Thu, 05/12/2011 - 09:31 | 1267369 tmosley
tmosley's picture

Ok, put down the crack pipe.  400% profit from when I went bullish on silver, 240% profit on my cost average.

And $49 last Friday didn't discount 6 more margin hikes.

Wait, you think you DON'T pay taxes when you sell your silver?

Now I know why you live in a van on the beach.  Must have been nabbed for tax evasion.

Thu, 05/12/2011 - 11:07 | 1267846 Abitdodgie
Abitdodgie's picture

Who pays taxes that's like so 80's , don't forget taxes are voluntary

Thu, 05/12/2011 - 09:18 | 1267323 bob_dabolina
bob_dabolina's picture

I don't care anymore tmosely. I'm done with silver @ the moment, I had my fun there. 

It's time to start shorting bonds, do it here. 

Live long and prosper.

Thu, 05/12/2011 - 09:29 | 1267361 tmosley
tmosley's picture

What, getting off the gravy train so soon?

May your paper burn bright for a spectacular funeral pyre.

Thu, 05/12/2011 - 08:31 | 1267116 Mercury
Mercury's picture

Restricting leverage may tame some PM speculation volume but in the long run it won't change fiat currency fundamentals.

Thu, 05/12/2011 - 08:36 | 1267122 Quintus
Quintus's picture

I think the point of all this is to shake the little guys out of real assets and back in to paper.  That way the Insiders can round up all the real assets for themselves before they pull the plug on the paper ponzi.

 

 

Thu, 05/12/2011 - 08:36 | 1267136 cossack55
cossack55's picture

BINGO!!!!

 

Take em' to 200%, WTFC?

Thu, 05/12/2011 - 08:45 | 1267150 Mercury
Mercury's picture

Even that may not be effective.  In ZIRP-world it can't be too challenging to lever up high and cheap before you move funds into an account to buy PM.

Thu, 05/12/2011 - 08:31 | 1267117 breezer1
breezer1's picture

as long as fiat is the preferred currency of the TBTFs then the war will be against real money, Gold and Silver.

Thu, 05/12/2011 - 08:36 | 1267121 NOTW777
NOTW777's picture

so this is what timmy was doing in china - cooperation

Sun, 05/15/2011 - 18:16 | 1277271 boomerbaby
boomerbaby's picture

So Timmy and Hill relaxed "high tech export controls" to keep the Chinese happy?

Thu, 05/12/2011 - 08:33 | 1267125 PaperBear
PaperBear's picture

There always has to be a war on somewhere in the world.

Holders of physical gold and especially physical silver will be winners in the global bonfire of the fiat paper currencies.

Thu, 05/12/2011 - 08:36 | 1267126 Xibalba
Xibalba's picture

Well, that was nice of them. 

Thu, 05/12/2011 - 08:37 | 1267128 Al89
Al89's picture

From a Chinese point of view, this might help further boost the $ and crush silver. Helps them get out of their dollar holdings and provides a better buying opportunity in PMs? They have as little interest in seeing the $ enter into a tail spin at this point as the fed. 

Thu, 05/12/2011 - 08:34 | 1267130 Caviar Emptor
Caviar Emptor's picture

Been sayin' it for months: US (and others) will continue to drift toward centrally controlled economies. In the US we now have State Run Capitalism. In an ironic (but inevitable) twist: we're becoming more like China just as they become more like the US

Thu, 05/12/2011 - 08:41 | 1267146 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Yes, it's called "corporate fascism" and China is the globalist's model.  If you haven't figured it out already Homeland Security was set up to be used on the American people.  It has nothing to do with terrorists in caves in Western Afghanistan.

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Thu, 05/12/2011 - 08:46 | 1267170 Caviar Emptor
Caviar Emptor's picture

Agree. But that was only a baby step. The pace is picking up lately and the trend is in

Thu, 05/12/2011 - 08:56 | 1267235 MisterAmbassador
MisterAmbassador's picture

Entropy.  All systems naturally decay/corrupt over time.

Luckily, the Bill of Rights is a trump card most other nations do not have.

If the Germans had had the Second Amendment, they would have stopped Hitler once they realized what he was really all about (Nazis only got like 37% of the vote; Hitler changed the laws to secure absolute power - similar to things in the Patriot Act/Obamacare/Internet kill switch/etc: centralize/consolidate power).

If the Chinese had the Second Amendment (not to mention the First), they would have overthrown their government years ago.

When the three branches of government inevitably fail, it is up to the People to fight for their freedom.  The People become the backstop to tyranny.

Those who would sacrifice Liberty for security deserve neither and will lose both.

*security can mean an entitlement check or going through a metal detector at an airport*

The Tree of Liberty must be refreshed from time to time with the blood of Patriots and tyrants.

Generations before us had the Great Depression and World Wars.  Why should we think our generation is any different?  Why should we think it should all just work out for us?

 

We Americans got lazy in our abundance.  This is the price.

 

I watched the data come across on CNBC this morning.  I have a feeling we're very close to falling into the abyss.  July is going to be one hell of a month.  Will the Great Emperor of Money actually stop QE?  Maybe he'll just tell us that he's stopped without really stopping.  Will he actually stop it and then be forced to restart it?  Perhaps a new program - not QE - of Money Enhancement...  The Fed is trapped, conspiracy theories or not, there is no answer.

Bernanke should be the first tyrant whose blood runs through the streets.

 

Thu, 05/12/2011 - 09:01 | 1267243 MisterAmbassador
MisterAmbassador's picture

You do realize you're quite mad, right?

Exactly what are you the Ambassador of?

Thu, 05/12/2011 - 08:59 | 1267249 MisterAmbassador
MisterAmbassador's picture

Muhahahahahahahahahaha...

Fri, 05/13/2011 - 20:17 | 1273385 vipobviously
vipobviously's picture

lets see what happens when food prices double.

Those without real money will certainly feel the squeez, and the system will begin to tighten the noose.

Thu, 05/12/2011 - 08:37 | 1267132 Temporis
Temporis's picture

Nice sale on silver today.

Thu, 05/12/2011 - 08:52 | 1267191 cccmachine
cccmachine's picture

My first thought when I saw a dollar discount this morning

Thu, 05/12/2011 - 08:36 | 1267134 Kina
Kina's picture

When TPTB really really doen't want me to do something I know it is something I Must do.

 

World just got too schizophrenic, too insane and too full of conmen to not own PMs.

Anybody that gets caught without PMs will will deserve to spend the remainder of their lives sucking dick for TPTB and bending over a  barrel with the KY for Blythe daily.

Thu, 05/12/2011 - 08:39 | 1267137 Troy Ounce
Troy Ounce's picture

 

Moral of the story:

Don't believe the BS that China is a friend of gold/silver. You either trust the government or you trust gold/silver. There is something else going on. The only thing we can do is....buy the dip!

Thu, 05/12/2011 - 08:53 | 1267196 Thunder Dome
Thunder Dome's picture

The chinese government wants to maintain the status quo just as much as the U.S.

Thu, 05/12/2011 - 09:03 | 1267262 buzzsaw99
buzzsaw99's picture

+1

Thu, 05/12/2011 - 08:37 | 1267143 Quinvarius
Quinvarius's picture

It was nice of them to tell their citizens to buy gold and silver and then nuke them at Washington's request.

Thu, 05/12/2011 - 08:54 | 1267204 Bicycle Repairman
Bicycle Repairman's picture

The cliche is that the Chinese have a longer time horizon.

Thu, 05/12/2011 - 10:53 | 1267774 DosZap
DosZap's picture

With their cost of living(Peasant class), they are still in wonderful shape.Remember, these are US prices............

Not Chinese.

Thu, 05/12/2011 - 08:38 | 1267148 eigenvalue
eigenvalue's picture

This isn't a war on "speculation". If you read the rules of Shanghai Gold Exchange, you will find that the exchange will increase the margin when silver hits limit up or down prior to closing. Today, the silver (T+D) hit limit down prior to closing. As a result, Shanghai Gold Exchange hiked the silver margin.

Thu, 05/12/2011 - 09:05 | 1267274 buzzsaw99
buzzsaw99's picture

good info

Thu, 05/12/2011 - 09:10 | 1267291 AUD
AUD's picture

-1 junk

What most people miss, evidently including ZH, is that the exchange is not trying to shake anyone out or 'crush' the longs. The greater the volume on the exchange the more money the exchange makes. Why would it want to reduce its income?

The volatility in the silver price is being caused by the uncertainy inherent in the value of the ever expanding pile of perpetual debt.

Thu, 05/12/2011 - 09:24 | 1267342 eigenvalue
eigenvalue's picture

Oh well. That may be the case for Shanghai Gold Exchange but not CME. Shanghai Gold Exchange has predefined rules and you know when they will hike margins, (usually before public holidays, or after price hitting limit up or down). However, CME just chooses any time they want to hike margins.

Thu, 05/12/2011 - 09:39 | 1267393 AUD
AUD's picture

I think you will find that the CME has much the same rules as the Shanghai Exchange & in fact exchanges all over the world.

Thu, 05/12/2011 - 08:41 | 1267151 Zing
Zing's picture

If this continues I'll be able to buy some a dat industrial metal at the price point I am looking for.

Thu, 05/12/2011 - 08:40 | 1267155 Quinvarius
Quinvarius's picture

Silver has put in a classic double tap.  Every tradeable low and high seems to have one.  If today's low holds, it will be time to enter a paper trade on the long side, IMO.

Thu, 05/12/2011 - 08:42 | 1267161 Seacap81
Seacap81's picture

A "paper" trade on the long side.  People still do that?

Thu, 05/12/2011 - 08:54 | 1267198 Quinvarius
Quinvarius's picture

Everything old becomes new again.

Thu, 05/12/2011 - 08:40 | 1267156 dogismyth
dogismyth's picture

maybe you have been playing the markets too long.  There shouldn't be any margin...anywhere.  Either you have the cash to buy what you are "speculating" on or you don't.  The only crime is the way margin is manipulated to create losses for some and gains for others.  Welcome to the Mad Max of the markets.  I think complaining about the markets and its derived machinations is baseless.  It is what it is.  Its your expectation of a fair game that is unreasonable.  Just like a casino, you play by their rules, and the rules can and will change at any time.

Thu, 05/12/2011 - 08:42 | 1267165 Robslob
Robslob's picture

Actually Casinos don't change the rules in the middle of the game...compared to Central Banks the Casinos have "scruples"...

Thu, 05/12/2011 - 08:43 | 1267157 Robslob
Robslob's picture

Said all to well above:

"Hard" money versus "fiat" money...the battle for banking survival and control will be epic.

Thu, 05/12/2011 - 08:40 | 1267158 tarsubil
tarsubil's picture

So they can short the commodities, they can raise margins, what can they do after these fail to work?

Thu, 05/12/2011 - 08:41 | 1267159 Mike Hunt III
Mike Hunt III's picture

BTFD in Silver BItchez!!

Thu, 05/12/2011 - 08:47 | 1267162 Monedas
Monedas's picture

Monedas is grateful for the co-ordinated margin hikes ! It's like a world wide public service announcement ! The end is nigh ! Monedas 2011 Thanks for the "heads up !" !

Thu, 05/12/2011 - 08:45 | 1267163 Caviar Emptor
Caviar Emptor's picture

Introducing: The Free-market Shutdown Sequence:

-Commodities: move toward ending trading in all cases except where the buyer will accept delivery at expiration. 

-Wage and Price controls once step 1 fails

-Capital controls once capital flees to chase yield 

-Protective tarriffs 

-Stocks: bundle most favored US corporates into one USA ETF (mandatory monthly purchases to follow)

-Rationing of scarce resources

-Confiscation, Nationalization

 

 

Thu, 05/12/2011 - 08:55 | 1267214 Al89
Al89's picture

All that has happened before. Price controls in the U.S., confiscation of Gold in the 30s, tarriffs etc etc. 

Gold standard has been in place, will come back again, and will probably be repealed again. It's a cycle. Doesn't mean 'the end of capitalism as we know it'. 

Thu, 05/12/2011 - 09:02 | 1267247 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Captialism as we know it is long gone!

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Thu, 05/12/2011 - 11:05 | 1267817 DosZap
DosZap's picture

Capitalism is DOA in the USA.

We are under Corporate Fascism.Soon to be total Fascism.

The plans have LONG been in place.

Thu, 05/12/2011 - 08:55 | 1267223 agent default
agent default's picture

-Increasing international tensions

-Escalation

-War with (invent enemy here)

We are well on the path

 

 

Thu, 05/12/2011 - 08:57 | 1267237 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

I'm afraid you might be right!  Although the results of their attempting to confiscate silver and gold may yield the same results as when they come for our guns.

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Thu, 05/12/2011 - 08:44 | 1267171 Robslob
Robslob's picture

Then Armageddon

Fri, 05/13/2011 - 20:21 | 1273399 vipobviously
vipobviously's picture

No way, 200 million gun/pm owners far outnumber the gov henchmen, and they will be gittin real jumpy when confiscation is announced. I'll give them 2 months before their ranks are depleted.

Thu, 05/12/2011 - 08:45 | 1267174 friendly manitoba
friendly manitoba's picture

i wouldnt want to lend a fully margined speculator or investor $50,000 to buy $70,000 worth of silver with $20,000 down - for a contract that was $15000  a year ago  and $8000 tthree  years ago 

Thu, 05/12/2011 - 08:50 | 1267179 agent default
agent default's picture

Do away with margins all together.  Get those "evil speculators" right out and then lets see how much their freshly printed FRNs are actualy worth when the CME cannot manipulate the market in such a bullshit way.

Thu, 05/12/2011 - 08:55 | 1267211 Caviar Emptor
Caviar Emptor's picture

Don't wish too hard for avoidance of the free-market. You might be surprised what results you get. Without those mechanisms there's poor incentive for cheap commodity production that this economy has enjoyed for 40 years. 

Thu, 05/12/2011 - 08:53 | 1267195 Caviar Emptor
Caviar Emptor's picture

Gold will continue to be the safe haven of choice for the wealthy, global central banks, large private banks and anyone with any wealth or savings or spare cash to protect from degradation. People will increasingly lose interest in get-rich-quick schemes (aka stock amrket etc) and instead will want safe return of capital, get rich slow by avoiding crushed purchasing power of cash and dollar-denominated securities. 

Hide your gold

Thu, 05/12/2011 - 08:52 | 1267208 Dingleberry Jones
Dingleberry Jones's picture

Shanghai what? I though Comex was a monopoly. So stated by Tyler last Sunday when saying that the new Hong Kong exchange was going to break the Comex monopoly. 

Thu, 05/12/2011 - 08:57 | 1267216 Quinvarius
Quinvarius's picture

Obviously the regulators finally woke up to the fact that silver is the Achilles Heel of the global banking system, thanks to JPM.  Rhodium can run from 50 to 10000.  Palladium can run from 150 to 800.  But, silver is special.

Thu, 05/12/2011 - 08:55 | 1267227 maneco
maneco's picture

Speculators are "evil" only when they buy commodities! When equity markets rise no one blames the speculators.

Thu, 05/12/2011 - 09:01 | 1267264 agent default
agent default's picture

Speculators are "evil" only when they buy commodities or sell bankrupt sovreign debt! There fixed it for you

Thu, 05/12/2011 - 09:45 | 1267438 Rynak
Rynak's picture

They also must be operating those bots, which can crash markets and endanger the economic security of the US - like economic WMDs! Down with the terrorists!

Thu, 05/12/2011 - 08:59 | 1267245 RobotTrader
RobotTrader's picture

Looks like lots of guys who were catching falling knives in silver are getting close to the point of capitulation.

Thu, 05/12/2011 - 09:15 | 1267307 spartan117
spartan117's picture

Robo, do you still have the monster box of ASEs for -$2 of spot?  I'm buying here if you are selling.

Thu, 05/12/2011 - 09:00 | 1267257 RED BARRON
RED BARRON's picture

Big line of people with heavy paper bags lined up to get into Stacks on 57 Street in NYC this morning.  Stackers going to Stacks to sell their precious.LMAO

Thu, 05/12/2011 - 09:02 | 1267271 Johnny Lawrence
Johnny Lawrence's picture

Sometimes you just have to trust the chart.  I'm a big believer in silver and gold, but the charts were looking ugly.  I got out after it slashed through the 9-day on big volume.

Also, I've noticed that the PMs have been correlating to the direction of the equity market, which made me think speculative money was going into them.  I don't like to see that correlation, especially when the equity market is overvalued by about 45% on a historical P/E 10 basis.

Thu, 05/12/2011 - 09:11 | 1267304 eBuddha
eBuddha's picture

J.L. - better be careful saying things like that around here --the geniuses like traderjoe or stormdancer will label you a troll like they did me several days ago when i suggested that one can be long-term bullish on something but recognize a short/medium term pullback is probable and it's best to take a few chips off the table - this can be done a variety of ways if you are long physical: sell futures, sell SLV, sell calls on either, buy puts on either.  Then when things settle down a bit you can cover that hedge.  It's just prudent, especially after the run PMs have had.  It makes no sense owning this stuff all the way up and in the process getting married to it and talking all sorts of stupid trash while all the way holding it all the way down.

as of today's low, silver is down 18% since YESTERDAY's high and 35% since April 25.  anyone who isn't interested in capturing a bit of that doesn't understand how to manage investments.

Thu, 05/12/2011 - 09:22 | 1267349 Zing
Zing's picture

+1

Thu, 05/12/2011 - 10:16 | 1267556 tarsubil
tarsubil's picture

You can say the pull back was bound to happen but it was precipitated by direct manipulation. Who would want to play the market when it is being manipulated? I'll just buy physical and hold. But, I hate gambling in general, so I'm biased.

Thu, 05/12/2011 - 11:31 | 1267983 eBuddha
eBuddha's picture

If by 'manipulated' you mean the exchange hiking margins, i would humbly disagree.

In this case, I think the regulators are being prudent:  as the price of a commodity rises, if the margin does not rise correspondingly, then effectively you're offering speculators a 5% down mortgage instead of a 20% down mortgage -- and we've all seen that movie.

Someone a few days ago suggested that the exchanges just have a simple ratio marging system.  The fact is that most of the time most commodities stay in a fairly stable (albeit sometimes wide) range and the margin can be set and left alone for long periods.  This is much easier for exchanges, clearing firms and for traders.

Frankly, IMHO, a lot of the explosion in prices we've seen since around 2007 in ag, energy and metal commodities has been the result of greater access to the futures pits either by people opening futures accounts (b/c traditional discount stock brokers are offering access) or via ETFs.  There's just so much money flowing into what was a fairly stable eco-system that prices are just going nuts.  Then when something happens to spook these players, they rush out en masse.

Certainly there are macro factors that justify a rise in commodities but the explosion seems more a factor of large blocks of new money in the space.

Thu, 05/12/2011 - 12:36 | 1268206 RockyRacoon
RockyRacoon's picture

How did I "play" the rise in silver prices?  I had rolls and rolls of 1 oz .999 generic rounds and a few pounds of 1 oz ingots that were accumulating around here since the early 1990s.   About 8 weeks ago I started selling them, one at a time, on eBay.   No reserve auctions, free shipping, start bid at 1 cent.    Sold the crap out of all of them.   The last few are being shipped this week with closing prices from $48 to $52 each.   During the sales I was rolling the cash into Silver Eagles.   Thus, my basis in the Eagles was quite low -- repeat: Quite low.  Lots of fun as well!

Thu, 05/12/2011 - 21:47 | 1270459 tarsubil
tarsubil's picture

That's fine if they raised them as the price went up but I'm pretty sure they raised them as they were going down. And why multiple hikes instead of just one?

Thu, 05/12/2011 - 09:15 | 1267302 chinaboy
chinaboy's picture

Like most of you, I own some silver. But I support hiking margin in China.

 

Most of you know that Chinese bought a lot physical. But physical is one way we play silver. Ma and pa investors can also invest in T+D through banks. We call it paper gold or paper silver. You ride the roller coaster but never take delivery. Note that this is a bank investment product. They have to be very conservative. When your margin fall below the bank safety line, they sell your position automatically. Effectively, there has been a de facto margin. What Shanghai exchange declared is a passive move to harmonize the rate across the country. 

B.T.W., most of us don't qualify for an account at the Shanghai exchange. You have to be really big and approved to be a player in there. The exchange does not have a silver future. The gold future volume is among top in the world.

 

Thu, 05/12/2011 - 09:15 | 1267308 goldfreak
goldfreak's picture

this can only be good for the health of the long term bull market. The lower the price goes, the more silver is taken out of circulation by smart investors and the less attention it gets from the MSM

Thu, 05/12/2011 - 09:18 | 1267318 Rynak
Rynak's picture

Okay, fuck this...... i may be far from having made a loss, but it's time to play whack-a-mole on the next up, wait till the storm calms down, and then reentry near the bottom. They want to play games, fine, i'll exploit it.

Thu, 05/12/2011 - 09:26 | 1267354 goldfreak
goldfreak's picture

Anybody know what the amount of silver available for investors is? Is it about a billion ounces?

Thu, 05/12/2011 - 09:28 | 1267359 FriedEggs
FriedEggs's picture

Fear not fellow (true) ZedHeds...

Don't listen to the trolls/shills...they are bottom feeders - like a carp, eating the feces of other fishes. They have an agenda - and its quite clear.

This 'battle' goes way beyond Silver and Gold - its much much more then PM's (which i think most of you realize)...

Its 'us' vs. 'them'...the shift is happenning...feel good

Stay steady. (Lock&Load)

 

Fried (e)

 

Thu, 05/12/2011 - 09:28 | 1267367 Richarda2
Richarda2's picture

I am involved in the Mining industry and will accept Meth mans  $ 5 figure but would like to add the following

5$ to dig it out of the ground, ok its still in the skip, 25$ to mill it and another 5$ to pour.

35.00 dead cost per OZ, YMMV

In primary mines the cost are higher.

Regards 

Ricka2

 

Thu, 05/12/2011 - 09:37 | 1267387 Rynak
Rynak's picture

Do you have some links to data to verify this?

Thu, 05/12/2011 - 10:27 | 1267612 Reptil
Reptil's picture

kewl!

Thu, 05/12/2011 - 09:39 | 1267391 Zing
Zing's picture

I have physical gold and some platinum, as a precious metals physical hold.  When Silver gets to a more palatable level I will buy some SLV, since I expect the industrial metals to over-correct.

Thu, 05/12/2011 - 09:39 | 1267408 SmudgieBuggler
SmudgieBuggler's picture

Can someone please explain the logic behind raising margins due to volaitility? All it does is increase volatility. Sounds like double-think and double-speak to me. We are all supposed to accept this.....?

Thu, 05/12/2011 - 09:41 | 1267418 Rynak
Rynak's picture

Yes, you are supposed to accept that the tail wags the dog.

In THEORY, there is a point to margin hikes, if they are used for their purpose, and consistently. Nowadays instead, they are simply used to manipulate spotprices up and down.

Thu, 05/12/2011 - 09:39 | 1267410 Richarda2
Richarda2's picture

I am involved in the Mining industry and will accept Meth mans  $ 5 figure but would like to add the following

5$ to dig it out of the ground, ok its still in the skip, 25$ to mill it and another 5$ to pour.

35.00 dead cost per OZ, YMMV

In primary mines the cost are higher.

Regards 

Ricka2

 

Thu, 05/12/2011 - 12:42 | 1268222 Fiat2Zero
Fiat2Zero's picture

Have those costs been rising?  If not, then were the miners busy losing money when silver was sub 35.00?  Even if silver is a "secondary product" (generally not the direct aim of mining, but a by-product), that simply means the cost would be $30 (less the $5 to dig it up since that is spent on finding gold, for example).

These costs seem too high.

And just because it "costs $5 to dig it out of the ground" (one of my favorite canards here on ZH, BTW), doesn't mean that the price is $5.  That's confusing production costs with pricing and scarcity.

Thu, 05/12/2011 - 09:42 | 1267411 Darth Silver
Darth Silver's picture

Dr. Durden,

Dont you think the move is genius?  the chinese love the physical.  they know the banks love to short paper.  so they increase the margin to 19%, baiting the paper shorts to zoom in to drive price down.  on the flip side they buy open contracts at the lower prices with the $2 billion of $US reserves that they have announced they are going to get rid of.

they now will have the ability to demand physical come the big july contract month.  since comex is empty and no dealer vaults have seen deposits in how many weeks, the house of cards is coming down.

china gets more physical with the lower prices, get rid of their unwanted $US, and drive a stake through the heart of one of the leading world powers by forcing the fed/banks to eat over a $500 billion loss in the paper silver short ponzi. 

tick tock...................

Thu, 05/12/2011 - 17:37 | 1269697 goldfish1
goldfish1's picture

Certainly sounds like a beautiful plan.

Thu, 05/12/2011 - 09:46 | 1267429 SilverDoctors
SilverDoctors's picture

Move over "sub-prime" and "green-shoots"....at this pace, "Silver Margin Hike" will be the catch phrase of 2011!

http://www.silverdoctors.com/

Thu, 05/12/2011 - 09:50 | 1267446 Bansters-in-my-...
Bansters-in-my- feces's picture

Ya well if you fucking TRADERS would just buy and fucking hold physical,and stop playing the FUCKING GAME,then maybe we would already have had a real price determined.

BUY PHYSICAL.....or FUCK OFF.

Thu, 05/12/2011 - 09:56 | 1267476 Rynak
Rynak's picture

You forget that one can in "exceptional circumstances" "trade" without going out of physical. Like for example, at the right time convert volatile physical to stable physical, wait for the bottom, and then buy more volatile physical. I haven't done it this time, but i certainly will do it next time.

Thu, 05/12/2011 - 09:50 | 1267449 Downtoolong
Downtoolong's picture


Question: Why are the spreads on SIVR options so wide? They are $.30-.50 on the most common strikes and expirations; on average about 20% of the option price. This is not an anomaly; it is always this way. In contrast, spreads on GLD options are as low as $0.04; 2-3% of the option price. With all the action and liquidity in silver these days, I wouldn’t think there would be a need for such high option spreads. How can this condition sustain in a truly competitive marketplace?

Thu, 05/12/2011 - 09:53 | 1267474 Bansters-in-my-...
Bansters-in-my- feces's picture

well when you's all are ready for a revolution wake me up....

Otherwise ,while you's Americans leave the N Y Federal Reseve Building standing,you's get what you deserve.

Thu, 05/12/2011 - 10:06 | 1267512 Downtoolong
Downtoolong's picture

Be careful what you wish for. Don't forget, that's how we started this shithole of an economy.

Thu, 05/12/2011 - 10:12 | 1267541 FriedEggs
FriedEggs's picture

http://www.usdebtclock.org/

YUP! - 14,000,000,000,000+ USA debt is still there...nothing has changed.

Im waiting for some Silver on Kitco for us Canadians...and nothing on the shelves (except 1000oz bar) ....been nothing all week. HANG TIGHT to your physical...nothing has changed.

Anyone that bought physical dont even think to sell (or do sell so i can buy:-)

Fried(e)

Thu, 05/12/2011 - 13:41 | 1268546 Anglo in Abitibi
Anglo in Abitibi's picture

FriedEggs,

You could check out silvergoldbull.com. I have ordered from them and Kitco in the past. Faster delivery than Kitco but higher premiums. They also sponsor the bullionbullscanada.com website (home of the great Jeff Neilson).

Good luck!

Thu, 05/12/2011 - 10:22 | 1267585 TaxSlave
TaxSlave's picture

From the sidelines:

I don't invest.  I trade my hours and skills for FRN's, then try to save whatever I can.  When silver zoomed, it meant I got fewer silver coins per hour of work.  This looked to me like a huge cut in pay so I sat it out.  Now that it looks to be crashing, I'll go trade some of those FRN's for more coins.  And I'll hold them.  The strategy is a gamble that I'll outlive the FRNs' value and still have something to trade for food, energy, and sex on the other side.

Still, I love reading the passionate arguments of people arguing all aspects of the fixed market.

Looks to me from out here in the fog of the unknown that in today's atmosphere, stock and commodities markets exist mainly to whipsaw the average investor out of his money (uh, so megabanks can report all their earnings off trading without ever taking a loss).  Like a casino, the house always wins.  Fine for amusement for people that enjoy playing, but they ain't gettin' none 'o my cash.

Now, can we please get a price dip on firearms and ammo, too?  Please?

Thu, 05/12/2011 - 11:14 | 1267891 DosZap
DosZap's picture

Now, can we please get a price dip on firearms and ammo, too?  Please?

 

You have one now..........best get what you need while gettins good.

 

Thu, 05/12/2011 - 10:31 | 1267623 Plata con Carne
Plata con Carne's picture

I think we need a thread discussing the implications of hoarding and transacting metal at a time when it's deemed illegal.

 

I would be very interested in a thread regarding the above.  Absent that, are there some websites or reading materials someone could kindly recommend?  Thanks very much.

Thu, 05/12/2011 - 12:35 | 1268194 Fiat2Zero
Fiat2Zero's picture

Enforcement will obviously be a problem when everyone is doing it.  Bringing in your metals for FRN trade may be made a law (seriously doubt this).  Just don't be silly enough to comply.

Think about it:  house to house searches using the dwindling police resources in bankrupt states to enforce what will be a very unpopular law.  The law would be Federal, and it would be in the states interests to sabotage it since they receive Federal money in worthless FRNs (many states currently have laws in congress to allow citizens to pay taxes in PMs).

All this confiscation fear is overblown.  By that time (hyperinflation height) it might be time to trade your PMs for things that are truly in the toilet, like houses you can rent to people.

Fri, 05/13/2011 - 23:13 | 1273681 vipobviously
vipobviously's picture

you could try survivalblog

Thu, 05/12/2011 - 10:37 | 1267661 cabernet
cabernet's picture

The war on silver is hot, hot, hot. The exchanges have knocked the price down hard and they are layering on a lead jacket so it can't get back up. I do not understand the establishments paranoia. Silver is such a small market. But in the end, higher margins cannot bring out more silver for deposit at the exchange vaults. It may have the opposite effect, where lower prices results is lower supply. I believe the real silver buyers will continue to take delivery and hold it until judgement day.

http://www.TheAngryGrapes.Com 

Thu, 05/12/2011 - 11:15 | 1267820 VFR
VFR's picture

double post

 

Thu, 05/12/2011 - 12:06 | 1268115 jmc8888
jmc8888's picture

Just remember kids, it was all this fraud that 'had to be paid off', that has been (partially) paid off (well by taking on debt via Benny's HP printer) that gave them this money.  The obligations ARE FRAUD.  The method of paying off the obligations ARE FRAUD.

Just think without paying off fraud, you wouldn't have these commodities going to the moon.  WIthout the printing to pay off the fraud, you don't have a catalyst.

What we have here...is a self-fulfilling prophecy of doom...brought to you by the idiots that believe paying off fraudulent debt is the 'tits'.

...and just remember, they would've gotten away with it if it wasn't for the pesky internet kids.

Paying off fraudulent debt through cuts, the Republicans/Tea Party dipshit way to overlook the real crisis, and thus be completely worthless (still).

Paying off fraudulent debt through printing, the Democrats/Republicans dipshit way to overlook the real crisis, and thus be completely worthless (still).

Anybody that isn't a bankster shouldn't support the paying back of fraud.  Our legal system used to protect us from such lunacy.  Now we have left, right, center, and tea all screaming their way forward is to pay back fraud, just with different methods.

As always, Glass-Steagall is the standard, the protectorate, and the cure to what ails us.  Of course the body politic actually has to do the work, but Glass-Steagall is the anti-bankster-otic....and yes we need to finish the entire bottle with these nasty bugs.

Do NOT follow this link or you will be banned from the site!