Shanghai Gold Exchange To Hike Gold, Silver Margins

Tyler Durden's picture

Adding insult to injury, the Shanghai Gold Exchange overnight announced that following the tumbling precious metal prices and limit down drop in early trading, it may raise trading margins for its gold and silver forward contracts. The SGE announced that should prices not recover by the end of the trading day (which they didn't), trading margins for the gold forward contract will be raised to 12 percent, while margins for the silver forward contract will be hiked to 15 percent, the exchange said in a statement on its website. Curiously, gold prices in China were up in early trading only to take a dramatic U-turn on Monday, reversing early gains to drop to a two-year trough once the Japanese pre-margining onslaught was unleashed on the market.

From the SGE (translated)

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Dear Infinity's picture

Let them bring it -- the paper pushers are raining havoc on physical premiums, last I checked @ the average premium on 90% junk is in the ballpark 13% range -- unheard of

gold-is-not-dead's picture

shortage and price drop at the same time, welcome to disneyland!

Harlequin001's picture

at this rate all the sellers will soon be gone.

And then we start the next up leg with nothing but buyers...

GetZeeGold's picture



Margin call.....and we don't take stawks bitchez.

carlsbro's picture

Dow 16,000. Gold 850. Go ZH!!!!! ROFL!!!!

Buy phizz buy phyzz buy phyzz. LMAO!!!!!

TeamDepends's picture

We'll see who laughs last, non?

JonNadler's picture

those who own phyzz don't get margin calls, they just take advantage of the lower prices. If you're not stacking at this point, you're a  (fill in favorite pejorative term)

Beam Me Up Scotty's picture

This looks like a parabolic move to the downside.  We all know how parabolic moves to the upside end....

gold-is-not-dead's picture

here's a silly projection inline with the current craziness, XAUUSD = $3000 by the end of may

TeamDepends's picture

You look like that Princeton dude...

hankwil74's picture

I would stack, but I've listened to you and every other ZH poster and BTFD at $1800, $1750, $1680, $1625, $1560, and $1500.  No more fiat left to turn into gold.

TeamDepends's picture

Then you are sitting pretty.  Cheers!

teahouse's picture

There is only one dip...that's the one you want to buy...

thisandthat's picture

The zillion dollar question: when's a dip a dip and when it's not? Problem with dips is if you're aiming for the perfect one, you'll probably end up missing your shot, so what's a guy to do but take a shot in the dark and stick to your guns then?

Jayda1850's picture

That scenario sounds awfully familiar to 2008, and we all know how well that went. but hey... maybe this time is different.

hankwil74's picture

Is there an anti-ZH ETF out there I can invest in?

pods's picture

Just buy some more FB shares Copper Top.


TeamDepends's picture

Sure!  Send a check to TeamDepends @ Disneyland...

agent default's picture

Welcome to the magic world of central banking.  Enjoy the ride while it still lasts.

CompassionateFascist's picture

Let 'em eliminate margin altogether. It won't matter. Just keep converting debtbux to physical. Those suckers in ETF's/COMEX. Trapped in a paper Ponzi nightmare from which they cannot escape. 

agent default's picture

"Let 'em eliminate margin altogether.

Let me tell you something, if I pay you cash, I expect on the spot delivery, and it better be polished.  You turn COMEX to a cash market instead of the leveraged paper trade bucketshop it is today, reserves will be depleted within seconds.  Not happening.

CompassionateFascist's picture

Soon "they" will have no choice in the matter. The guywires holding up the paper ponzi are trembling violently. 

Killtruck's picture

Dump and hike all you want, you fuckers. You're not going to stop me. I've already won.

seek's picture

If we hypothesize that this is being done to save JPM or maximize the take from small sovereigns, then yes, CME will be next.

But doing so will lower prices, which will blow up the CME.

So either the COMEX blows up or there's a part 2 here, which somehow allows COMEX to avoid delivery without anything resembling a default.

The other thing that occurred to me -- this is a bit out in left field -- is that the US and China have been in emergency talks about North Korea. What if a deal was made, and part of that deal was China not grabbing physical during this event, or not balking on failures to deliver?


Bicycle Repairman's picture

Who defines delivery? Who defines default?  Who can change the rules?  If you disagree what is your course of action?

Markets are desirable as long as they function as desired by TPTB.  When they don't, TPTB will adjust them or end them as needed.

The market is not going to save you, if TPTB want you.

RSBriggs's picture

CME already avoids delivering by FORCING longs to take cash at a small premium over spot rather then delivering.  You can't FORCE the CME to deliver physical, even if you wanted to.  The rules say they can pay a cash premium, rather than deliver, if they want to, and they are settling this way more and more often.

seek's picture

I am aware of this, but it gives the appearance of a default. If every stand-for-delivery contract gets cashed out instead of delivered, they lose their reason for existence. So there needs to be some alternative; MF Global is a good example of this, they took the heat for non-delivery (aka theft) rather than CME.

Short version: I think there's a hidden piece to this puzzle.

Bicycle Repairman's picture

You'll have to be very long.

Sudden Debt's picture

yeah... the price is just so high... good of them to get it even cheaper...

The FED is really giving it away to the foreign powers for free right now...

and nothing we can do about it.

China will become the next economic supperpower and reserve currency. By design.


TeamDepends's picture

As long as the commie dolla is backed by gold, we will use it.  But we won't be happy about it one little bit.

Divine Wind's picture




Wow. Gold is on sale.

NoDebt's picture

DOWN goes Frasier!

Zer0head's picture

been years since I've seen that expression 

in spring of 09 almost daily

PeaBird's picture

On the way to 100% margin?

Frozen IcQb's picture

That will happen only when the futures sentiment turn net long.

Raising margins now would force the shorts to cover.

VonManstein's picture

A CME Margin hike would be bullish. Wont happen