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The Next Escalation: Gold Goes 100% Initial Margin

Tyler Durden's picture


The day many have predicted would come, has finally arrived: 100% initial margin on gold.

For now it is just one Futures Commission Merchant, in this case ex-CBOT traders Crossland LLC (motto: "Where Speed And Service Matter"), but tomorrow it will be another, and another.

In a dramatic flashback to the torrid days of 2011, when the CME and other exchanges desperately tried to scare away the weak hands by raising initial and maintenance margins on paper gold futures ever higher, and when many predicted that eventually the brokers and exchanges would simply do away margin completely in order to make levered trading in paper gold impossible, we have now witnessed the next shot across the bow aimed at all those who dare to oppose the central planners' scheme of forcing everyone out of hard assets, savings, bank deposits and other inert saved capital and into investing in ponzi capital markets, preferably on leverage, or otherwise spend their hard earned cash to buy stuff they don't need and stimulate inflation.

Of course, all this will do is simply shake out even more weak hands, making the residual base of holders that much most stable and not only eliminate the bulk of paper price volatility, but also lead to an even more profound breakage in the link between paper and hard gold.

Below is Crossland's notification to clients that starting tomorrow (we assume), the initial margin on gold and silver, will be 100%. In other words, the utility of a margin account is now null and void when trading PMs.

From: CustomerService <>
Subject: Margin Notice - Precious Metals
To: []
Date: Thursday, May 2, 2013, 3:46 PM


Crossland LLC is requiring all customers trading the precious metals, more specifically Gold and Silver, to be margined at 100% of initial for intraday trading.


Current margin for Gold is $7040 and for Silver is $12375


If it is the customers intention to trade the above products, it is recommended that you keep a minimum of $10,000 in your account at all times to trade Gold and a minimum of $15,000 to trade Silver.


Please note:  Crossland LLC always reserves the right to amend margins as we deem necessary.


Thank you


Krissy Metcalf
Customer Service Manager


How long until other brokers and exchanges follow suit? At the rate the onslaught to crush the last remaining "gold bug" is unfolding we expect that what Crossland just did will be a mandatory CFTC regulation in a few short months.

All hard asset resistance must be crushed!

And in other news, the delivery requests to JPM continue, as does the company's somewhat questionable strategy to make it appear it has no eligible deliverable problem by continuing to convert registered gold into commercial. Because while the bank's vault has not received one additional ounce of gold in over a week, just as it got another request for 24,028 oz of gold on Wednesday, the bank continues to "restock" by converting its stock of registered gold into eligible, this time "adding" another 57,860 oz (something HSBC decided to do as well), the fourth day in the past week it has done just this.


We wonder what happens if those holding gold warrants with JPM (i.e., registered stock) decide to inquire as to why over a hundred thousand ounces of their gold has been converted into eligible to satisfy ongoing delivery requests?

Finally we inquired how the CME goes about the entire process of reclassifying eligible gold into registered and vice versa. This is the response we got back:

... the adjustment column does reflect the issuance and cancellation of warrants, but it can be used for other purposes as well. Anything that is not received or withdrawn would be reported in the adjustment column.

Sufficiently vague to provide absolutely no real information on why it is happening or just who is cancelling their warrants, and whether it is voluntary or not. We would expect nothing less from the COMEX system of safe "vaulting."

h/t Ro and JQ


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Thu, 05/02/2013 - 19:38 | 3524480 Aeternus
Aeternus's picture

Bye Bye Paper Market - Hello Physical Market and True Price Discovery!

Thu, 05/02/2013 - 19:39 | 3524484 CrazyCooter
CrazyCooter's picture

Lower prices please!



Thu, 05/02/2013 - 19:55 | 3524537 knukles
knukles's picture

Now keep in mind the craziest of all paradigms that with the COMEX (I believe it was) that iMargin could be posted in Gold.
So, if the CRIMEX were to go to 100% iMargin then you could post your iMargin in Gold, meet your vMargins in Gold to support your paper (or pGold) gold so you're Fat Golden Goose awaiting Plucking a la Corzineing of your account.


Sumptin's wrong, Lucy

Seriously.  Why bother?
Unless you just want a Gazillion dollars in exposure you can't get anywhere else... but then again, even probably would make more sense to just be long GLD (as bad that could be) than to have that exposure with some FCM.
Jesus, people....

Thu, 05/02/2013 - 19:58 | 3524545 fonzannoon
fonzannoon's picture

Keep it simple knucks. That dumbfuck Celente probably just got caught with his pants down again buying on margin and they skanked him just for fun. He will be all over the place screaming about it tomorrow.

Laughs all around at the crimex.

Thu, 05/02/2013 - 20:09 | 3524567 ihedgemyhedges
ihedgemyhedges's picture


Thu, 05/02/2013 - 20:22 | 3524628 TwoShortPlanks
TwoShortPlanks's picture

GO FOR IT! Coz 110% isn't happening, and we get to end the foreplay once and for all.

Thu, 05/02/2013 - 20:31 | 3524658 Supernova Born
Supernova Born's picture

China, India, etc. will keep buying gold regardless of what is done to hostage Americans by the literally bankster-controlled federal government.

They can't stop the fight the between gold and baseless fiat bullshit. They can only make it an away game.

Thu, 05/02/2013 - 20:31 | 3524677 rehypothecator
rehypothecator's picture

I don't see what the big deal here is.  JPM's auditors found another 58,000 oz of gold that had only been sold 99 times, and so they have sold it, making it sold a nice, round, 100 times.  Just like all the other gold they, uh, "hold."  

Thu, 05/02/2013 - 20:41 | 3524697 TwoShortPlanks
TwoShortPlanks's picture

I would suggest that a margin hike to 100% would push paper up against the wall, where it can then be beaten to death. Remember, these guys never come down on the wrong side, so expect the same [Goldman] shenanigans which we saw in CDS and Shorting MBS pre-GFC to be played in this game too.

For all anyone knows, they could be building a very tidy physical position on the side (like shorting MBS). I seem to recall JPM getting a Bullion licence in record time (within less than a week) about 2-2.5 years ago....wonder what that was for? Tradition!

Thu, 05/02/2013 - 20:41 | 3524715 Manthong
Manthong's picture

Lucy got some 'splainin to do.

Thu, 05/02/2013 - 20:51 | 3524748 american eyedol
american eyedol's picture

i watch cnbc everyday and i have no idea what u guys are talking about? What does this mean for gold? Say it

Thu, 05/02/2013 - 20:54 | 3524759 TwoShortPlanks
TwoShortPlanks's picture

@ eyedol,

Just read as much as you can and catch up as fast as you can. Buying some physical may be a good idea too....maybe!

Thu, 05/02/2013 - 21:07 | 3524816 HoofHearted
HoofHearted's picture

Uh, this isn't as big of a deal as it seems. It just says that if you are day-trading you have to play by the same rules as the people holding overnight. If you think $7040 is going to buy you 5k ounces of silver, well...try again. 

I can't wait for the day we finally go cash and carry. Then those dumb fucks at JPM will finally get the spankings they deserve when the strong hands just hold for delivery. If you've already put 100% of the price down, you might as well get the shit.

Thu, 05/02/2013 - 22:45 | 3525137 americhinaman
americhinaman's picture

HH, exactly correct.

"to be margined at 100% of initial for intraday trading" just means that you have to post initial margin rather than maintenance (secondary) margin.  i.e. an extra $640 (post $7040 instead of $6400) to buy 100 oz. of gold with value ~$147,500.  it doesn't mean there's no leverage allowed, or that you have to post the full $147,500.

Margin Requirements
Speculator    Hedger
Initial    7,040    6,400
Secondary    6,400    6,400

the recommendation to hold a touch more than the min required is just them saying "don't go all in leveraged to the max". 

Thu, 05/02/2013 - 22:49 | 3525146 Pinto Currency
Pinto Currency's picture


There's a five alarm physical fire raging right now.

This margin increase is a thimble of water and simply wishful thinking on the part of price managers.  Just like Merrill Lynch cascading the markets on April 12 with a 300 tonne sell order, there will be no lasting effect - and it may even backfire just like ML's sell down of gold caused a stepwise increase in purchase of physical gold and silver.

Thu, 05/02/2013 - 23:16 | 3525212 strannick
strannick's picture

The futures meet the present, as COMEX contract holders with their 100% initial margin, to quote Jim Grant, now have the opportunity for ''returnless risk''

Thu, 05/02/2013 - 22:48 | 3525142 Pinto Currency
Pinto Currency's picture



Fri, 05/03/2013 - 12:15 | 3527281 bilbert
bilbert's picture

"i watch cnbc everyday and i have no idea what u guys are talking about?"

Classic! - you can't make this stuff up!

Eyedol - step away from the television. CNBS will poison your mind.


Thu, 05/02/2013 - 20:57 | 3524770 rubiconsolutions
rubiconsolutions's picture

Holy Rehypothecation Batman! Bam! Pow! Wam!

Thu, 05/02/2013 - 20:21 | 3524629 HulkHogan
HulkHogan's picture

Does anyone know if there's been a 100% margin on any other commodity market before?

Thu, 05/02/2013 - 20:24 | 3524644 HulkHogan
HulkHogan's picture

Answered my own question. Link is from the MGEX:

Thu, 05/02/2013 - 22:16 | 3525037 macholatte
macholatte's picture

Does anyone know if there's been a 100% margin on any other commodity market before?


As a matter of fact, this very issue came up a couple of years ago in the forex market. It might have been the result of Dodd-Frank, I don't recall.  anyway, trading gold and silver on the forex exchanges, like, went to 100% cash - zero margin.  I have no idea what happened to thier trading volume. My guess is that it was compromised significantly.


Thu, 05/02/2013 - 20:17 | 3524613 SAT 800
SAT 800's picture

You're right; it is the COMEX that accepts Gold Bullion for "iMARGIN"; as you so wittily observed. It is very droll. Let's see, you give them the Gold so you can have a contract on Gold; hm, hmm. Yeah, well, that sounds fair enough. LOL.

Fri, 05/03/2013 - 00:06 | 3525342 FEDbuster
FEDbuster's picture

Like a bankster requiring you to put up a $100K cash as collateral for a $100K loan.

Fri, 05/03/2013 - 01:19 | 3525449 olto
olto's picture

!00% margin is cash------who would trade futures at all rather than trade the cash?

A de-leveraged market will certainly cheer up my banker who is afraid of almost all collateral-----

He'll will definitely prefer a 'Tier one' item that we can mark to market every afternoon

Maybe, there will be a 'bullion bank' on every corner, except mine----it is all too complicated for this forest-dweller's small brain

unless I am the banker! 

Thu, 05/02/2013 - 20:41 | 3524717 TheProphet
TheProphet's picture

Exactly. Which is why I am unsure if I should be cheering or crying.

On one hand, this could drive down spot, and if spot stays down a while, create a buying opportunity.

On the other hand, it could force hedgers to hedger by taking possession rather than contracting. Not as likely to be used, but could certainly at least set a floor under gold, and perhaps influence the price upward.

Thu, 05/02/2013 - 20:41 | 3524718 TheProphet
TheProphet's picture

Exactly. Which is why I am unsure if I should be cheering or crying.

On one hand, this could drive down spot, and if spot stays down a while, create a buying opportunity.

On the other hand, it could force hedgers to hedger by taking possession rather than contracting. Not as likely to be used, but could certainly at least set a floor under gold, and perhaps influence the price upward.

Thu, 05/02/2013 - 20:54 | 3524732 Harbanger
Harbanger's picture

Thanks for the video Aeternus.  It made me sad but I needed to see it.  I never heard of the Tytler cycle before, it's worth posting:

"The historical cycle seems to be: From bondage to spiritual faith; from spiritual faith to courage; from courage to liberty; from liberty to abundance; from abundance to selfishness; from selfishness to apathy; from apathy to dependency; and from dependency back to bondage once more."

Fri, 05/03/2013 - 06:51 | 3525766 Fuh Querada
Fuh Querada's picture

Bring back Niko Bellic - puts an end to the Harlem paper market, permanently !

Thu, 05/02/2013 - 19:39 | 3524482 lineskis
lineskis's picture

More cheap physical, sweet! ;)

Thu, 05/02/2013 - 20:04 | 3524559 Hacked Economy
Hacked Economy's picture

Not only cheaper in the near-term, but it'll actually "firm up" the price floor (resistance) as gold buyers slowly move from paper over to physical.  That's a normal part of economics, credit availability is reduced, prices (homes, cars, assets) collapse down closer to cash prices.  With PMs, the reduction of leveraged trading allows for the physical buying to become more relevant, which brings the focus closer back to the "real" value in the real world.

Thu, 05/02/2013 - 19:39 | 3524486 fonzannoon
fonzannoon's picture

This seems like good news. No more margin. Buy it outright and take delivery. Buy facefart on margin if you must use margin.

Thu, 05/02/2013 - 19:56 | 3524539 knukles
knukles's picture

Makes no sense



Thu, 05/02/2013 - 20:16 | 3524607 DeadFred
DeadFred's picture

Why buy futures when for the same price you can buy spot? Seems to me they didn't just eliminate the counterparties for the next smackdown they just guaranteed most of the buyers will ask for delivery. Makes no sense unless they know the scam will be over before the next delivery.

Thu, 05/02/2013 - 21:17 | 3524855 spanish inquisition
spanish inquisition's picture

My conspiracy theory is that if you drive everyone out of the market for paper gold, then you get to set the price. Who cares if they ask for delivery, confiscation will be using the paper price that you set.

Thu, 05/02/2013 - 23:31 | 3525256 mayhem_korner
mayhem_korner's picture



My theory is that they are trying to crush PMs ahead of the equities collapse (for cover).  Let them all fall.  I know what will endure.

Thu, 05/02/2013 - 20:19 | 3524620 SAT 800
SAT 800's picture

It seems to me that the number of serious things that seriously don't make no sense is seriously increasing; but maybe I'm just seriously out of it.

Thu, 05/02/2013 - 20:52 | 3524751 RSBriggs
RSBriggs's picture


Fri, 05/03/2013 - 01:51 | 3525110 New World Chaos
New World Chaos's picture

This is the last big shakeout before the default.  If they are going to default, they might as well default big.  They short shitloads of metal that doesn't exist, buy physical for themselves on the way down, next they will destroy the market and never have to cover their shorts, even as they force longs and forward-hedged miners to eat printed cash payouts at a paper price which everyone knows is fraudulently low.

They still have a few big cards to shake out the phyz:

-100% cash market in London and New York.

-Ban public ownership of PMs; provide printed cash payouts of a few percent to successful narcs.

-All your mining stocks are belong to us.

-Supposedly end QE (which will mostly be for propaganda purposes and manufacturing a crash. They will continue to print in secret, so that the well-connected can buy up real stuff at pennies on the printed dollar).

Even if they do all this at once, I doubt they can smash the physical price though 16 / 1100, and that would be almost as short as a flash crash.  Only a few people would actually be able to buy at that price.  Probably they can't even get it down that far.  Fuck 'em.  Buy phyz anyway.

Hope you don't still have those leveraged silver futures you talked about multiple times?

Fri, 05/03/2013 - 01:56 | 3525515 Ignatius
Ignatius's picture

Big players we love to hate will not end up on the wrong side of physical PMs when it matters.


Fri, 05/03/2013 - 08:11 | 3525933 samcontrol
samcontrol's picture

paper pms will rise one more is the plan.

Thu, 05/02/2013 - 19:42 | 3524491 Rustysilver
Rustysilver's picture

I am welcoming this news with open arms.

Thu, 05/02/2013 - 19:42 | 3524492 AL_SWEARENGEN

Why trade Gold and Silver through these cocksucker's rigged casinos?  These iddiots know they have no cards left to play except manipulation and deception (was there ever anything else?)  Own physical in hand or you don't.

Thu, 05/02/2013 - 20:44 | 3524729 THECOMINGDEPRESSION

..ask TURD he plays paper all the time and loses this shit..2 face mongoloid

Thu, 05/02/2013 - 19:43 | 3524494 q99x2
q99x2's picture

Good signal to buy more physical gold and silver.

Thu, 05/02/2013 - 19:58 | 3524544 knukles
knukles's picture

For some reason, I concur....
This is fishy.

Like expanding volume and open interest when they smashed the PMs a couple weeks ago.  Weren't closing positions, people!

Thu, 05/02/2013 - 20:23 | 3524639 SAT 800
SAT 800's picture

I definitely agree that something don't smell kosher in Denmark. I been wondering about that very thing you just mentioned; I wonder if it's possible they got their dick slammed in the door? Weren't they supposed to scare everybody? like BOO!. But, as you say the number of open positions increased, it didn't decrease; and now we find out that Chinese house wives have bought 300TONNES, and not that is not a typo; of physical in the same time period. WTF? Is the band still playing? I mean if the band is still playing, then everything must be alright, right? even though the Deck seems a little tilty?

Thu, 05/02/2013 - 23:40 | 3525287 Crash Overide
Crash Overide's picture

"I wonder if it's possible they got their dick slammed in the door?"


I am sure there is a Bangkok joke in there somewhere...

Fri, 05/03/2013 - 06:53 | 3525767 Fuh Querada
Fuh Querada's picture

Yeah, there seems to be frigging in the rigging somewhere ...

Thu, 05/02/2013 - 20:30 | 3524672 Yen Cross
Yen Cross's picture

 Open Interest? B/S. Who is the "volume" player? What open interest in a volumeless market?

Thu, 05/02/2013 - 20:11 | 3524580 SnobGobbler
SnobGobbler's picture

shame my local dealer only has liberty-halves; oh yea' he's out now...

edit: fuck you jpm

Thu, 05/02/2013 - 19:43 | 3524499 tmosley
tmosley's picture

Dehypothication, bitchez.

Thu, 05/02/2013 - 19:44 | 3524500 PaperBear
PaperBear's picture

Perhaps now we can have proper price discovery.

Thu, 05/02/2013 - 19:44 | 3524501 KingdomKum
KingdomKum's picture

we few,  we happy few,  we band of silver holders  .  .  .

Thu, 05/02/2013 - 20:24 | 3524646 SAT 800
SAT 800's picture

You're Goddam right; This is Sparta!.

Thu, 05/02/2013 - 19:44 | 3524503 nmewn
nmewn's picture

"Below is Crossland's notification to clients that starting tomorrow (we assume), the initial margin on gold and silver, will be 100%. In other words, the utility of a margin account is now null and void when trading PMs."


Thu, 05/02/2013 - 19:44 | 3524504 fonzannoon
fonzannoon's picture

100% margin after a 20% drop....nah....this does not reek of complete panic....

Thu, 05/02/2013 - 19:48 | 3524512 valley chick
valley chick's picture

should it be an interesting Friday?

Thu, 05/02/2013 - 19:55 | 3524526 fonzannoon
fonzannoon's picture

I doubt it. I just don't think we are there yet. Let's say the NFP is 20k. At 3pm Hilsenrath will drop a rumor that the fed may go to 120 bil/month. The market will party.

If it's 100kish the market will just shrug it off as a non event.

If it's 150k plus the market will rally and conclude the fed will still be there with easy money anyway.

But that's just my jaded opinion. As Divided States illustrated the other day...whenever the market decides to overwhelm the fed it will be over in an instant.

I do believe those vaults are being emptied, and that will show up somewhere soon, but there are a lot of people on here a lot smarter than me that can explain how that may play out.

Thu, 05/02/2013 - 20:33 | 3524683 DeadFred
DeadFred's picture

The S&P at 100,000 is not their goal. At some point they have to let a correction occur and the old pump and dump is a great way for them to make money. This has gone way higher than I expected but sooner or later they will let it go down. 1600 at the beginning of May with economic indicators falling flat, leverage at crazy levels and the world in unease seems like a reasonable time to me. They weren't able to get many little retail guys but the hedge funds, pensions and retirement accounts are still there to feed the squid. The Fed will still print but where is it writen that the POMO money has to go immediately into stocks? It will buy much more at 800 than at 1600. 

Thu, 05/02/2013 - 20:42 | 3524722 infinity8
infinity8's picture

I like the way you talk, Fred.

Thu, 05/02/2013 - 20:57 | 3524769 Kelly
Kelly's picture

He's got a purty mouth, ain't he?

Thu, 05/02/2013 - 19:45 | 3524505 LoneStarHog
LoneStarHog's picture

May ANY of you trading PAPER suffer TOTAL COLLAPSE of ALL YOUR FINANCIAL ASSETS...YOU have been DESTROYING the REAL ASSETS of people by PARTICIPATING in the CRIMINAL ACTIVITIES of the CRIMINALS like JPM...FUCK all of you and may you all ROT IN HELL!

Thu, 05/02/2013 - 19:44 | 3524506 buzzsaw99
buzzsaw99's picture

This portends lower margin requirements for stawks too if recent history is any guide.

Thu, 05/02/2013 - 19:50 | 3524520 mick68
mick68's picture

Bought another 30 ounces today.....

Fri, 05/03/2013 - 00:10 | 3525351 Scritchy
Scritchy's picture

 If the gov't ever comes calling regarding your comment, just tell 'em it was Old English Malt Liquor and it went down smooth.


Thu, 05/02/2013 - 19:54 | 3524524 Racer
Racer's picture

Yessss.... brilliant, just what I would have wished for after the crush... no more margin squeezzzzzzeeesss on the weak longs....

Oh the Stupids....

Foot shooting multiple times over and now shot into a major leg artery....HA HA HA HA


Thu, 05/02/2013 - 19:57 | 3524541 Mine Is Bigger
Mine Is Bigger's picture

100% margin is still not high enough.  Many of us are paying premiums of 20%-plus to get silver coins.

Thu, 05/02/2013 - 20:01 | 3524549 knukles
knukles's picture


Party on, dude!
If they really wanted to stick it to everybody, why not make iMargin 150 or 200% the notional value of the contract?

Oh shit, I didn't mean to give Blythe any more ideas.   Jamie, you dn't hear that....

Thu, 05/02/2013 - 20:03 | 3524553 IridiumRebel
IridiumRebel's picture

200% is good right?

Thu, 05/02/2013 - 20:03 | 3524555 IridiumRebel
IridiumRebel's picture

150% is good right?

Thu, 05/02/2013 - 20:06 | 3524563 knukles
knukles's picture

LOL :)

Thu, 05/02/2013 - 20:29 | 3524667 kaiserhoff
kaiserhoff's picture

Who would be stupid enough to think this would stop the squeeze on delivery?

Oh yeah, Bennieboy.  He must have a new fuck all model.

Thu, 05/02/2013 - 20:38 | 3524703 DeadFred
DeadFred's picture

Bennieboy is on vacation, didn't you hear? Some far away island if he's wise. But then he's an economist so we know he's not wise.

Thu, 05/02/2013 - 20:00 | 3524547 IridiumRebel
IridiumRebel's picture

This is good right?

Thu, 05/02/2013 - 20:02 | 3524551 knukles
knukles's picture

Impressive, sir.

Thu, 05/02/2013 - 20:02 | 3524550 solgundy
solgundy's picture

margin for palladium once posted at 150%..............any thing is possible

Thu, 05/02/2013 - 20:03 | 3524554 TooBearish
TooBearish's picture

Do people really trade futures anymore? - I mean after the MFG theft and subsequent FCM blowups why in the world would you ever think you could succeed trading futures?

Thu, 05/02/2013 - 20:08 | 3524578 knukles
knukles's picture

Lemme see...
Does anybody trade stawks anymore?
Does any...


It's the Rise of the Machines!
Ned Ludd was right!
So was George Orwell.
This is not sounding like it's gonna have a very good outcome....

Thu, 05/02/2013 - 20:58 | 3524774 Lost Wages
Thu, 05/02/2013 - 20:06 | 3524564 Seasmoke
Seasmoke's picture

Get ready for lift off.

Thu, 05/02/2013 - 21:35 | 3524863 Jorgen
Jorgen's picture

From Texas Precious Metals inventory update letter dated 5/1/2013:

"Last week, on Tuesday, we offered 15,000 silver eagles on our website, and they sold in 8 minutes. On Friday, we sold another 15,000 in 4 minutes. All orders sold as monster boxes. The demand is so greatly outstripping supply that we do not have the option of offering smaller quantities."


"On Friday morning (May 3rd), we will release 15,000 silver american eagles at 8am CST. In a previous email, I commented that we would release silver eagles every week on Tuesday morning, but last week we offered two releases - one on Tuesday and one on Friday - because we were able to pull in stock early. Moving forward, it is likely that Friday will become the norm for the weekly release of eagles."

Seeing the trend, it will take them 2 mins to sell the 15K ASE's tomorrow...

Thu, 05/02/2013 - 20:09 | 3524579 Jafo
Jafo's picture

This tells me that lower prices are on the way.  The indicated range is $1215 to $1125 or somewhere in between.  If it goes on sale at that level it is time to double down.

Thu, 05/02/2013 - 20:11 | 3524585 SilverDoctors
SilverDoctors's picture

um...Tyler...perhaps you should re-read that email notice to clients.   Crosslands didnt just increase initial margins to 100%, which would be $120k for silver, and ~$150k  for gold.  They just said that clients wishing to day trade must keep 100% of initial margin (which they specify is currently Gold is $7040 and for Silver is $12375  in order to trade, and recommend keeping $15k in account at all times to trade silver.   $15k on 5,000oz of silver is 100% margin?  I'll take delivery on that contract in a heartbeat.


Thu, 05/02/2013 - 20:49 | 3524714 Haole
Haole's picture


Surprise, it's still all fraud.

Thu, 05/02/2013 - 20:44 | 3524728 Tyler Durden
Tyler Durden's picture

Where they say what the current margin is, which as you point our correctly is X for gold, and Y for silver, is what the current margin is, before the change in margin requirements for new positions.

And the change language: 100% of initial for intraday trading. Nothing in there about maintenance and overnight, but quite clear about new positions, i.e., initial, the cash outlay being whatever the normal of mini contract costs.

Finally if you open and close (a 100% margined) intraday position, you have to keep $0 in the account at the end of the day, quite a bit lower than their recommendation of how much cash should be kept "at all times."

Thu, 05/02/2013 - 20:47 | 3524737 Yen Cross
Yen Cross's picture

 Tyler, I have sub-accounts to hedge trades.

Thu, 05/02/2013 - 20:54 | 3524755 IridiumRebel
IridiumRebel's picture

Get a room you two....

Thu, 05/02/2013 - 21:16 | 3524850 Yen Cross
Yen Cross's picture

 I, R ,  Retail traders have the option to open sub accounts, in their primary accounts to hedge trades. It's no secret.

   If you open account A, you can open a sub-account (B) to hedge.  Good luck manageing it. ;-)

Thu, 05/02/2013 - 20:11 | 3524588 seek
seek's picture

MF Global 2.0, here we come!


Thu, 05/02/2013 - 20:11 | 3524589 Quinvarius
Quinvarius's picture

Retail and hedgefunds have gone full retard short as supply is shrinking fast.  This broker might not want to be involved in a delivery scandal.

These dudes trade gold like it is just paper without realizing there is a physical component to the trade.  They don;t want your USD or your EUR when they take delivery. They want something that does not exist.

Thu, 05/02/2013 - 20:13 | 3524591 ebworthen
ebworthen's picture

If there is any Gold left in Fort Knox it will be given to J.P. Morgan Chase; secretly, quietly, in the middle of the night on a weekend. 

If the Fort Knox Gold is gone Treasury will give them the Nazi Gold.

Thu, 05/02/2013 - 20:16 | 3524610 knukles
knukles's picture

If the Nazi gold is gone, then they'll come for that little burlap sack my 99 y/o German neighbor wears on his belt when he's outside singing the Horst Wessel song at 3 a.m.

Thu, 05/02/2013 - 20:21 | 3524630 ebworthen
ebworthen's picture

Can I help defend him?  Seems like a good use for my .45 1911 Model.

Thu, 05/02/2013 - 20:12 | 3524595 Lmo Mutton
Lmo Mutton's picture

Dude! Where's my margin?
Dude! Where's your margin?

Thu, 05/02/2013 - 21:43 | 3524937 SgtSchultz
SgtSchultz's picture

Every single dude - in order



Thu, 05/02/2013 - 20:14 | 3524598 SubjectivObject
SubjectivObject's picture

" Anything that is not received or withdrawn would be reported in the adjustment column."

I'll admit to being clueless, but is this an euphamism for infinity, or for nothing?

Thu, 05/02/2013 - 20:41 | 3524713 Winston Churchill
Winston Churchill's picture

Depends on the meaning of 'for'.

Thu, 05/02/2013 - 20:14 | 3524599 Bastiat
Bastiat's picture

This on top of the "people want physical" statment from the CME guy.  It smells like victory.

Thu, 05/02/2013 - 20:14 | 3524601 knukles
knukles's picture

But the good news is that Central Frog HQ (Elysee Palace) is auctioning off their (aka the people's) superb wine collection. 
Lemme see, margin call on France, so the Frogovernment is selling the people's Chateau Haut Brion?

Makes sense to me....

Fri, 05/03/2013 - 01:41 | 3525484 Isotope
Isotope's picture

I'm in for half. My favorite first growth. Haven't been able to afford it for more than 10 years.

Thu, 05/02/2013 - 20:18 | 3524616 pauhana
pauhana's picture

Tomorrow, and tomorrow, and tomorrow, Creeps in this petty pace from day to day, To the last syllable of recorded time; And all our yesterdays have lighted fools the way to dusty death.  

Thu, 05/02/2013 - 20:20 | 3524621 ebworthen
ebworthen's picture

I only deal in physical so I claim ignorance but it sounds to me like they have had people with not enough cash or physical to cover their gambling debts.

My hope is that the hordes of regular people buying physical because they have NO TRUST have crushed the paper gamblers.

Thu, 05/02/2013 - 20:21 | 3524633 Yen Cross
Yen Cross's picture

  I have a bunch of silver and platinum. (physical)  I'm weak on the xau physical. 


    Star Trek.  Bones: Jim I'm a P/M specialist, not a magician.

                  KIRK: Warp 9 Scotty, the Klingons just broke the neutral zone.

           Scotty: We're all out of {BS cubes} Captain.

                SPOCK: Captain, It would be logical to expell crew waste...

Thu, 05/02/2013 - 20:22 | 3524635 Jim in MN
Jim in MN's picture

All this and negative interest rates for bonds, too!  AHhhhhhh, the Land of Paper!  

Sweet paper....

Towering fantasy cities of paper....

Now, where's that box of matches gotten to.....

Thu, 05/02/2013 - 20:25 | 3524645 Smuckers
Smuckers's picture

A lot of fuss over non-HQC tangibles....



Thu, 05/02/2013 - 20:25 | 3524650 casaananda
casaananda's picture

God help us all who have lived clean, uncorrupted lives...and bought physical PM's. The latter is a gesture towards the former.


Thu, 05/02/2013 - 20:26 | 3524652 Joebloinvestor
Joebloinvestor's picture

The interesting "next big swing" will be in paper to conive people into selling physical.



How they will "bid up" the supply of paper gold will be the neat trick.


That may blow up in their faces also.

Thu, 05/02/2013 - 20:29 | 3524668 Trampy
Trampy's picture

Tyler apparently doesn't understand the simple and long-standing meaning of margin, which probably means he's never traded a futures account.

There are many FCMs that don't require exchange-dictated margins for INTRA-DAY trades.

Crossroads is telling their clients that they need to have the full initial margin (for OVERNIGHT positions) of GC and SI even if their intent is to close out the position before the end of trading for that same SESSION aka INTRA-DAY TRADING.


Thu, 05/02/2013 - 20:32 | 3524679 ebworthen
ebworthen's picture


Thu, 05/02/2013 - 20:39 | 3524706 FranSix
FranSix's picture

People can only trade futures, but not borrow on margin to excercise settlement of those contracts beyond expiry unless they put up 100% collateral.

Thu, 05/02/2013 - 21:58 | 3524993 ebworthen
ebworthen's picture

Thank you.

I like the sound of that.

Thu, 05/02/2013 - 22:29 | 3525069 Trampy
Trampy's picture

Yes, except that they're not "borrowing" anything to take delivery.  If they went long, say, one contract GC @ $1500, and stayed long into delivery and after the next contract goes active, their broker will demand that they have at least $150 K of unencumbered cash in the futures account to pay for ~100 ozt of gold, exact price TBD based on delivery charges and the exact weight of the bar(s) assigned (in order of "standing") that are only approximately 100 ozt.

Tyler posts the delivery of gold and last week I remember seeing R.J. O'Brien getting one contract of GC delivered, which means that retail broker had one retail customer who stood for delivery.  O'Brien didn't "lend" that customer anything, ever.  Unlike equity margin loans at stockbrokers, which are LENDING, the margins for futures trading are like an escrow deposit to cover potential losses a customer could incur before the point at which their account goes negative cash balance.

Thu, 05/02/2013 - 20:34 | 3524695 Yen Cross
Yen Cross's picture

 Apparently, you don't understand the difference between trading, { Futures and Options} . Based on your comment you're trading options. You sure as hell couldn't fill a futures contract!

Thu, 05/02/2013 - 21:10 | 3524778 Trampy
Trampy's picture


Thu, 05/02/2013 - 21:16 | 3524780 Trampy
Trampy's picture

Seems like over 90% of the posters here have never traded GC or SI (much less YG or YI).

Even a "wannabe" trader with a handle referring to FX should know the obvious fact that:

No margin is required to trade options (equities and futures both), unless of course they're being "written" !!!

The irony here is that dumb sheeple are dumb sheeple, whether they're "following" Krugman or Durden.


Thu, 05/02/2013 - 21:21 | 3524868 Yen Cross
Yen Cross's picture

  If you have the collateral to fill the front end of the trade, and still walk away after taking delivery (with your head held high)

    Good on ya!

Thu, 05/02/2013 - 21:44 | 3524947 Trampy
Trampy's picture

CME explains margin for gold futures if you click on the appropriate links from this page:

Since you obviously have never had a futures account or even an FX account, I suggest you start small with maybe a CFD broker like Nadex or, if you really do have an interest in yen, trade FX with only 10 K lots for the first few years.

Since there are so few real traders here--and way way too many poseurs--you should get out more to places like, and then maybe eventually to, where the most popular broker is IB.




Thu, 05/02/2013 - 21:34 | 3524874 nevadan
nevadan's picture

This link is to Mirus margin requirements.  Their intraday requirements are much less than the position or "overnight" trades.  Margin is better defined as a performance bond for futures accounts, as opposed to borrowing stock from a broker "on margin".  The increase in performance bond amounts at this particular FCM is a reflection of increased volatility requiring more insurance money be held in the traders account. And as silverdoctor pointed out it is nowhere near 100% margin requirement for the contracts in question.


Thu, 05/02/2013 - 23:29 | 3525227 Trampy
Trampy's picture

Thank You. 

Mirus could be a perfectly good broker, but I didn't want to name any names because there are some very aggressive low-budget/limited-service "futures brokers" catering to small-account ES daytraders; most are IBs, not FCMs, and none of them are the sort i'd trust with a futures account, for many reasons unrelated to topic.

Thu, 05/02/2013 - 20:40 | 3524678 Manipuflation
Manipuflation's picture

It might be time to resume "Operation Shitload of Silver Dimes".  I am always checking prices and have noticed that the prices at my preferred dealer site for BU dimes have not changed even one cent during all of April.LOL  I suppose I could go buy some sliders from Apmex but what's the point in that?  I already have those for trading purposes.  Perhaps, I will wander over to my local LCS and see what is going on over there but I already know what I will find there.  JACK SQUAT!

Thu, 05/02/2013 - 20:31 | 3524680 in4mayshun
in4mayshun's picture

I love the smell of desperation in the morning...

Thu, 05/02/2013 - 20:46 | 3524734 spencer
spencer's picture

no. it is overhyped as usual here.

"as to why over a hundred thousand ounces of their gold has been converted into eligible to satisfy ongoing delivery requests?"



Eligible means that the condition of the bars conforms to the standards of delivery. Size and quality of the bars being stored at the Comex warehouse, but NOT OFFERED for delivery.

Registered means that the metal conforms to the standards of delivery AND is available for delivery to those who demand bullion from those who sold futures contracts.

Now the article says the gold is being converted from registered to eligible as a result of delivery situation. While it is possible - it is not necessarily the only reason.

Actually I would totally disagree with this simplified explanation. But what the heck - we should cheer up the end result - which is the drop in Registered. That indeed matters a lot.

The only thing that we need to know is a drop in registered. That's it. We do not need to build any conspiracy around the fact.

Thu, 05/02/2013 - 21:08 | 3524821 Tyler Durden
Tyler Durden's picture

Well, there is your interpretation of the NYMEX rules... and then there is the verbatim use of the rules, and the NYMEX' definition of what constitutes eligible.

Chapter 7A in the NYMEX Rulebook (source) provides the following definitions:

  • (p) "Eligible" shall mean, with respect to any Commodity, that such Commodity is acceptable for delivery against the applicable Commodity Contract.
  • (ee) "Warrant" shall mean a document of title issued by a Licensed Facility, meeting the requirements of Article 7 of the UCC, and demonstrating that the referenced quantity of the covered Commodity, stored in the Licensed Facility referenced thereon, meets the specifications of the applicable Commodity Futures Contract.

Warrant, in this case referring to registered gold, which simply means it is "warranted."

Thu, 05/02/2013 - 21:24 | 3524877 Yen Cross
Yen Cross's picture

   Registered as a B/D. Or accredited.

Thu, 05/02/2013 - 21:28 | 3524894 spencer
spencer's picture

you are absolutely right that the warrant means it is warranted the corresponding gold is conforming to the delivery standard.

The only little thing is that 'acceptable for delivery' does not mean 'registered for delivery'. 7A04 is self explanatory, no need to create more confusion.

Look, I am not trying to be an ass or anything - I rarely comment on anything - but please be just.

Thu, 05/02/2013 - 21:47 | 3524957 NoWayJose
NoWayJose's picture

Registered, eligible and warrant are meaningless... The only truth is that if you 'think' JPM is holding your gold - it's not there any more!

Thu, 05/02/2013 - 21:52 | 3524973 the grateful un...
the grateful unemployed's picture

its there, they're not selling get it

Thu, 05/02/2013 - 20:34 | 3524688 FranSix
FranSix's picture

Having their clients put up 100% margin lets them settle in cash very easily when they fail to deliver.

Thu, 05/02/2013 - 20:37 | 3524700 JJ McApe
JJ McApe's picture

100% margin... LOLWUT

Thu, 05/02/2013 - 20:53 | 3524710 Yen Cross
Yen Cross's picture

  Tyler respectfully. Gold is traded on the United States (F/X) exchange @  1:1.  There isn't any hedging in the retail market after 2011.  If you're accredited and trade 100k(cme)(CBOE) contracts you have some leverage.

Thu, 05/02/2013 - 20:58 | 3524740 Jones79
Jones79's picture


Thu, 05/02/2013 - 21:07 | 3524811 devo
devo's picture

Crushed right into my pocket.

Thu, 05/02/2013 - 21:08 | 3524818 They Tried to S...
They Tried to Steal My Gold's picture

Folks we have the building of another MF Global scenario coming soon. Not exact but of the same elk....and the commodity traders will again bitch and complain why they got fucked...

Once Ignorant 

Twice Fuckin Stupid


Fri, 05/03/2013 - 01:29 | 3525466 Lord Koos
Lord Koos's picture

The same elk?  Oh my deer.

Thu, 05/02/2013 - 21:10 | 3524822 derryb
derryb's picture

I suspect the real reason behind this is that Crossland sees the growing threat of a COMEX default has become too much of a risk for the company when allowing margin trading. I say "great risk analysis" and I expect others to follow. Kudos for protecting themselves and their customers.

Thu, 05/02/2013 - 21:19 | 3524862 sink critically
sink critically's picture

As a regular average joe I gleaned two things from this:

1. The future of gold and silver cannot be initially purchased nor sold on margin, it's now a fully-funded bet. There is no future anymore, there is only now.

2. This sets the stage perfectly for an unanticipated trading stoppage, the emergency, glitch, or malfunction kind whereby they win and you lose. You lose everything you had on the table, and they win it all.

Thu, 05/02/2013 - 21:38 | 3524926 derryb
derryb's picture

If it's on the table in the form of paper, you never really had it to begin with.

Thu, 05/02/2013 - 21:50 | 3524967 the grateful un...
the grateful unemployed's picture

don't forget this keeps the bear raiders from driving down the price on margin. the fact that gold futures trade closer to spot, and spot trades closer to the real premium only helps the gold bugs. the market should reflect the cash and carry value of gold, and this moves us closer to that number

Thu, 05/02/2013 - 21:53 | 3524977 Monedas
Monedas's picture

I would rather have good junk silver .... than the stuff they pass as "good for delivery" !

Thu, 05/02/2013 - 22:00 | 3524997 el Gallinazo
el Gallinazo's picture

Why the fuck would anyone want a piece of paper saying that they had the rights to such a stack of gold (with probably 20 other people with the same "rights" to the same stack) when you can have it physically stacked in your favorite secure place,   if you can't trade on a low margin.  Anyone stupid or gambling addicted enough to engage in this practice deserve what he gets.  Despite what this Tyler writes, I see this as a very positive sign.  Should mark the death of paper gold one might hope.

Thu, 05/02/2013 - 22:02 | 3525004 Tirion
Tirion's picture

Presumably 100% margin applies to those wanting to short gold/silver, too?

Thu, 05/02/2013 - 22:02 | 3525006 Tirion
Tirion's picture

Presumably 100% margin applies to those wanting to short gold/silver, too?

Thu, 05/02/2013 - 22:06 | 3525012 RMolineaux
RMolineaux's picture

Beg to differ with some of Tyler's inferences:

The Crossroads announcement referred to "initial" margins and "intra-day" trading.  It appears to me that their target was the professional crap-shooters, not small holders.  In any event, this is a positive step in the direction of returning CME activity to responsible participants.  The next steps will be to expand the high margins to other commodities, and reduce the total contracts available to some reasonable percentage of the total physical quantity of a commodity available.

Thu, 05/02/2013 - 22:32 | 3525079 xxxxx
xxxxx's picture

I recall during the last Gold bull market they put the margin to 100% plus no new contracts, liquidation only. That"s what broke the Hunt Brothers forcing them to sell. We know what happened next.

Thu, 05/02/2013 - 23:29 | 3525247 Judge Crater
Judge Crater's picture

One scenario is that JPM forced a drop in the gold price to $1,321 an ounce on April 15, then immediately swapped most of its vaulted physical gold for gold exchange-traded funds paper.  JPM delayed reporting the sharp drop in its gold inventory for a week, giving it time to transport the gold out of the United States, to prevent the US Treasury from seizing the gold at a later date.  I figure the JPM gold is now stored in a Hong Kong bank, beyond the reach of Obama's henchpeople.  I wonder if Jamie Dimon has a penthouse apartment overlooking Victoria Harbor in Hong Kong.

Thu, 05/02/2013 - 23:34 | 3525258 sablya
sablya's picture

It is the new alchemy - turning paper into gold.  Even though you can buy June 2014 gold futures for less than spot, no one really wants to do that, even less so with 100% initial margin.  The backwardation is somewhat of a motivation for people to get out of physical and into paper and at least collect the decarry.  But it's not working - the backwardation persists because, contrary to "reason", people are buying physical and shorting paper.  

There appears to be an obvious bullion bank/Fed strategy in play to increase the M2 velocity (M2V) by driving people out of hard assets - to turn gold into paper and then get the paper flowing - but their strategy seems to be backfiring.  The more they drive down the price, the more people are loading up on PMs, which contributes nothing toward GDP.  They are obliging by selling their paper but using it to buy phyzz.  

I think that Bernanke must be scratching his head wondering how he missed this turn of events.  It is contrary to all reason, the lower the paper price of gold because of deflation because of a drooping M2V, the higher the spot price of gold.  The more that people buy gold, the lower the M2V.  It is a vicious cycle that ends badly for the $USD.

Fri, 05/03/2013 - 01:01 | 3525434 RaceToTheBottom
RaceToTheBottom's picture

Agreed.   Very funny he didn't expect the "Fuckyou Washington and WS  I don't trust you at any price"

Thu, 05/02/2013 - 23:34 | 3525269 London Dude Trader
London Dude Trader's picture


Do any of you even understand what margin on futures contracts means?

Crossland's memo is about raising the intraday maintenance margin to make it equal to the intraday initial margin, i.e. ca. 5% margin on the notional.

If margin on a CME Gold contract were raised to 100% of the notional, that would bring it to $147,500, not $7,000.

I'm puzzled by Tyler's absolutely false and moronic statement and even more amazed by the dozens of subsequent comments from ZH readers that clearly lack an even basic understanding of how these market function.


Fri, 05/03/2013 - 05:32 | 3525706 Trampy
Trampy's picture

Amen, brother!

Yeah, the stupid herding of these lemmings following their leader off a cliff of nonsense is hilarious.

Stupid sheeple are stupid sheeple.  Some of them "follow" Krugman but most of the sheeple here at ZH choose to blindly follow Durden. 

These bozos were immediately told by quite a few people here that this "story" was garbage and could only have been written by a person who knows absolutely nothing about futures trading.

Only one of them rather lamely and ad hominem tried to tell me I was wrong; the majority did nothing but parrot Durden with twittter-length assents while pushing a few down arrows on dissidents, apparently because none of them could think of doing anything requiring thought, despite fact that Durden's huge error was all explained very clearly by non-Durdens.

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