And There's Your Perfectly Leaked Explanation: CME Hikes Gold Margins, Again, This Time By 27%

Tyler Durden's picture

Two weeks after the CME hiked gold margins by 22%, and two days after the Shanghai Gold Exchange sent them higher by 26%, here comes the CME, as we expected, with another 26% gold margin hike (previously: "Should we expect 3 more SGE margin hikes in the next 2 weeks? Or will the CME rightfully accept the baton and do everything in its power to dent the parabolic rise in the alternative reserve currency? We are cautiously looking at what the CME will do today and will advise readers."). And now we know that this particular margin hike was leaked well in advance, and explains the entire $100 plunge in gold today. And as a reminder, the August 1 CME margin hike worked... for about 30 minutes.


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unky's picture

So I guess they will hike it few more times, just like they did with Silver back in May?

JLee2027's picture

+ for Turd. Who's junking this guy? He's a godsend.

nope-1004's picture

CME = Criminal Metals Enterprise.

Fuckers exist as a proxy for the US Gov't to play monetary games such as, devalue a currency, steal from the common individual, and "show" subdued inflation.  All part of the master manipulation game that goes on daily.


JW n FL's picture

Keiser Report: Bankers & Aliens (E175)

From: RussiaToday | Aug 23, 2011 | 23,008 views

This week Max Keiser and co-host, Stacy Herbert, notice that looking back is not an option when all the evidence is destroyed by the SEC and Max tries to explain the gold / Treasury conundrum. In the second half of the show Max talks to Catherine Austin Fitts about exponential fraud and the financial coup d'etat.

BaBaBouy's picture


Don't Trade Anything NYC ...


Fucking you know what's ...

BaBaBouy's picture


SEC should investigate Allegded Margin Hike Leak at the CFTC ???


Hahahahahahahaha, Like that will ever fucking happen ...

BaBaBouy's picture


Jackson HOLE = Bung HOLE ???

Ahmeexnal's picture

Blythe is going home in a bodee bag!!!!

Buggo Chavez called, he wants his gold back.  BEEEEEEEYOTCH!!!!!

HoofHearted's picture

Bastards. Let's just go cash and carry on everything. No more of this bullshit where you can short three years' supply worth of gold or silver production if you happen to have a J and a P in your company's name. Yesterday I work my "Kiss my ass, JP Morgan shirt. I want to drag that thing out of the dirty clothes pile and wear it again." Fuckers. At least we get PMs on sale for a few more days.

Seems like perfect cover for the Bernank to be able to monetize more shit. He'll have to make the markets drop tomorrow and Friday to get it done, though. And Krugman might need another earthquake to explain why his buddy Obama needs more stimulating from the economy or stimulus of the economy or whatever.

Thomas's picture

A-Holes at the J-Hole.

TruthInSunshine's picture

zerohedge 7 minutes ago
  • Academic studies of stimulus show it prevented the Great Recession from turning into Great Depression 2.0 @zerohedge: @Nouriel like ARRA?
Nouriel 12 minutes ago zerohedge 16 minutes ago
  • Yes Crisis Economics book on Kindle and also in tree-chopping version "@zerohedge: @Nouriel Is it available on the Kindle?"
Nouriel 20 minutes ago zerohedge 21 minutes ago
  • Ec101:Stimulus preventing DD double dip reduces debt surge caused by DD @zerohedge: you should inform Krugman about the benefits of leverage
Nouriel 22 minutes ago
  • @Nouriel Is it available on the Kindle?
zerohedge 25 minutes ago
  • Read my Crisis Economics on leverage & financial instab in Keynes/Minsky @zerohedge:47x leverage which voodoo keynesian have no problem with
Nouriel 26 minutes ago
  • @Nouriel Perhaps you should inform your colleague Krugman about the benefits of leverage
zerohedge 27 minutes ago
  • Keynes/Minsky knew all about leverage risks:get your history right @zerohedge:ES leverage is 47x which voodoo keynesians have no prob with?
  • Have plenty of prob with that & ANY excessive leverage @zerohedge: leverage on ES/E-mini is 47x which voodoo keynesian have no problem with?
Nouriel 33 minutes ago
  • Margin requirement for ES is 5000 initial and 4000 maint with daytrading rate at 25% of initial
zerohedge 35 minutes ago
  • Margin requirement for GC is now 9450 initial and 7000 maintenance. no daytrading rebates
zerohedge 35 minutes ago
  • Margin requirement was 5500 for Comex100 gold futures » 32x @zerohedge:Also initial+maintenance leverage 4 gold is 16450/175900 which is 11x
Nouriel 38 minutes ago
New_Meat's picture

Truthi-u guyz b an internet MACHINE!

Howz that for real-time commentary?

A Greenie for all y'all.

- Ned

TruthInSunshine's picture




Roubini is melting down on Twitter, claiming that anyone without a Phd in economics is a know nothing, and taking personal offense at any questioning of the Church of Keynes!


JW n FL's picture

Nouriel Roubini

Patethic democracy of Twitter/Blogs: any ignoramus/wacko/hack without even Econ 101 feels entitled to spew pompous nonsense on Keynes & Econ 19 minutes agovia Twitter for BlackBerry® Favorite Retweet Reply replies ?
JW n FL's picture

he ( Nouriel Roubini )only wants to engage someone who is to polite to take him to task, like Tyler.. God Love Tyler.. but he really is to, too fucking polite.

TruthInSunshine's picture



Now to piss Roubini off, people should basically talk about how he apparently despises things 'democratic.'

Roubini would make a great despot.

Manthong's picture

It won't be pretty when this thing burns, and everyone will feel the heat, but I for one, will enjoy the hell out of it.

Justaman's picture

Roubini is just positioning himself for a position on Obama's now defunct economic team.  Paulie K is going to be on the right side of BO but NR is trying to make a run at it as time goes on and he keeps talking/texting/posting. 

But really no one, I mean no one, can beat Paulie K with his alien savior movie coming to a theater near you. 

New_Meat's picture

Ya, and we all know all about them "Economic PhDz".

Piled higher and deeper.

- Ned

(dang, I'd kinda liked ol' roob, but probably his ... oh nvm)

IQ 145's picture

I've been looking at the Silver Chart, the daily bar chart; and I'd like to change what I said earlier. It looks like Silver has already corrected; the silver and gold markets diverged dramatically a few weeks ago, as you know. Silver touched $39 today which is a perfect bottom of the up-trend channel, (the way I do it, anyway). If you can buy it tomorrow for $39/ or $39 and small change go ahead and do it. This is contrary to what I said previously about waiting for further downside move. Of course, this is only an opinion; I may be wrong. But it looks like Silver is already done correcting. Gold could trade at $1700 without damaging the up-trend; whether this will occur or not, I don't know. I waiting until tomorrow morning; I may buy silver then; if so I'll post that. The price is supported very well right now in Hong Kong.

MillionDollarBonus_'s picture

This comment is a perfect example of the consipratorial nature of the "precious metals" community. Whenever they lose money investing in crazy doomer gold stocks or looney compression trades, they invent a conspiracy theory to cover for their complete lack of real economic education. Read some Krugman and Stigletz, and you might actually learn something useful for a change.

BaBaBouy's picture


OK Genious ...


When was the last time the CME raised Margins when the GOLD Price was in constant Decline ???????????????

MillionDollarBonus_'s picture

The CME raises margins all the time when the metals are falling. In fact, they raised margins 5 consecutive times while the price of silver was falling. That is pretty obvious evidence to me that there is NO manipulation in your precious "precious metals" market. You are just upset because you are an ammature trader who refuses to get a real economic education from the masters in the field. You have chosen to take shortcuts by listening to the lunatic rants of doomers like ron paul, and you are now paying the price for your ignorance.

BaBaBouy's picture


Aren't you confused, they RAISED SILVER MARGINS 5 times recently when Silver was SOARING ===> AT $50/ozs...


Plant ???


N'uff time wasted...


Cdad's picture got that entirely wrong.

GoinFawr's picture

He did get his leg pulled a bit there... but you and over a hundred others knew what he meant.

eisley79's picture

interesting, can you post the dates and amounts, but technically, it should be reducing margins in a down, if raising them in an up, to maintain stability.


anyway, i'd like to see the comparison, post some stats to go with that,

scratch_and_sniff's picture



Performance bonds rise and fall in direct response to risk, they work this out using the "dollar value of risk". So when the dollar value of risk falls or rises the margin is adjusted in line. The margin is only adjusted in response to increased vol regardless of the direction of price. You asked about silver; the dollar value of a one standard deviation move in silver is calculated as

price * $5,000/contract * 21-day standard deviation

Below, look at the chart plotted along the life of the silver hikes, you will see as the dollar value of risk rises, the margins increase, irrespective of the direction.

This is the underlying principal, the version they use is more complicated, i.e they use a bank of “what if” arrays with worst and best case scenarios(i.e adjusted implied volatilities, size of possible moves, and size of standard deviations) then minimize or maximize to get the margin.

Admittedly this leaves room for subjective interpretation, but with respect to the moves in gold, if anything, they were holding back from margin increases(the standard deviation has never been higher on gold) - the worst case scenario played out so the hike was inevitable…when the moves start to approach 5% per day, it’s a sure thing. The article above states that the hike was telegraphed, this is just absurd as anyone using CME’s SPAN software(anyone can own it) would have worked out that a margin hike was overdue. The price crashed because it was a vertical bubble, it bubbled all the way up to $1900, I mentioned this the other day and one guy here said “the gold market laughs at my parabolas”, indeed, it laughed so hard it that it fell over. They dont call them goldtards for nothing.



eisley79's picture

you are missing the point, regardless of the mechanism or calculation, they are raising rates supposedly to reduce the upside speculation.  Increasing an investors costs to prevent to quick a rise by shaking out weaker hands. 

On the downside they should be reducing costs, to bring more money in, and prevent collapsing values.


So, you didnt post what i asked.  Post the days and amounts during the rise, AND SINCE.  I absolutely think both silver and gold got ahead of themselves, and needed corrections, everyone saw that coming.  The issue in silver is what was being talked about, and are they controlling the market.  Whole bunch of quick rises to keep the price in line, and how much reduction in the nearly 6 months since, of no volatility.

Lets see a chart of March to September, and nothing else....

scratch_and_sniff's picture

NO You are missing the point of margin hikes, the hikes are to cover the exchange and clearing houses from risk; if they have 2000 accounts that will blow up if another 5% move happens, they will act to cover themselves, they would not want to be chasing people for margin calls, it puts the exchange at risk(the CME has not defaulted in 100 years), a lot of guys just dont pay margin calls. They decide if there are likely to be continuing large moves in an asset, and then work out how much accounts need to be capitalized using the methods i have mentioned. This works two ways, up and down, the direction does not matter. The day silver tanked everything fell, from oil & equities to currencies and yields, everything got the chop, there was a sharp turn in risk across the board in all assets and it had fuck all to do with silver. Silver got hit hard because it was a purely speculative bubble that had over run its fundamentals by a stretch.

As for all that data you requested, i think you will find that Google is a handy tool, i think i have been generous enough with my time. You are asking me to post figures just to quell your paranoia(it wont work), i have better things to do, and if you thought about what i have already said you wouldn’t need it. If you want to go through life thinking the CME are evil that’s up to you. Remember, they can only kill the price if the(SPECULATIVE) contracts belong to them, if you want to trade metals buy physical.


scratch_and_sniff's picture

Here, you can find all advisory notices with this link, you can chase up all the margin hikes and decreases yourself, im done. You can also have a look at the software used to determine the hikes on the second link. If you think you can prove something tell the authorities.

gwar5's picture

Krugman is the doomer, and international man of ridicule. Says we're all going to die if we don't spend another $1-2 Trillion. Brilliant. The last one worked worse than if we'd done nothing at all -- by their own prescribed numbers.


The  same sort of strategy has also done wonders for the economy of Spain the last 8 years, unemployment 22%. Stigletz at least admitted privately we'd have 10% unemployment for years to come -- and that was in Spring-summer of 2009, before it went over 8%.


Poor Grogman's picture

Hey master of the universe it would have been real good for us Amateurs (correct spelling) if you had called the drop for us three days ago.

I'm good with my positions what about you?


theMAXILOPEZpsycho's picture

For the record, what happend to the devils metal was this:

it fell $6 in minutes overnight when half the world were on holiday and america was celebrating the pretend killing of osama bin dead for 9 years

CME then had to raise margin requirments as per the rules on volitilty - so all the spec longs had to liquidate their positions

so the mystery is not so much the margin requirements; its what happened when silver mysteriously fell $6 in minutes...lots of people all going down to the coin shop and cashing in profits? well not exactly.

goldfreak's picture

it's so easy to find the trolls now, just look for -50

Kelley's picture

Isn't it amazing how the CME raised margins when the drops were HUGE. What kind of a coincidence is that in a market that has ALREADY been exposed as being manipulated AND where nothing was done about it.

It's open season for the thieves.

LongBallsShortBrains's picture

Yeah. Leave the metals alone and go back to trading ammatures.

(long or short)?

Hugh G Rection's picture

When you take a shit, do you have to hold your balls to keep them out of the water?

samslaught's picture

Let us break down this comment just a bit.  The first and second sentence doesn’t bother to reference a date, just makes a blanket claim with no evidence.  It's so vague that I fear you could be talking about the same thing as the person you are trying to ridicule.  If margins are hiked drastically on Silver after a 10 day bull run and the PM’s value falls, and then they hike it again 2 days later while it’s still declining, do you consider that margin hikes in a declining market?  If so you are a short sighted fool.  Then you claim that is obvious evidence that there is NO manipulation in the PM market.  Really?  PM’s manipulation has been documented to come from several different angles.  There is an entire website dedicated to gold manipulation for over a decade now.  Finally, you attempt to then call PM investors amateurs that are paying the price for listening to people like Ron Paul?  Really, you say that in the middle of a decade long PM bull run?  Do you even know how well Ron Paul’s portfolio has done over the last 15 years?  I guarantee he has outperformed the so called masters you are referencing.  I think his worst return on a PM stock over the decade has been 300%, his best being over 2000%.  Thanks for the laugh.  When I see comments like yours it only reaffirms my belief that the smart money is in gold

cynicalskeptic's picture

I suspect that 'million dollar bonus' was paid in Zimbabwe dollars....  we've got an aspiring Wall Streeter defending the system he so much wants to serve - while being paid as part of an astroturf effort defending the status quo......   newsflash - Wall Street is laying carbon baseed life forms off and using silicon to do all the work now.  You'll still be living in your parents' basement - Pace MBA or not - ten years from now (IF their house isn't foreclosed on).


I've worked on Wall Street - and for various 'quasi-governmental' agencies.  Things have been BLATANTLY rigged since the 'Plunge Protection Team' came to life under Saint Ronnie (though markets have been manipulated to varying degree since stocks were traded on the Street outside taverns. 

bankruptcylawyer's picture

i gave you a Plus just to piss everyone off. too much consent is intolerable, bitchez!

Chuck Walla's picture

Are things that so slow over at OFA? Or are you rooting for Krugman's Space Alien Invasion?

theotheri's picture

Gold is the ultimate bubble as we soon shall see.