This page has been archived and commenting is disabled.

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.

 

 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 08/24/2011 - 16:42 | Link to Comment unky
unky's picture

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

Wed, 08/24/2011 - 16:43 | Link to Comment Turd Ferguson
Turd Ferguson's picture

maybe

Wed, 08/24/2011 - 16:51 | Link to Comment JLee2027
JLee2027's picture

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

Wed, 08/24/2011 - 16:55 | Link to Comment Turd Ferguson
Turd Ferguson's picture

Thanks.

Wed, 08/24/2011 - 17:04 | Link to Comment nope-1004
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.

 

Wed, 08/24/2011 - 17:05 | Link to Comment JW n FL
JW n FL's picture

Keiser Report: Bankers & Aliens (E175)

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

http://www.youtube.com/user/RussiaToday#p/u/13/pudykXGTDtg

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.

Wed, 08/24/2011 - 17:06 | Link to Comment BaBaBouy
BaBaBouy's picture

.

Don't Trade Anything NYC ...

 

Fucking you know what's ...

Wed, 08/24/2011 - 17:12 | Link to Comment BaBaBouy
BaBaBouy's picture

 

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

 

Hahahahahahahaha, Like that will ever fucking happen ...

Wed, 08/24/2011 - 17:21 | Link to Comment BaBaBouy
BaBaBouy's picture

 

Jackson HOLE = Bung HOLE ???

Wed, 08/24/2011 - 17:40 | Link to Comment Ahmeexnal
Ahmeexnal's picture

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

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

Wed, 08/24/2011 - 20:56 | Link to Comment HoofHearted
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.

Wed, 08/24/2011 - 17:49 | Link to Comment Thomas
Thomas's picture

A-Holes at the J-Hole.

Wed, 08/24/2011 - 18:02 | Link to Comment TruthInSunshine
TruthInSunshine's picture

https://twitter.com/

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
Wed, 08/24/2011 - 18:15 | Link to Comment New_Meat
New_Meat's picture

Truthi-u guyz b an internet MACHINE!

Howz that for real-time commentary?

A Greenie for all y'all.

- Ned

Wed, 08/24/2011 - 18:26 | Link to Comment TruthInSunshine
TruthInSunshine's picture

 

 

Lol!

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!

 

Wed, 08/24/2011 - 19:02 | Link to Comment JW n FL
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 ?
Wed, 08/24/2011 - 19:04 | Link to Comment JW n FL
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.

Wed, 08/24/2011 - 19:07 | Link to Comment TruthInSunshine
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.

Wed, 08/24/2011 - 19:58 | Link to Comment Manthong
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.

Wed, 08/24/2011 - 20:43 | Link to Comment Justaman
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. 

Wed, 08/24/2011 - 20:40 | Link to Comment New_Meat
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)

Thu, 08/25/2011 - 00:21 | Link to Comment IQ 145
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.

Wed, 08/24/2011 - 17:21 | Link to Comment MillionDollarBonus_
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.

Wed, 08/24/2011 - 17:24 | Link to Comment BaBaBouy
BaBaBouy's picture

.

OK Genious ...

 

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

Wed, 08/24/2011 - 17:32 | Link to Comment MillionDollarBonus_
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.

Wed, 08/24/2011 - 17:40 | Link to Comment unky
unky's picture

...ridiculous

Wed, 08/24/2011 - 18:33 | Link to Comment BaBaBouy
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...

 


Wed, 08/24/2011 - 18:37 | Link to Comment Cdad
Cdad's picture

Ah...no...you got that entirely wrong.

Thu, 08/25/2011 - 02:37 | Link to Comment GoinFawr
GoinFawr's picture

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

Wed, 08/24/2011 - 17:48 | Link to Comment eisley79
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,

Thu, 08/25/2011 - 01:06 | Link to Comment scratch_and_sniff
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.

 

 

 

http://i51.tinypic.com/294ifbb.png 

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.

 

 

Thu, 08/25/2011 - 11:04 | Link to Comment eisley79
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....

Thu, 08/25/2011 - 11:48 | Link to Comment scratch_and_sniff
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.

 

Thu, 08/25/2011 - 11:55 | Link to Comment scratch_and_sniff
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.

http://www.cmegroup.com/tools-information/20110217_advisorySearch.html

http://www.cmegroup.com/clearing/risk-management/span-overview.html

Wed, 08/24/2011 - 17:51 | Link to Comment gwar5
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%.

 

Wed, 08/24/2011 - 17:53 | Link to Comment JasperNewtonDaniel
JasperNewtonDaniel's picture

Are you an "ammature" speller?

Wed, 08/24/2011 - 17:53 | Link to Comment JasperNewtonDaniel
JasperNewtonDaniel's picture

Are you an "ammature" speller?

Wed, 08/24/2011 - 17:53 | Link to Comment Poor Grogman
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?

 

Wed, 08/24/2011 - 17:54 | Link to Comment theMAXILOPEZpsycho
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.

Wed, 08/24/2011 - 18:26 | Link to Comment goldfreak
goldfreak's picture

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

Wed, 08/24/2011 - 18:36 | Link to Comment Kelley
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.

Wed, 08/24/2011 - 18:39 | Link to Comment LongBallsShortBrains
LongBallsShortBrains's picture

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

(long or short)?

Wed, 08/24/2011 - 19:27 | Link to Comment dropdeadfed
dropdeadfed's picture

I love your pic.

Wed, 08/24/2011 - 19:46 | Link to Comment Hugh G Rection
Hugh G Rection's picture

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

Wed, 08/24/2011 - 18:52 | Link to Comment samslaught
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 www.gata.org 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

Wed, 08/24/2011 - 18:58 | Link to Comment cynicalskeptic
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. 

Wed, 08/24/2011 - 20:08 | Link to Comment bankruptcylawyer
bankruptcylawyer's picture

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

Wed, 08/24/2011 - 20:09 | Link to Comment Gandalf6900
Gandalf6900's picture

Are you human or machine?

Wed, 08/24/2011 - 20:38 | Link to Comment Chuck Walla
Chuck Walla's picture

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

Wed, 08/24/2011 - 22:17 | Link to Comment theotheri
theotheri's picture

Gold is the ultimate bubble as we soon shall see.

Wed, 08/24/2011 - 22:22 | Link to Comment daveedollar
daveedollar's picture

Well, my biggest bonus ever was less than 200K, but I know how to spell amateur, even without studying the masters.

Wed, 08/24/2011 - 22:26 | Link to Comment DRT RD
DRT RD's picture

"ammature" Really? Your total butchering of the word "amateur" just discredited anything you had of value to say, if you had anything at all.

 

John

Wed, 08/24/2011 - 23:50 | Link to Comment 55 men
55 men's picture

Million dollar dumb ass

Thu, 08/25/2011 - 07:18 | Link to Comment tarsubil
tarsubil's picture

LOL, like I said. Their hands were tied people. They had no choice. The stock market...uh... I mean, gold was like all over the place. So was silver. I mean, seriously, it was like all over the place. I have a PhD! Don't question me, ignoramouses!

Wed, 08/24/2011 - 19:37 | Link to Comment Prometheus418
Prometheus418's picture

Who cares?

You need to take into account that not everyone buying gold right now is doing it because they have lost faith in the US dollar- I'm sure there is a sizable percentage that are just speculating on it because it's in a bull market.  They might buy on margin, and be either unwilling or unable to add cash to their position, or just be taking profits out.  For all I know, they're doing it to buy shares of AAPL- there is just no telling.

All it means to anyone saving in PMs, is that the price goes down, which is a bonus.  Apocalypse money shouldn't be leveraged, unless you have a crystal ball that says it's coming before the first payment is due.

Let 'em do whatever they want, all that is really happening is that people are shuffling paper and electronic bits around- it doesn't take ounces out of your safe, and actually allows you to buy more.

All of the bitching about margin hikes is a logical fail.  If you are claiming that paper currency is becoming worthless, and are using PMs as a hedge against that, there is no reason to be concerned or care about margin trades- they have no power over you.  Anyone intending to take physical delivery should already have the cash needed to pay off the contract, so meeting the increased margin is a non-issue, right?

Wed, 08/24/2011 - 17:25 | Link to Comment caerus
caerus's picture

you sir, are hilarious

Wed, 08/24/2011 - 17:26 | Link to Comment smore
smore's picture

Gave you a point for humor.  You were joking, right?

Wed, 08/24/2011 - 17:39 | Link to Comment Esso
Esso's picture

That is an AWESOME avatar!

Wed, 08/24/2011 - 18:04 | Link to Comment Citxmech
Citxmech's picture

+2 on the Avatar - Damn.

Wed, 08/24/2011 - 18:22 | Link to Comment smore
smore's picture

Please allow me to introduce myself,
I'm a man of wealth and taste.

I've been around for a long, long year,
Stole many a man's soul and faith :)

Wed, 08/24/2011 - 19:29 | Link to Comment SamuelMaverick
SamuelMaverick's picture

Awesome avatar

Wed, 08/24/2011 - 21:00 | Link to Comment Blano
Blano's picture

Thank you, thank you, thank you, thank you.

Wed, 08/24/2011 - 21:16 | Link to Comment Newsboy
Newsboy's picture

You win with the peep-show avatar!

Thu, 08/25/2011 - 00:23 | Link to Comment CompassionateFascist
CompassionateFascist's picture

Pah....typical seductive Jewess. Destroys all capacity for rational thought.

Wed, 08/24/2011 - 17:37 | Link to Comment Luxy
Luxy's picture

Dear Mr. MillionDollarBonus,

 

I have read Krugman and many other pinnacles of modern financial and economic thought.  

 

I'm just thankful that I followed their advice when I sold my home and put my money in the broad indexes.  That's right, I didn't.  I'm not down 33%.   

 

Following my conspiratorial nature I put all my money into silver at $6 and gold at $340.  It's been really rough so far.  If you really think I should, I guess I'll sell it all and put it back into equities and good old USDs.  

Wed, 08/24/2011 - 18:00 | Link to Comment Bastiat
Bastiat's picture

High five, Luxy!

Wed, 08/24/2011 - 17:55 | Link to Comment zenbones
zenbones's picture

I read Paul "E.T." Krugman today.  He wrote individual businesses don't know anything about creating jobs, they just know how to expand their business.  And all this time I thought jobs might be created by someone expanding their business.  Silly me.  And to quote him in regards to businessman, "never having to confront the feedback effects that are at the heart of the kind of problems an economy as a whole faces."  Does he mean the feedback effect of the policies corporations implement with the backing of economists like him and other globalists?

Wed, 08/24/2011 - 19:21 | Link to Comment cynicalskeptic
cynicalskeptic's picture

I know more than a few small businesses that would LOVE to create jobs but they CAN'T GET CAPITAL.  

Someone wanting to start his own Heating and Air Conditioning business - has commercial customers that WANT him to break away from his ineptly run employer has suppliers willing to front him credit BUT NO BANK will loan him a cent - even though as a vet he's supposed to qualify for govt backed loans.  He went through a long application process with one bank only to be told 'We don't make small business loans' - SO WHY DID YOU TELL HIM TO APPLY?!?!

A local gun shop has been trying to expand for years - and refurbish their indoor range.  They've been in business for DECADES - not much in the way of local competition.  BOOMING business (I wonder why?) and a loyal law enforcement clientele.  Can't get a loan from anyone.  

A friend has been trying to sell an autobody repair shop for 3 years - wants to retire.  Good established business, modern shop and spray booth, great reputation and steady business from insurance repairs and a specialty niche in restorations.  He's had a half dozen interested (and qualified) buyers - NONE of whom can get financing.

The TRILLIONS of dollars being thrown out of helicopters are going ONLY to WALL STREET.  

Main Street is getting screwed.

And those low mortgage rates are a joke.  Banks will take your application fees but somehow find an excuse NOT to make the loan.  A friend putting 40% down - with a six figure income - was told he'd have to pay 2% more than the initially quoted rate.  I looked at refinancing - with the same big bank that holds the current mortgage.  Owe less than HALF the original amount on a house still worth 4 times what I paid (bought with 20% down on a fixed 30 year and refied - and have paid ahead on a 15 year.   They collected fees and then found 'problems' - things that existed when they wrote the mortgage and which are being dealth with (am spending six figures on major renovations - and was doigng so OUT OF POCKET).  I was NOT looking to take any money out of the house - I was looking for a lower rate to pay down FASTER.  But they won't write a new mortgage at the currently quoted rate.  Fine.  Told them to drop dead and took the money out of the existing home equity line.  Was going to pay off everything early but screw it.... I may max out the home equity line and invest in silver.  Would have doubled my money if I'd done that a year ago.

BOTH Political parties are slaves to Wall Streeet and the Banks - and they're being paid off with OUR tax money which has been funneled to them at 0%.   Not a bad deal - the banks get trillions in TARP funds and 0% 'loans' in exchange for a .05% kickback in campaign contributions.

Wed, 08/24/2011 - 19:43 | Link to Comment MsCreant
MsCreant's picture

Hell of a post. I hope you are wrong. I am trying to get a loan right now and I am afraid all that is happening is that they are collecting application fees. My down payment will probably be over 60%.

Wed, 08/24/2011 - 20:10 | Link to Comment bankruptcylawyer
bankruptcylawyer's picture

monetary policy is just fiscal policy for the people who work on wall street. that is all. move on folks.

Wed, 08/24/2011 - 22:26 | Link to Comment zenbones
zenbones's picture

But when all the businesses can't afford to operate and have to sale for pennies on the dollar and the banks swing in and buy, maybe the previous owner who put time, sweat, personal capital, and pride into making the business a success in the first place can work there.  See, banksters care about the little people.

Wed, 08/24/2011 - 22:56 | Link to Comment Malachi Constant
Malachi Constant's picture

CAN'T GET CAPITAL

How impossible is it to talk to a group of people that are not bank, but still have some dough? Seriously? I am not an economist, I am not an investor, I just don't understand: why go to the bank, if banks are cheating, enslaving hacks anyway?

Talk to humans directly. Raise CASH from your potential or actual customers in your immediate area. If you are so sure of success, if they want you to succeed, how hard is it to finally dump the banks altogether and deal with the people you are allegedly going to improve lives of? They don't trust you? Well, maybe you are not as good as you like to think. You can't convince them? Well, go learn the skill. Sell your property. Ask. Barter. Take risk. Learn to live without banks, or you will be screwed till the end of times by those who you are delegating your risks to.

It's not about bad, greedy banks that won't loan money - it's about human spirit. Take responsibility, stop making excuses, find a way, use your head, or others will keep your balls.

Thu, 08/25/2011 - 06:28 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

The gun shop/range should start a club, make NRA membership a requisite, and get the range refurb loan from the NRA.

Wed, 08/24/2011 - 18:42 | Link to Comment Texas Ginslinger
Texas Ginslinger's picture

How high will these negative counters go...??

I say we find out on MDB's posts here...

Wed, 08/24/2011 - 19:26 | Link to Comment AmCockerSpaniel
AmCockerSpaniel's picture

I for one don't gain or loss anything, till I sell.  Oh; I'm not selling here, but will buy a little more if gold falls to $1655. Would buy here, but I'm running short on cash, and don't have the stomach for margin.

Wed, 08/24/2011 - 19:31 | Link to Comment LongBalls
LongBalls's picture

Gold and silver have gone up 20% y.o.y for over 10 years versus the dollar. Enough said. Now curl up in that ball again and keep trying to blow yourself.

Wed, 08/24/2011 - 20:36 | Link to Comment russki standart
russki standart's picture

MillionZimbabwe Dollar Bonus,, you must be kidding. Krugman recently suggested that if the east coast earthquake was a bit stronger, the increase in damages would result in a higher GDP due to rebuilding. So why don´t we nuke the entire country and rebuild from scratch, yeah that will boost GDP

Thu, 08/25/2011 - 06:30 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

That was a "fake but accurate" hoax.

Wed, 08/24/2011 - 20:43 | Link to Comment Chuck Walla
Chuck Walla's picture

Krugman vs Krugman

 

Hack editorialist Paul Krugman attacked Jim Bunning last week for blocking the extension of unemployment benefits. Krugman said “What Democrats believe is what textbook economics says”, namely that the government should keep paying unemployment benefits.

There’s just one problem. As James Taranto pointed out, a Nobel Prize winning economist has written a very popular textbook that points out exactly what Republicans are saying — “Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect . . . . Generous unemployment benefits in some European countries are widely believed to be one of the main causes of “Eurosclerosis,” the persistent high unemployment that affects a number of European countries.”

The author? Nobel Prize winning economist Paul Krugman and his wife Robin Wells.

Wed, 08/24/2011 - 22:08 | Link to Comment Fiat2Zero
Fiat2Zero's picture

Dude, you're a fucking idiot. Pull your head out of the books, stop believing in Santa, and observe the way things work.

You sad, stupid Krugman sucking sheep.

Thu, 08/25/2011 - 02:24 | Link to Comment coffee_sponge
coffee_sponge's picture

Looking to Krugman or Stigletz for economic direction would be like asking Barney Fife to load his bullet and to give us a marksmanship class.

 

You're obviously a flaming retard.

Wed, 08/24/2011 - 22:34 | Link to Comment strannick
strannick's picture

Its not the SEC that governs COMEX, its the CFTC. Their are 5 commisioners and their names are Jill Sommers, Michael Dunn, Scott O'Malia, Bart Chilton, and Chairman Gary Gensler.

Send them an email and let them know how you appreciate their regulatory efforts..jsommers@cftc.gov ; MDunn@cftc.gov ; Somalia@cftc.gov; ggensler@cftc.gov Chilton, Bart

Wed, 08/24/2011 - 17:36 | Link to Comment optimator
optimator's picture

Remember, if you can't talk about "them", "they" own you.

Wed, 08/24/2011 - 17:21 | Link to Comment Frog-And-Toad
Frog-And-Toad's picture

Can somebody possibly explain the recent slide in silver?  

Wed, 08/24/2011 - 17:32 | Link to Comment sitenine
sitenine's picture

That is my question precisely. Not just silver, but all PM tracked Gold today. How does a margin hike in Gold translate to selling in all other PMs in every market? There is more to this story.

Wed, 08/24/2011 - 17:43 | Link to Comment Bastiat
Bastiat's picture

That's not a "slide" that's an airstrike!  Has nothing to do with the gold "price" and everything to do with JPM's short and CME OPEX tomorrow.

Wed, 08/24/2011 - 18:10 | Link to Comment Citxmech
Citxmech's picture

I can't believe folks are actually flipping out about this shit.  Ooooh, PMs fell 5% in a day!  Yeah - after going up 15%.  JFC, if you bought two weeks ago you're still way in the money.

Damn - I bought a shit-ton (not really, but it felt like it) at $800 and took a long f'n time to break 1k.  Some of the newbies around here need to learn some patience.

At the rate these asshats are raising margins, they're going to be holding reigns on a cash-only market within 6 months.  And that nag is going to be one bucking beeyeotch.

If you wanna get in while the gettin's good, there aren't too many more shopping days until x-mas pals.

Wed, 08/24/2011 - 18:26 | Link to Comment cpnscarlet
cpnscarlet's picture

Please keep saying this in caps. That's me all over...but a day like this still hurts and its hard to remember where you've been sometimes. My bad. I'm alnost 50. I should be better than this.

Wed, 08/24/2011 - 19:17 | Link to Comment midtowng
midtowng's picture

I'm not sweating it. Those margins hikes simply clean out the short-term speculators and leave the PM market to investors. That's bad in a bear market, but good in a bull market with strong fundamentals.

It's especially good when they do this right before the Asian buying season. India and China is going to come in and buy up a HUGE amount of physical at a discount. That will put a floor under the gold market and we can start moving up again.

This is no big deal except to people that want to get mad.

Wed, 08/24/2011 - 19:29 | Link to Comment mayhem_korner
mayhem_korner's picture

Slide in gold = political cover for TPTB's need of fiat to control the sheeple, also a cover for...

Slide in silver = protecting JPM from melting down (rumor is they spontaneously combust at any sustained $47 price, but I have no specific knowledge of the same)

Slide in platinum, et al = just along for the ride driven by 1 and 2

BTW, like the avatar - big fan as a kid!

Wed, 08/24/2011 - 21:02 | Link to Comment kkam
kkam's picture

Why PMs (gold & silver) are down? Easy. Preparing the ground for The Bernank's speech at Jackson Hole. Whenever the Fed has an important event, PM's are smacked down by the PPT so that the mainstream press don't have to compare the Chairsatan's analysis with soaring price of gold, which exposes his lies.

Read more at Ranting Andy: http://babybulltwits.wordpress.com/category/ranting-andy/

Wed, 08/24/2011 - 19:09 | Link to Comment midtowng
midtowng's picture

I don't know why you guys are getting so mad at the CME. What they are doing is shaking the weak hands out of the gold market.

Sure it causes a little short-term pain, but in the long run it keeps the bull market healthy. It prevent it from becoming a bubble, thus prolonging the bull market.

And that's important to me because frankly, I don't know where else I would put my money right now.

So shake those weak hands. In fact, now is the best time to do it - right before the traditional Asian buying season, when they will come in and buy up the physical at a discount.

Wed, 08/24/2011 - 21:04 | Link to Comment kkam
kkam's picture

Agree ! I hope the CME does this regularly allowing us to reload on the dips!

Wed, 08/24/2011 - 19:18 | Link to Comment IQ 145
IQ 145's picture

Gold down to $1751 in the aftermarket, on the Globex; the sharks can smell the blood in the water, now. Be interesting to see where the bottom is; but it sure as hell isn't here.

Wed, 08/24/2011 - 23:57 | Link to Comment CompassionateFascist
CompassionateFascist's picture

Only way to burn thru all the GLD, SLV and all the other paper ponzi crap is to keep tightening margins. Let 'em. When people have to pay 100% cash on the line for Gold/Silver they'll settle only for the real stuff. Then the terminal squeeze will be on. In the meantime, gold & silverbugs need to stop whining.  

Wed, 08/24/2011 - 17:13 | Link to Comment Sudden Debt
Sudden Debt's picture

Turd,

I've recently read this article where the comex doesn't keep accountable for the possibilty that their silver bars are all 999 but yet on their 1000 oz bars they do stamp the 999 bars. You as the metal guy on this board, have you ever heard of one of there bars being tested with the marks and not been proven to be 999?

Because I'm starting to think that besides the gold thungsten stories, this could also be a biggy if there ever would surface 1 bar that doesn't meet the parameters as the comex itself says it doesn't test the bars on purity. 

http://server2.nmdesigns.com/cpdscc/www/pimages/1000oz-100oz%20bar.jpg

 

Wed, 08/24/2011 - 16:55 | Link to Comment Dr. Richard Head
Dr. Richard Head's picture

I loves me some Turd. 

Wed, 08/24/2011 - 16:59 | Link to Comment Turd Ferguson
Turd Ferguson's picture

Thanks, again.

Wed, 08/24/2011 - 17:01 | Link to Comment MsCreant
MsCreant's picture

DO I BUY OR WAIT!!!!!

Wed, 08/24/2011 - 17:13 | Link to Comment caerus
caerus's picture

wait

Wed, 08/24/2011 - 17:18 | Link to Comment MsCreant
MsCreant's picture

When I look at the charts, I come up with your number too. But can the trend lines even mean anything in this environment? I only have a few more minutes to decide. Maybe I will agonize too long and end up waiting by default.

Wed, 08/24/2011 - 17:21 | Link to Comment caerus
caerus's picture

only one way to find out...

Wed, 08/24/2011 - 17:26 | Link to Comment ZippyDooDah
ZippyDooDah's picture

Don't say "default," unless referring to our lords & m(b)as(t)ards.

Wed, 08/24/2011 - 17:28 | Link to Comment Jim in MN
Jim in MN's picture

I usually buy in thirds if it's a 'real' buy (not a position, physical).  1/3, 1/3, 1/3.  I find I blow fewer gaskets that way.

General rule--sweating the top 10% and the bottom 10% are what blow your deals.  Also known as greed and fear.  Have a plan and execute.  You still might lose but you'll sleep better.

Wed, 08/24/2011 - 17:34 | Link to Comment New_Meat
New_Meat's picture

logic is a well-defined way to drive over the cliff with perfect confidence ;-) - Ned

Wed, 08/24/2011 - 17:46 | Link to Comment Jim in MN
Jim in MN's picture

Stay diversified, adjust return expectations to zero.  Over and out.

Wed, 08/24/2011 - 20:43 | Link to Comment New_Meat
New_Meat's picture

but, well, "diversification is a guarantee of mediorocrity" - Ned

{Over and Out: Over--Back to you, Out--I ain't listenin' to u no mo}

{{Kinda' like "Lock and Load"--If u know how bulletz get into the chamber, makes no sense}}

Wed, 08/24/2011 - 17:56 | Link to Comment caerus
caerus's picture

kinda like livermore....i do 20% 20% 30% 30%

Wed, 08/24/2011 - 19:47 | Link to Comment unununium
unununium's picture

After planting the flag, I make a point of not contradicting myself buy selling any lower or buying any higher.  It's amazing how little room is left for consternation when this rule is followed.  Only on major new information do I break it.

Wed, 08/24/2011 - 23:27 | Link to Comment Cistercian
Cistercian's picture

To Miscreant:

 

Buy Silver.But I am just a troglodyte so....

 PS.I built a SKYFORT for my little ones.It is filled with EPICNESS!!! Google the term to understand.

 How progresses the whole ham radio thing?I hope well!!

 PPS.Baked bread in the last week that cost 78cents for a 2.8 lbs  loaf...and was epic.Girls and I loved it!

 

 Best wishes, and geez I turned 2 yesterday!!

Thu, 08/25/2011 - 08:58 | Link to Comment MsCreant
MsCreant's picture

I did buy silver!

Congrats on the ZH Birthday.

House was destroyed by a tree, I am in a rental, rebuilding the house. All the priorities are changed, no radio for now until house is built (and paid for, I did not insure for enough).

Skyfort sounds fun. Wonder if a snyper type would think so too? ;-P I'm bad. My hubby used to joke that way about my son's treehouse. It was also destroyed. Everyone is okay tho so no real worries, just a lot of hassles.

Sounds like lots of happy memories being created at your house.

Best wishes to you, too.

Fri, 08/26/2011 - 00:36 | Link to Comment Cistercian
Cistercian's picture

My Friend,I am so sorry about your house(tears welling up)But I am glad you are ok.

 Best wishes, and you are in our prayers(yes, that includes the silly 3 year old).

  I wish I was closer...I would make you dinner.

 My fabulous mashed potatoe recipe:(just for family and best friends)

6 to 8 Large Idaho potatoes

 1 stick butter

 1 large container of sour cream

 1/2 package cream cheese

 1 1/2 tsp salt

 Cook the potatoes in salted water 30 to 40 minutes.Drain.Add to butter,cream cheese, and sour cream.Mix savagely with a hand mixer.

 EPIC deliciousness results.

 Peace Mon Ami!!

 PS.If the potatoes are too stiff, add some heavy whipping cream.I HATE baked potatoes and the wife wanted loaded baked potatoes...so I ran amok and thats how this recipe came about.Everyone raves about them.Try them with the meat of your choice...and enjoy!

Wed, 08/24/2011 - 17:13 | Link to Comment cossack55
cossack55's picture

Buy...quickly, and wait.  Also stock up on popcorn for when the cart containing the CME scum rolls by on the way to the guillotine.  Go long knitting needles.

Wed, 08/24/2011 - 17:24 | Link to Comment John Bigboote
John Bigboote's picture

This motherfucker (their system) is coming down so hard and soon that you better make sure and buy everything else first. Just read "One Second After" for reference.

Wed, 08/24/2011 - 18:14 | Link to Comment Citxmech
Citxmech's picture

That book is some dark shit - but it'll make you think.  If you invest in paper but you don't have food, water, and security dialed in - you're priorities are misplaced.

Another good one is Cody Lundin's "When All Hell Breaks Loose" - it's got all the important shit in there that they don't have in all those Army Ranger/SERE books - like what to do with poo when your buggin-IN and the water is off - and how to combat constipation, etc.  

Wed, 08/24/2011 - 17:26 | Link to Comment fiddler_on_the_roof
fiddler_on_the_roof's picture

BUY!!!!

 

99% of people will fear to buy when price goes lower but will momo buy when price rises up.

In which camp do you belong ?

Wed, 08/24/2011 - 17:58 | Link to Comment theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

Just buy in increments.

I caught the bottom today and blew 20% of my powder. If it continues down tomorrow I'll blow another 35%

then I'll wait and see the effect of what bernanke says is and buy the rest next week no matter the price

Wed, 08/24/2011 - 18:05 | Link to Comment unky
unky's picture

seems like a good strategy. i am doing the exact same thing

Wed, 08/24/2011 - 18:33 | Link to Comment MsCreant
MsCreant's picture

I think it is going down more (already has since my buy), but I have missed so many BTFDs (been waiting since 1500s or so, 1600 happened and left so fast).

Used some of my powder, keeping most of it dry.

Thanks all. Great strategy discussion just when I needed it.

Wed, 08/24/2011 - 18:59 | Link to Comment delacroix
delacroix's picture

my local coin shop, raised their premiun on silver, from $1 per oz to $2 per oz today. he started charging me sales tax, about 6 weeks ago. I was with my son today, and bought $1500 worth of 1 oz rounds, without the sales tax. that's a 7.75% discount. plus we got in close to the bottom. but now I have an uneven amount, and I just need  3 more ozs. ( it's not an addiction, I can stop anytime I want to )

Wed, 08/24/2011 - 23:15 | Link to Comment In Fed We Trust
In Fed We Trust's picture

Why not just ban margin on gold all togehther.
Just
Get it over with. And Ofcourse the gov with confiscate after it hits a certain target. Lets say 4,000.

And those people dealing in it will be called financial terrorist by the media.

I certaintlh wouldn't be braying about your holdings on this site.

Unless you knew a way to get the loot past TSA.

Wed, 08/24/2011 - 23:17 | Link to Comment In Fed We Trust
In Fed We Trust's picture

Well it's good to know that Tyler is living human being,

Wed, 08/24/2011 - 16:51 | Link to Comment spiral_eyes
spiral_eyes's picture

hikes shmikes. people aren't buying to speculate on margin. they're buying because of the underlying reality of dollar debasement, liqudity traps, structural unemployment, deindustrialisation, reliance on arabia and china, etc etc etc ad infinitum

qe3 = bullish for gold
no qe3 = bullish for gold

op twist 2 = bullish for gold

http://azizonomics.com/2011/08/23/what-if-qe3-doesnt-happen/ 

Wed, 08/24/2011 - 16:55 | Link to Comment JLee2027
JLee2027's picture

Takes 10K or so to buy 1,000 ounces in silver (Mini). Why would you put up more???? No reason in the world to just put up 40K.

Everyone is on margin on COMEX. 

Wed, 08/24/2011 - 17:02 | Link to Comment fonestar
fonestar's picture

Yes, and I for one won't feel sorry for them when they lose EVERYTHING!  Swim with sharks, wrestle with bears long enough and you might just wind up like Steve Irwin did.

Just bought another fifty ounces of scrap silver and I would never consider COMEX.

Wed, 08/24/2011 - 19:02 | Link to Comment delacroix
delacroix's picture

what do you mean by scrap?

Wed, 08/24/2011 - 20:36 | Link to Comment Prometheus418
Prometheus418's picture

What's the spread like on "scrap" silver?

I know with jewelry, it's pretty crappy compared to bullion.  Local jewler pays about 60% for scrap jewelry, and the coin shops won't bother with the stuff.  Same jeweler is willing to pay close to spot for coins to compete with the coin shops.  If you get more than the 60%, where do you sell it?

Just curious.

Wed, 08/24/2011 - 17:07 | Link to Comment unky
unky's picture

If all people just bought at the COMEX they could supply everyone with unbacked paper shorts and the price would not even move at all. THey could always find a way to settle in cash (if neccessary change the rules). I think the run up in Gold and Silver are based on physical buying with the COMEX slowly loosing control of price supression

Wed, 08/24/2011 - 16:57 | Link to Comment SilverRhino
SilverRhino's picture

Perfectly leaked indeed.   Fuck, there are no secrets, only insider tips for the big boys.  

Buy and HOLD metals. 

Wed, 08/24/2011 - 17:02 | Link to Comment 4realmoney
4realmoney's picture

+1. Nothing is going to keep the gold price down for long. Just like fiat currencies, the paper gold game is ending as more and more people want to get physical. This price drop will serve to get more people on board.

Wed, 08/24/2011 - 19:19 | Link to Comment midtowng
midtowng's picture

Exactly!

+11

Wed, 08/24/2011 - 16:53 | Link to Comment cornedmutton
cornedmutton's picture

I'm certainly no expert by any stretch of the imagination, but isn't the point of an exchange with a minimum margin requirement to encourage leverage?  At some point, if gold margins are continually increased, the margin will reach some point in which the allure to do business on the exchange is destroyed....why leverage @ 2:1 (or lower) when you can just buy and hold?  Am I missing something here?

Wed, 08/24/2011 - 16:58 | Link to Comment Dr. Richard Head
Dr. Richard Head's picture

I am no expert, but I don't think you are of the mark.  Sooner or later, like the Bearded Bernanke, the CME will paint itself into a corner.  Via la Gold and Silver R3volution.

Wed, 08/24/2011 - 17:00 | Link to Comment unky
unky's picture

True. The nearer they come to 100% the less possibilities they have. Perhaps they already know this and they just try to buy themselves time until the inevitable price discovery sets in.

Wed, 08/24/2011 - 19:22 | Link to Comment midtowng
midtowng's picture

That's the way I see it as well.

Hiking margins is like lowering interest rates - they have diminishing impact the further you go.

Wed, 08/24/2011 - 20:57 | Link to Comment Smiddywesson
Smiddywesson's picture

Shock and awe, maybe TF.

On the other hand, when you can set the price back on a mere rumor of a single hike, why use the one two punch and hike it multiple times.  Most of the scardy cats are long gone.  Each hike yields diminishing returns and cannot be replaced.

On the other hand, there may be an ugly surprise in store for gold at Jackson Hole.

On the other hand, maybe the assault on gold was because Jackson Hole will be good for gold.

Oy vey!  My head hurts.  

I think we have felt most of the pain.  Maybe it takes two weeks to get back to $2k, maybe as much as a month and a half (but I doubt it).

Thu, 08/25/2011 - 01:16 | Link to Comment cocoablini
cocoablini's picture

Options expiration week. Let the longs rejoice and then kill them with counterfeit paper before options expire in the money. They do it EVERYTIME.
All done by the Fedster winky wink. They are struggling mightly, and illegally to keep the financial system from utter collapse.

Wed, 08/24/2011 - 16:45 | Link to Comment trav7777
trav7777's picture

every intervention tends to coincide with a technical extreme in the market so as to achieve maximum effect.

Wed, 08/24/2011 - 16:52 | Link to Comment JLee2027
JLee2027's picture

Well of course Captain Obvious.

Wed, 08/24/2011 - 17:30 | Link to Comment ZippyDooDah
ZippyDooDah's picture

That's not obvious to everyone, else there would be no sheeple.

Wed, 08/24/2011 - 16:53 | Link to Comment Idiot Savant
Idiot Savant's picture

True, but the half-life of the "maximum effect" continues to diminish. Next week will be interesting.

Wed, 08/24/2011 - 19:51 | Link to Comment unununium
unununium's picture

> every intervention tends to coincide with a technical extreme in the market so as to achieve maximum effect.

That ain't no accident.  The extreme didn't just "happen".

Wed, 08/24/2011 - 16:51 | Link to Comment rsi1
rsi1's picture

Futures 101 Lecture-

When magins are hiked, they are hiked for both longs and shorts, so they are both impacted the same? they BOTH need to put more collateral? yes, they both do, but in this case, the price of gold was going up, so the shorts were already in heavy losses, and are in a worse position to put up more margin that the longs that had ample profits. Result? the longs can keep their positions, while the shorts are more likely to be squeezed in a margin hike after a move up.

In addition, do people use leverage to the maximum in the futures markets? only idios that do not understand that they will be stopped as soon as there is a bit of volatility and their account will be blown, or super geniuses that can time them perfectly, but there are very few of those.

If Gold goes up, does the contract stay 100 ounces? YES

In that case, the value of a contract goes up? YES

And if margin stays the same, does the "cusion" become smaller as a percentage? YES

What happens if volatility also goes up? The cushion is relatively smaller then, and makes even less sense not to hike it.

Does it make perfect sense then to raise margins when the price of gold goes up and/or volatility goes up? YES, ABSOLUTELY.

Conclusion - Does this margin hike make a difference? is it a consipiracy to bring the price of gold down? NO! it does not make any sense, its only psychological for some people that dont understand a thing about Futures and margins, or just are betting on the stupidity of the crowd.

Wed, 08/24/2011 - 16:52 | Link to Comment unky
unky's picture

Unless you are a large commercial bank with huge short exposure and unlimited cash...

Wed, 08/24/2011 - 16:54 | Link to Comment rsi1
rsi1's picture

Yes, that is the reality of dreamland. The losses of such short positions would be billions, you can hide millions in a bank, but hardly billions especially from trading activity.

Wed, 08/24/2011 - 16:57 | Link to Comment unky
unky's picture

I think I have a different view. In my view "creative" accounting lets the large banks hide even billions of potential losses

Wed, 08/24/2011 - 16:59 | Link to Comment Dr. Richard Head
Dr. Richard Head's picture

With mark-to-monkey accounting a primary dealer could shit in a bucket and post it as collateral and no one would blink an eye. 

Be right back, I need to make a collateral deposit at the Fed.

Wed, 08/24/2011 - 18:28 | Link to Comment Citxmech
Citxmech's picture

"Primary dealer shit-in-a-bucket" is way different than "peon shit-in-a-bucket."

That's the AAA tranch right there - Moody's said so.

Wed, 08/24/2011 - 17:00 | Link to Comment rsi1
rsi1's picture

Could be, I dont have proof of that happening or not happening in this particular context regarding Precious Metals though to have that thesis. What makes you believe this is credible and not just a way to justify your previous argument that shorts have unlimited money?

Wed, 08/24/2011 - 17:08 | Link to Comment narapoiddyslexia
narapoiddyslexia's picture

But do you have a theory, explanation, or hunch about why the prices of PM went down so much the last 72 hours?

Harvey Organ [and I am not promoting or demoting the guy, just noting his prediction] said on his blogspot this week that the approach of options settlement days meant the bankers would manipulate the price of PMs downward.

 

edit - never mind. my post crossed yours just below. thnx.

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