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Caution: Another Gold Margin Hike Imminent

Tyler Durden's picture


Just like Interactive Brokers predicted the last CME margin hike with 100% precision, here it comes again. It is now all too clear that the CME risk managers have decided to do to gold what they did to silver: namely shake out the weak hands with as many as 5 or more margin hikes in a row. Since everyone else is all cash, the CME's attempt to manipulate the market is coming to an end.



Thu Aug 25 13:54:57 2011 EST


As a result of the continued volatile trading environment, please be advised that exchange margins and/or house margins are likely to increase overnight and over the next couple of days, particularly in the metals. For exchange specific increases, please visit the respective websites. IB will also be increasing the gold derivatives margin. Please monitor any affected holdings closely and manage your risk accordingly.


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Thu, 08/25/2011 - 14:07 | 1600676 Gene Parmesan
Gene Parmesan's picture

Good. Bring it.

Thu, 08/25/2011 - 14:26 | 1600832 BaBaBouy
BaBaBouy's picture


GERMAN Credit downgrade Coming .?. Rumors are starting, you know what that means !!! (Kitco News) -

December Comex gold futures in late-morning trading Thursday have rebounded well off the daily low of $1,705.40 on cautious investor bargain-hunting buying, but prices remain below unchanged on the day. Investor risk appetite in the market place has pulled back a bit Thursday as the U.S. stock market sells off amid some rumors coming out of Germany. There were rumors that Germany's credit rating would be downgraded, but the major ratings agencies have denied such. There were also reportedly rumors that German exchange officials would implement short-selling bans market place. That rumor is also unfounded, so far. December gold futures last traded down $20.00 an ounce at $1,737.80.

Thu, 08/25/2011 - 14:33 | 1600870 laomei
laomei's picture

The last strategy I used was great... short gold on forex with 50:1, buy the dip with the profits.  it's just too fucking easy when they flat out tell you what they are gonna do.

Thu, 08/25/2011 - 14:42 | 1600923 Gold Man-Sacks
Gold Man-Sacks's picture

Isn't Forex just for currencies? 

Thu, 08/25/2011 - 14:45 | 1600932 laomei
laomei's picture

Also have access to commodities, indices, etfs, major stocks... all with great margin and no daytrader restrictions (i use platforms that flat out ban anyone from the US)

Thu, 08/25/2011 - 15:14 | 1601071 Bolweevil
Bolweevil's picture

"All your platforms are belong to us."

Thu, 08/25/2011 - 15:28 | 1601143 camoes
camoes's picture

Dr. Sashimi said it's gay to buy gold...

Nouriel Roubini
In Freudian psychoanalytic theory obsession with buying/accumulating gold is associated with anal retentive neurosis
Thu, 08/25/2011 - 15:33 | 1601161 russki standart
russki standart's picture

Both of these guys are clowns academics who do not really understand markets or investing psychology. They should stick to what they are good at,  uttering meaningless nothings in pompous rummy tones.

Gold margins are being hiked because Chavez wisely removed his physical gold from the control of the western banksters, and now margins must be raised, and prices dropped to shake out the weak hands.

Thu, 08/25/2011 - 17:11 | 1601623 Hephasteus
Hephasteus's picture

So he's saying holding onto your ass is gayer than passing your ass around like a fucking buffet to central bankers?


Thu, 08/25/2011 - 20:04 | 1602164 FranSix
FranSix's picture

Don't look now, but ppl are going to think THINGS aboot Roubini!

Thu, 08/25/2011 - 15:00 | 1600995 pazmaker
pazmaker's picture

Lucky you... who is your forex broker cant' do that with OANDA anymore (residing in USA)

Thu, 08/25/2011 - 16:55 | 1601571 laomei
laomei's picture

I've been pretty happy with 4xp actually... dump in a nice pile of cash and they give some damn nice service.  metals margins up to 1:100, 1:4 on stocks

Thu, 08/25/2011 - 20:28 | 1602241 Chupacabra
Chupacabra's picture

I'm an online gambler, and 4xp reminds me so much of my online books it's not even funny.  Right down to the "double bonus promotion" for ponying up.  Love it, may have to open an account after I figure out what vig they are charging!

Thu, 08/25/2011 - 22:51 | 1602691 laomei
laomei's picture

Yea, their withdrawal is kinda annoying and they have a horrible connection to China... that's my only complaint and the main reason i'm swapping over to aaafx most likely (also better spread).  just drop in like 5k, zulutrade people who know what they are doing for most of it and a nice stable return, and play the gold/silver/stocks on my own when i get a hunch.

Thu, 08/25/2011 - 14:34 | 1600873 Thomas
Thomas's picture

Yup. Make my day (and BTFD)

Thu, 08/25/2011 - 14:58 | 1600986 Panafrican Funk...
Panafrican Funktron Robot's picture

Just wanted to note that this information is now 2 hours old, and futures have been flat.  So, basically, they just prevented it from running to $1800 today.

Thu, 08/25/2011 - 15:32 | 1601164 midtowng
midtowng's picture

If they chase out ALL the weak hands then they'll not have that weapon to use the next time gold goes up.

They've gone as far as they can go (2 hikes in 3 weeks) without completely ridding the gold market of speculators. If they go nuclear then we have reached End Game.

Thu, 08/25/2011 - 16:58 | 1601578 Quinvarius
Quinvarius's picture

They are doing these margin raises way too soon.  No one is in yet.  The COT reports don't even show any participation.  This is like raising margin on silver after it went from 16 to 18.  No one is even paying attention yet.

Thu, 08/25/2011 - 17:01 | 1601585 LongBalls
LongBalls's picture

I totally agree. Gold, as of 3:58 CST, is now up $21.20 USD. If they use all the bullets now they are saying that the fiat currency troubles are behind us. They don't have the balls because they know we are just getting into the thick. They have a few more increases and a lot of rumors left. Thats it. The genie is out of the bottle boys!

Game on SUCKA'S!!

Thu, 08/25/2011 - 14:08 | 1600679 Debugas
Debugas's picture

this is actually good news for those who buys physical with cash :) - the market overall becomes less speculative and the prices more real

Thu, 08/25/2011 - 14:17 | 1600772 tarsubil
tarsubil's picture

I'm sorry to all the speculators but man do I hope gold overshoots in this drop. The buying opportunity will fit perfectly with my cash flow. Actually, if the speculators were smart, this will be a big money maker for them too. Right?

Thu, 08/25/2011 - 14:50 | 1600956 WarriorClass
WarriorClass's picture

Yep, this is a great buying opportunity!  Once it's an all cash requirement, they have no more bullets.

Thu, 08/25/2011 - 15:28 | 1601139 SWRichmond
SWRichmond's picture

Buying miners right now...

Thu, 08/25/2011 - 14:55 | 1600970 SWRichmond
SWRichmond's picture

Agree.  This is nothing more than squeezing leverage out of the system and enabling price discovery.  Raise margins to 100% and get it over with.

Thu, 08/25/2011 - 17:57 | 1601815 Snidley Whipsnae
Snidley Whipsnae's picture

Damn right! Bring on the margin hikes... Get everyone out of the game except those holding physical and those with really, really deep pockets... like soverign nations.

Then we will find out what gold is worth in crumbling fiats...

Fri, 08/26/2011 - 05:04 | 1603197 Eager learner
Eager learner's picture

If the price doesn't come down today, aren't the shorts fucked? Options expiry today, no?

Thu, 08/25/2011 - 14:08 | 1600680 Cash_is_Trash
Cash_is_Trash's picture


Thu, 08/25/2011 - 16:50 | 1601548 DoChenRollingBearing
DoChenRollingBearing's picture

We are back from vacation.  All I could do was watch the spike to over $1900.

They just knocked down the price of physical oz for me!  Out tomorrow or Saturday to buy a little more

Thanks guys for one last chance!

Thu, 08/25/2011 - 14:08 | 1600684 poopoo78
poopoo78's picture

love it.....bring it on.

Thu, 08/25/2011 - 14:15 | 1600751 Cognitive Dissonance
Cognitive Dissonance's picture

Don't Hollywood deaths and PM margin hikes come in 3's?

Thu, 08/25/2011 - 15:14 | 1601073 Sudden Debt
Sudden Debt's picture

Obama better be carefull because the black man always dies first....


Thu, 08/25/2011 - 17:15 | 1601654 Hephasteus
Hephasteus's picture

Fed's Economic Horror Show is tough on the black man.

Thu, 08/25/2011 - 17:23 | 1601694 DosZap
DosZap's picture

Hep, @ 17:15,

Not any tougher than any other American................hungry, is hungry, no money, is no money, losing it all, is losing it all.........for EVERYONE.

Seen the lines for jobs?................their all Americans, and all a different color, nationality.

Thu, 08/25/2011 - 14:09 | 1600688 spiral_eyes
spiral_eyes's picture

margin hikes are bullish for gold. they get the sickly on-margin speculators out of the market, and allow us all to buy the fucking dip. the more the better. 

Thu, 08/25/2011 - 14:44 | 1600929 JLee2027
JLee2027's picture

Margin hikes are the only tricks the shysters running COMEX have left. Each one should be less effective then it's predecessor.

Thu, 08/25/2011 - 15:35 | 1601178 midtowng
midtowng's picture

Driving down the price of gold in August is perfect for Asia. Their huge physical buying season is right around the corner. They'll be able to buy all the gold they want at a discount.

Thu, 08/25/2011 - 14:09 | 1600692 Cash_is_Trash
Cash_is_Trash's picture

Please be advised

That we will take all your shit, nigga

Thu, 08/25/2011 - 14:20 | 1600794 Boston
Boston's picture

Not if it's in Canada.

Thu, 08/25/2011 - 14:10 | 1600697 Shineola
Shineola's picture

Margin hikes?   Is that only punch you know how to throw?   Pussies!


I got phyzz!   So, hike THIS!

Thu, 08/25/2011 - 14:09 | 1600699 JJSF
JJSF's picture

Love it.

Thu, 08/25/2011 - 14:09 | 1600700 Silver Bug
Silver Bug's picture

The chain gun reaction of Margin hikes continues. This is pure and blantant manipulation. The price has dropped. But they now fear that it is holding steady. They now wait to kick Gold in the face when it is down, just like they did with Silver. But we all know what happened with Silver, it won't stay down for long.

Thu, 08/25/2011 - 17:03 | 1601594 DosZap
DosZap's picture

Silver Bug,@ 14:09,

Yes, and I r po'd..............Gold was at 1708 this a.m., and since we got hit w/2 margin hikes one Asia,one CME, I figured it would go down to at least $1670-80.


Missed this one, hope they knock it down again, I will not so stupid this time.

I do not believe they can KEEP gold down as they did Silver.As I type we are at 1775.00, so, I scrwed the pooch big time.

Fri, 08/26/2011 - 05:07 | 1603200 Eager learner
Eager learner's picture

I hear that. Bring the hikes we'll get our chance to load up ;)

Thu, 08/25/2011 - 14:10 | 1600702 caerus
caerus's picture

hike this

Thu, 08/25/2011 - 16:57 | 1601575 DoChenRollingBearing
DoChenRollingBearing's picture

They can hike the margins on paper all they way.  As paper runs into a shortage of physical gold:


Don't be surprised to see the paper price vs. physical prices diverge.  When that happens, paper becomes worthless and the real thing goes to the moon.

Thu, 08/25/2011 - 17:07 | 1601610 CompassionateFascist
CompassionateFascist's picture

Already happening. Last time I looked, SLV a buck or 2 below spot; on the other hand to get my eagles, I pay a several $ premium over spot. The gap will continue to widen, until the paper blows up altogether.

Thu, 08/25/2011 - 18:24 | 1601898 Prometheus418
Prometheus418's picture

That's not the divergence you're looking for, it's just the dealer's vig.  That hasn't changed much... yet.  when SLV cost a buck, and an ASE goes for a c-note, then we can talk about divergance,  Until then, keep your head, and time your moves very carefully.  dangerous trades everywhere right now.

Fri, 08/26/2011 - 00:02 | 1602906 RetardTrader
RetardTrader's picture

That's probably because you got jacked.


I know lots of y'alls love gold and silver, but you gotta say, the people who are selling your coins or bricks or whatever are certainly making a lot of money.... and you can see why they'd be so interested in promoting the boom.



btw, have you ever tried to sell a diamond?  Most people have bought them, but try to sell one and you can see how much money they are really taking from you.


Thu, 08/25/2011 - 14:12 | 1600717 speconomist
speconomist's picture

Nothing surprising, next.

Thu, 08/25/2011 - 14:13 | 1600721 Shell Game
Shell Game's picture

Tinker all you want market makers, you cannot stop what's coming..

Thu, 08/25/2011 - 14:12 | 1600728 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

Haven't got that much fiat left, but still enough to buy another kilo of silver or about 2/3ds an oz of gold...

I'd still very much like ot get that as cheaply as possible

So raise those margins baby - raise thm to 100%

Thu, 08/25/2011 - 14:13 | 1600734 dropdeadfed
dropdeadfed's picture

funny because we buy when it dips hard...

Thu, 08/25/2011 - 14:13 | 1600735 poopoo78
poopoo78's picture

what's general consensus on percent allocation of bullion vs numismatic?  i'm aware of the +/- and various theories of both, the obvious one being confiscation, but curious how people allocate if at all?

Thu, 08/25/2011 - 14:18 | 1600773 Eagle Keeper
Eagle Keeper's picture

bullion is the only way. numismatic will only matter long after you are dead....

Thu, 08/25/2011 - 16:04 | 1601336 lemonobrien
lemonobrien's picture

yeah, bullshit on that. take a look at them Ampex bars versus other brands. Why? numismatic. I buy Pamp bars for cause I like the Lady of Fortune on them; and know the meaning connected to the roman empire... and Seneca. I also trust the company more. You show up at my door with shit metal bars for food and shelter, and I'd definitely charge you more cause it would be hard for me to trade.

Thu, 08/25/2011 - 16:18 | 1601407 tmosley
tmosley's picture

A coin is "numismatic" when a significant portion of its value is derived from its rarity.  Some bars may cost more than others, but unless they cost a LOT more, then they aren't primarily numismatic.  We are talking about coins that are worth greater 100% more than spot+premium on "cheap" bars/coins of comperable condition here.

Of course, you are free to demand wahtever you like for access to your goods, but most people aren't so picky.  If anything, there are plenty of professional bullion traders in any decent sized town who will ensure that the bars are real, and will trade you for them (for a fee).

Thu, 08/25/2011 - 16:39 | 1601506 lemonobrien
lemonobrien's picture

rarity alone has nothing to do with it; rarity, beauty, history... a mixture determines the extra amount you'll get above the spot price. I got shit that's really rare, and not worth much. Here's a hint, I bought a silver panda a while ago, it's now worth 3K; I gots another one a while ago, it's now worth 2k. numismatic is the derivative play on the metal; the base price is always the price of the metal; just a side note, from what I see of America, ain't many bullion dealers around except for pawn shops.

Thu, 08/25/2011 - 16:44 | 1601523 lemonobrien
lemonobrien's picture

also, value is determined by the eye of the buyer; i placed chinese in the 90s cause I knew they'd get richer and they was 1/5th of the planet.

Thu, 08/25/2011 - 16:53 | 1601561 tmosley
tmosley's picture

I really don't care.  I only care about metal content.  Investing in numismatics means that when you are FORCED to sell, you are going to get a terrible price compared to what you paid.  I might take a trade where I am paid less metal in the form of an ancient denarius, but I certainly won't do it over and over again.  You will find that most PEOPLE are the same (ie non-collectors).

And you clearly haven't seen much of America.  My little town of 200K has four bullion dealers.  As more and more people want to buy gold and silver, there will be more and more dealers opening up.  Two years ago we had three.  Four years ago we had two.  This is to the exclusion of the dozens and dozens of pawn shops that are happy to deal in PMs, but at a generally wider spread, or the jewelry stores that also are happy to deal in bullion (a few do), but again, at a wider spread.

Thu, 08/25/2011 - 17:21 | 1601690 macktheknife
macktheknife's picture

TMosely - in terms of survival strategy, you are totally correct - that, in desperate times, your coins will only pass at melt value.   But, for pure pleasure, there is more to it.  I love my straight Bullion bars and coins - holding them, watching the shine and warmth in the palm.  I ALSO have been buying other coins for numismatic value - I love the Mexican 50 Pesos 1921 strikes; and the Indian head gold 5$.  

They give extra pleasure to look at them, and understand  some of the history.  Collecting 2 or three hundred year old Mexican coins  is sublime.  It is an added pleasure to just the metals ( kind of like having two hookers in Vegas, differnt races, when you get used to the usual fare). 

I recognize that I may not be able to get the value back if things get desperate - but I also think that , in less than desperate times, these things of beauty will still fetch a huge premium. 

My suggestion, for those of you stacking gold and silver, is give the rare and beautiful coins a try - you will become addicted.  For the same reasons you love the gold coins-  the ones with history you can see and touch, is a rare sensual pleasure. 

Thu, 08/25/2011 - 17:56 | 1601811 tmosley
tmosley's picture

Like I said, most people would certainly buy a few, but like rare art, there is a very low limit on the amount any one person would want, unless they are a serious collector/dealer.

I have some rare coins.  To tell the truth, I don't fondle or even look at them.  I by far prefer to break out the troy pound silver "eagle" bullion round to look at/set on my desk.  It's just so unique.  Sometimes I spin it.  Simple pleasures.

Thu, 08/25/2011 - 21:50 | 1602508 chubbar
chubbar's picture

Everyone seems to miss the main point with numismatics. When gold was called in the only exceptions were gold collector coins. I.E. those that commanded a price above the spot value of the weight of the coin because of collector value. Get some numismatics that only command a small premium above spot and you have yourself a hedge against confiscation (assuming the PTB play by the previous rules).

Thu, 08/25/2011 - 20:20 | 1602207 DC
DC's picture

I am not aware of any silver panda coins worth $2-3K. None! I own Pandas from as far back as 1988. Please indicate weight, year and we all can ebay for actual prices. Or maybe you just paid $2-3K and have been royally ripped off.

Thu, 08/25/2011 - 17:12 | 1601633 Lord Koos
Lord Koos's picture

+1  wouldn't you rather have more gold?  Gold is going up faster than collectible coin values are.

Thu, 08/25/2011 - 14:36 | 1600887 Sequitur
Sequitur's picture

Forget numismatic. If you are trying to preserve wealth, bullion, bars or coins from a reputable mint, including Canadian maple leaves, American gold eagles, PAMP bars, SA Krugers.

Thu, 08/25/2011 - 14:49 | 1600952 poopoo78
poopoo78's picture

so no fear of confiscation in the u.s.?

Thu, 08/25/2011 - 15:52 | 1601267 Citxmech
Citxmech's picture

Nope.  That'll just push it underground and initiate a real grey market barter economy in the US.  Real money always floats to the top.

Thu, 08/25/2011 - 17:13 | 1601641 CompassionateFascist
CompassionateFascist's picture

You are underestimating the rapicity of pols and plutos. So: transmute some of that gold/silver into lead.

Thu, 08/25/2011 - 16:54 | 1601565 Row Well Number 41
Row Well Number 41's picture

Most of the gold that Americans own is conveniently stashed in GLD and SLV where it can be taken without fuss or the need to show up at the sheeples door. 

I suspect they will stop short of taking physical in private possession though they may try to make it illegal to sell.  I also doubt they take antiques or jewelry. Taking grandma's wedding ring might trigger something “unpleasant”.


Thu, 08/25/2011 - 17:50 | 1601796 DosZap
DosZap's picture

Row Well # 41 @ 16:54,

< Most of the gold that Americans own is conveniently stashed in GLD and SLV where it can be taken without fuss or the need to show up at the sheeples door.>

People in GLD and SLV do not OWN ANY metals.

They think they do,their paper traders,and their going to get screwed to the wall,when and if they THINK they can ask for PHYSICAL delivery.

Because there a teeny tiny clauses in their contracts granting them the RIGHT to settle in Fiat.

So, they are SOL.

Thu, 08/25/2011 - 17:02 | 1601587 Quinvarius
Quinvarius's picture

You need to bone up on your history.  You don't have a clue what happened when Roosevelt gave everyone money for their gold for the purpose of devaluing the gold backed currency and pushing up gold prices afterwards.  You are just a parrot spouting nonsense that never happened.

Thu, 08/25/2011 - 22:57 | 1602715 prole
prole's picture

Mr. Qiunvarius appears to be commenting on 1933 when Rosenvelt stole the peoples gold and reneged and violated all gold contracts and notes, while he devalued the new non-backed fiat joke currency. But his statement is short and I'm not sure of his point or idea.

Thu, 08/25/2011 - 15:58 | 1601298 lemonobrien
lemonobrien's picture

numismatic is a derivative play on PMs; I started way back when doing numismatic collecting; but you have to know what you are doing, and what to buy.... for instance, anything colorized is not good; and rarity and beauty are the plays.

here's how it would work:

buy a roman Caesar silver dinar. always something of value, and that someone will want.

buy 10oz bars of silver

buy modern day silver dollars.

buy gold bars, gold buffs, eagles. ( i like buffalos cause they 24k ); I buy PAMP bars cause lady Fortune is stamped on them; except for the 100 gram loafs.

I'd go deeper into strategy, give you mine for example; but, this is serious business and i don't need the competition.

Thu, 08/25/2011 - 17:13 | 1601635 DosZap
DosZap's picture



Nuimismatics are best left alone unless you are a serious collector.

And there is NOTHING saying they would not take it all THIS time of they could find it.

Plus, your paying hellacious premiums, = LESS GOLD>

My opinion..........FWIW

Thu, 08/25/2011 - 18:34 | 1601925 Prometheus418
Prometheus418's picture

I stay away from numismatic silver, but simply because it's too much work to track it down.

That being said, I am a big fan of rare books, and made some trades over the years that make silver look like amateur hour.  The trick is to know where your market is, and sell to them- which is not always as easy as it sounds.

To do that, you have to love what you are trading- and I don't love coins.  I couldn't tell you if any of my coins have any numismatic value at all, and I don't care- they were bought for melt value, and little else.  I *did* make a point of buying the most crisp 90% silver I could find, for that part of the hedge, and have a couple that are attractively toned, but nothing that would fetch a premium.  Those old ones that look neat are for show and tell, when I am trying to convince someone to trade or invest in silver.  

I do have one I might keep, for nostalgia's sake when I trade the rest someday- it's a peace dollar that is toned deeply everywhere but in a wavy cone-shaped pattern coming out of the eyes.  No idea what made it look like that, but it's kind of cool, for a coin.

Thu, 08/25/2011 - 22:58 | 1602722 Fred C Dobbs
Fred C Dobbs's picture

I took my gold out of the US in June.  When I went to customs at the airport to fill out their form I was asked if the gold was bullion or numismatic.  I told him both.  He then went on to tell me that he could not get an answer to what was numismatic or bullion.  The law was vague to him. 

I will probably buy more gold and take it out of the US too.  I think I am going to buy the cheapest St. Gaudins and Libertys I can as a poster above recommened just in case laws change.  I bought some non graded ones in June that were only a few dollars over bullion coins. 

Thu, 08/25/2011 - 14:14 | 1600743 DonutBoy
DonutBoy's picture

I can smell the fear

Thu, 08/25/2011 - 14:15 | 1600745 gunsmoke011
gunsmoke011's picture

Wonder with all of these Up 500 down 500 point days in the DOW -- and 60 Handle ranges in the S&P when we can expect a margin hike in them

Thu, 08/25/2011 - 14:17 | 1600746 PulauHantu29
PulauHantu29's picture

I'll just buy more at a lower price. Fine by me.

Gold price merely reflects the massive printing and deficits of our economy. Margin hikes temporarily lower the price but until the long term problems of massive deficits and debt are resolved, PMs and other hard assets will continue to rise. I do not see any incentive in DC or NYC to change the deficit spending and printing.



Thu, 08/25/2011 - 14:15 | 1600753 Central Wanker
Central Wanker's picture

Why are they rewarding the buyers of physical metal with these last-minute chances to jump onto the golden bandwagon?


Thu, 08/25/2011 - 21:52 | 1602519 Prometheus418
Prometheus418's picture

If you watch, they always give you one last chance to get on the bus.

Thu, 08/25/2011 - 14:15 | 1600755 Hansel
Hansel's picture

What about the margin for stock futures?  Those have been volatile too.

Thu, 08/25/2011 - 15:12 | 1601059 scratch_and_sniff
scratch_and_sniff's picture

Because stock margins are regulated by the Fed under regulation T.

Thu, 08/25/2011 - 14:16 | 1600759 EscapeKey
EscapeKey's picture

Where were the margin hikes on the E-mini's, when volatility spiked a few weeks ago?

Thu, 08/25/2011 - 14:16 | 1600763 MrBoompi
MrBoompi's picture

When I think of gold or silver, I usually don't think about them being magnetic particles on a hard drive or pieces of paper sitting in a file cabinet.  Why we ever let people people sell "assets" they don't even own is beyond me.

How about we have no margins allowed at all on metals?  That would suit me just fine.

Thu, 08/25/2011 - 14:48 | 1600942 Whalley World
Whalley World's picture

Jim Sinclair said gold will go to all cash market.  The sooner the better.

Thu, 08/25/2011 - 14:17 | 1600765 Jovil
Jovil's picture

Living through a currency devaluation

I was managing an American subsidiary of a successful large US Company in Mexico. It had been a financial turnaround for our team. Cash flow had accumulated in our bank in Mexico and corporate didn’t want the money repatriated to the US. Although we had already paid a 35% income tax to the Mexican government, we would have to pay an additional 30% exit tax to repatriate the money. In addition, we would have to pay high fees for the peso/dollar exchange, in order to make the transfer. The company wanted to expand our successful business and so we decided to keep the money in Mexican pesos to be used for further expansion.


One morning, as my wife and I were on a trip driving on the highway, we heard a national message from the President of Mexico in 1976, Luis Echevarria, one of the most corrupt presidents in Mexican history. “It is a lie that we are going to devalue the peso,” he said.

Read more

Thu, 08/25/2011 - 14:20 | 1600788 Spastica Rex
Spastica Rex's picture


Thu, 08/25/2011 - 14:16 | 1600766 Danno Anderson
Danno Anderson's picture

You guys at ZeroHedge need to learn more about SPAN, the computerization of margin hikes.

How SPAN Works

SPAN evaluates overall portfolio risk by calculating the worst possible loss that a portfolio of derivative and physical instruments might reasonably incur over a specified time period (typically one trading day.) This is done by computing the gains and losses that the portfolio would incur under different market conditions. 

At the core of the methodology is the SPAN risk array, a set of numeric values that indicate how a particular contract will gain or lose value under various conditions. Each condition is called a risk scenario. The numeric value for each risk scenario represents the gain or loss that that particular contract will experience for a particular combination of price (or underlying price) change, volatility change, and decrease in time to expiration.

Thu, 08/25/2011 - 14:23 | 1600797 EscapeKey
EscapeKey's picture

Oh right, and who creates the models used to reflect the "risk scenarios"?

And this would surely still apply to equity futures, when volatility increases by 100%, but strangely, we never see action there.

It's also convenient, as increasing margins have led to higher volatility, which then leads to more margin hikes. Gee, I wonder who profits from all this.

Oh, and while we're at it, please explain how this would lead to the announcement of 3 future margin hikes in advance, as was the case in silver trading, if the "numbers are output right there".

Thu, 08/25/2011 - 15:24 | 1601115 scratch_and_sniff
scratch_and_sniff's picture

The feds regulation T deals with stock margins. As for SPAN, its used in most exchanges and clearing houses, the methods are actually fairly reasonable considering the task. But if you want to get your head around it, here is a link to the ASX, they give the best working description of it i have read so far.

Thu, 08/25/2011 - 18:46 | 1601952 Prometheus418
Prometheus418's picture

You are, of course, free to believe what you like.

But, TPTB didn't get there by being sentimental or caring about what you do.  They can skin "sheep" because they are dispassionate, like computers, and that is how they beat people.  It's not only easy, but sensible to believe that they are using algos to prevent human frailty from losing them their seats.

No matter what you wanted to feel about it, gold spiked, and spiky graphs cause disturbances.  It makes sense to hammer the spikes down, and it has the side effect of shaking the "weak hands" (read: hysterical fools.)  Whether is is any player's goal to enslave or to lead as best they can, it is never a sensible move to promote the hysterical and ignorant to positions of power.  If the overall intention is evil, they will mess it up- if it is benign, they will abuse their accumulated power.

So suck down the emotions, and make a plan.  If you don't, they will play you, and you will get killed.  It's a game, like chess- not a social event.

Thu, 08/25/2011 - 14:33 | 1600865 how to trade ar...
how to trade armageddon's picture

So basically IB is modeling SPAN to predict when these margin hikes are coming. Seems like their model works pretty well.

Thu, 08/25/2011 - 19:47 | 1602108 Manthong
Manthong's picture

..think your spell check changed Perry's treason remark..

I'm already long Armegeddon and short Utopia.

Fri, 08/26/2011 - 01:40 | 1603063 Sokhmate
Sokhmate's picture

I'm long gold (Au) and Distopium (Dt)

Thu, 08/25/2011 - 14:35 | 1600880 kito
kito's picture

you danno need to learn that we, the physical buyers of a monetary store of value, arent concerned nor interested in how a completely disconnected and soon to be irrelevant paper market works regarding margin hikes. 

Thu, 08/25/2011 - 15:08 | 1601042 scratch_and_sniff
scratch_and_sniff's picture

Then why are you here talking about it in a thread about "paper" margin hikes?

Thu, 08/25/2011 - 19:48 | 1602112 Cdad
Cdad's picture

Hat tip to the physical guys.  It is the paper gold guys that are currently at risk.

Thu, 08/25/2011 - 16:38 | 1601503 Libertarian777
Libertarian777's picture

Sounds like monte Carlo...

Thu, 08/25/2011 - 14:18 | 1600776 digalert
digalert's picture

Phew, I swore I'd wait for

the Bernank hail mary

This morning was tempting, C'mon $1,700! That's a gift. I'll just and wait, maybe the Bernank pulls a quarterback sneak, left flank, head n shoulder fake and we'll be safe for the weekend. Betcha Monday is big gold.

Thu, 08/25/2011 - 14:24 | 1600815 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

lol, the price may be $1900, the price may be $1500

but I betcha those gold coins are going to fly out of those coin stores!

Thu, 08/25/2011 - 14:38 | 1600899 Long-John-Silver
Long-John-Silver's picture

The local coin shop closed it's doors just like they did when Silver got beat down with 5 margin hikes.

He was closed a few days and when he reopened all he had for sale was over priced Numismatics. 

This time he put a "On Vacation two weeks" sign up without a reopen date. Peeking in a window

confirmed the place was empty except for furniture. 

Thu, 08/25/2011 - 14:28 | 1600839 laomei
laomei's picture

Yea, it was tempting and i loaded up on it.  they are pissed the fuck off that despite the slap down it's still up for the day again... if they can cram it down under 1650 they'll claim victory and claim the "bubble" is dead.  Oh well, fucking bring it, I have another 50k in cash to buy up more... ironically thanks to my best paying client (the fed)

Thu, 08/25/2011 - 14:19 | 1600783 Dick Darlington
Dick Darlington's picture

Yet another golden opportunity to BUY THE DIP and accumulate more physical.

Thu, 08/25/2011 - 14:20 | 1600786 Ausperity
Ausperity's picture

Anyone care to venture a guess on the bottom gold and silver prices resulting from these hikes?

Thu, 08/25/2011 - 14:25 | 1600820 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

$1610 gold

$37 silver

Thu, 08/25/2011 - 17:16 | 1601661 Lord Koos
Lord Koos's picture

I pray that you are correct, because if so I'm going on a shopping spree very soon.

Thu, 08/25/2011 - 20:16 | 1602197 zorba THE GREEK
zorba THE GREEK's picture

Today's gold chart forms an upside down head and shoulders pattern. Isn't that a bullish signal?

Thu, 08/25/2011 - 14:26 | 1600827 Starving Artist
Starving Artist's picture

Look at the channels on TF metals report if you want a TA

Thu, 08/25/2011 - 14:35 | 1600881 Ausperity
Ausperity's picture

checked it out and bookmarked it.  Thanks!

Thu, 08/25/2011 - 14:20 | 1600789 Eagle Keeper
Eagle Keeper's picture

Thank you Hugo Chavez, even if you are a dick!

Thu, 08/25/2011 - 14:20 | 1600791 vast-dom
vast-dom's picture

"Please monitor any affected holdings closely and manage your risk accordingly."


Translation: We have just added the kind of risk we deem necessary; in other words, we have fucked you thank you very much. 


Synthetic systems with structural ethical decay.

Thu, 08/25/2011 - 14:46 | 1600934 Long-John-Silver
Long-John-Silver's picture

We should buy this T-shirt.

Thu, 08/25/2011 - 14:21 | 1600795 RobotTrader
RobotTrader's picture



Might as well get it over with and make the GC market "COD Only", and get rid of all the margined speculators once and for all.

But the question remains:

Why doesn't Warren Buffett buy out the entire open interest on the COMEX and demand delivery?

Why is he bottom fishing in BAC instead?

Thu, 08/25/2011 - 14:25 | 1600823 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

becuase he's obamas friend

Thu, 08/25/2011 - 15:05 | 1601026 narapoiddyslexia
narapoiddyslexia's picture

Because he's desparate for America to have a future and he's sticking his finger in the dike?

Thu, 08/25/2011 - 19:50 | 1602117 Cdad
Cdad's picture

becuase he's obamas friend

I'm not sure you know how prescient your comment is.  This Buffet BAC thing is almost certainly an arranged marriage.  

Thu, 08/25/2011 - 14:26 | 1600829 SheepDog-One
SheepDog-One's picture


Thu, 08/25/2011 - 14:37 | 1600892 kito
kito's picture

robo---what kind of inane question is that?

Thu, 08/25/2011 - 14:41 | 1600917 narapoiddyslexia
narapoiddyslexia's picture

Charlie Munger said anyone who buys gold is a jerk. He said he likes understanding what works in human systems.

One suspects there's a cultural underpinning to all of this.

Is your glass half-full, or the other way?

Thu, 08/25/2011 - 14:47 | 1600939 Cleverbot
Cleverbot's picture

There is a giant ice mountain range across the earth holding all of the water in.

Thu, 08/25/2011 - 14:50 | 1600955 Infinite QE
Infinite QE's picture

Because the Feds were going to charge him on pedophile charges if he didn't. Come on now, tell me that ole Warren doesn't have a weakness for little boys. Just look at him...

Thu, 08/25/2011 - 15:26 | 1601128 theotheri
theotheri's picture

Because he knows gold is a massive bubble and and has increased probably 5x as quickly as inflation and therefore is in for a major correction.

Thu, 08/25/2011 - 15:59 | 1601305 Diogenes
Diogenes's picture

"Why doesn't Warren Buffett buy out the entire open interest on the COMEX and demand delivery?"


He already did that, in 1997.

Thu, 08/25/2011 - 16:01 | 1601320 Citxmech
Citxmech's picture

Because he'd have "an accident" in his hottub if he pulled some shit like that.

Thu, 08/25/2011 - 17:20 | 1601680 DosZap
DosZap's picture

Robot, @14:21

Simple.........HE is one of THEM.

He's a PAWN, and knows he is being used.

Thu, 08/25/2011 - 14:22 | 1600803 scatterbrains
scatterbrains's picture

If they were plotting an SDR with gold backing should we expect the mother of all margin hikes/ gold crashes so they can grab up everyone's gold ?


Thu, 08/25/2011 - 14:23 | 1600805 IMA5U
IMA5U's picture

its amazing how they are trying to force people into gold and into stocks


Das Kommunist Market

Thu, 08/25/2011 - 14:23 | 1600810 RobotTrader
RobotTrader's picture



And why is AAPL only down $2??


Thu, 08/25/2011 - 14:27 | 1600835 SheepDog-One
SheepDog-One's picture

MomoFader still pretends he sees no rigged market, anywhere.

Thu, 08/25/2011 - 19:53 | 1602124 Cdad
Cdad's picture

Every time you write "momofader" I chuckle.


Thu, 08/25/2011 - 14:48 | 1600944 Cleverbot
Cleverbot's picture

No, thats from a song by the band Escape the Fate.

Thu, 08/25/2011 - 15:00 | 1601000 kito
kito's picture

robo---why are gold eagles selling for more than gold buffalos??????????



Thu, 08/25/2011 - 15:27 | 1601135 theotheri
theotheri's picture

Because Mr. Market knews that Jobs will be leaving sooner rather than later.  Apple is a corporation, not a person.

Thu, 08/25/2011 - 14:23 | 1600811 youngman
youngman's picture

Bank of America is up over 10% today sanctions there.....this is because the Comex is empty.....they can´t they have to lower demand....

Thu, 08/25/2011 - 14:28 | 1600840 Stuck on Zero
Stuck on Zero's picture

DOn't measure your wealth in dollars.  Measure your wealth in love, family, friends, community, hobbies, health, and physical gold!

Thu, 08/25/2011 - 14:30 | 1600849 Long-John-Silver
Long-John-Silver's picture

After Silver had it's 5 margin hikes it survived beat downs and just got back up maintaining it's now confirmed $40 floor.

What makes them think Gold will not be the same? Insanity is repeating the same operation expecting a different result each time.

Go ahead with your 5 margin hikes. Why don't you just eliminate margins and make it 100% pay to play? Oh people will just

demand physical delivery? What's that you say? You fear people demanding physical delivery on each and every trade? WTF do you

think you're bring on yourself if not strong hands only in it for physical delivery. 

Thu, 08/25/2011 - 14:31 | 1600851 aquagreen73s
aquagreen73s's picture

Open question: at what point does margin percentage make paper trading useless? 50%? Any ideas?

Thu, 08/25/2011 - 14:35 | 1600882 What_Me_Worry
What_Me_Worry's picture

When there is no more gold to be delivered.

Thu, 08/25/2011 - 14:41 | 1600916 Caviar Emptor
Caviar Emptor's picture

Depends on the perceived payoff and the ability to hedge risk

Thu, 08/25/2011 - 14:45 | 1600931 Shineola
Shineola's picture

I think paper trading will always have some value. So long, as two parties can agree and both realize that the settlement is a just side-bet on a fictional price fix. 

The correlation to the price of physical will gradually widen until the percieved value of the paper trade, relative to the associated risks, leaves only looters on both side of the trade. 


On the bright side, I can see great utility as a vehicle for currency laundering!    WHEEE!!  

Thu, 08/25/2011 - 14:32 | 1600858 TradingJoe
TradingJoe's picture

Gold is in rebound modus, they need to do something or else...! Won't last long(er), then it did the other time around, when it was "leaked"! :)))

The Benster will say nothing tomorrow and so Gold will be back ON again and well into next week, I bet though that by Sep 5 all and their mommies will be LONG cause Obumster will announce HIS PLAN to Create Jobs and ya da ya da ya da! But for now it's DUMPING on the program!

Thu, 08/25/2011 - 14:32 | 1600860 Motley Fool
Motley Fool's picture

Oh please CME, could you? Would you? Pretty please with sugar on top? I wanna see market hikes to 100%, thank you very much.

Thu, 08/25/2011 - 14:33 | 1600868 lieutenantjohnchard
lieutenantjohnchard's picture

more parlor games. much ado about nothing if you have the real mccoy. those that want to learn all the nuances about cme risk analysis can knock themselves out. meanwhile, for the rest of us there's physical. it's easier to accumulate wealth, and allows for peace of mind.

Thu, 08/25/2011 - 14:33 | 1600869 Paul67
Paul67's picture

Bad news, guys looks like we’ll need to start paying a market based price for physical delivery pretty soon.

Oh well thanks for depressing the price all these years paper bugs, it was great while it lasted.

Welcome to the brave new world of a real market place.  Real as defined as a bunch of people that actually want to trade.

Thu, 08/25/2011 - 14:36 | 1600888 Shineola
Shineola's picture

The bottom line is that all market transactions, legal and clandestine, operate on one principle.   Trust.  It may be minimal, but it must be present.

If a favorite market is in a bad part of town, and people repeatedly get jacked there, eventually, even the dumbest of the participants will find a market in a location that they can trust.


Thu, 08/25/2011 - 14:36 | 1600890 NEOSERF
NEOSERF's picture

And oil will which is much more strategically important to the world will be next up, dropping in $20 in a day...

Thu, 08/25/2011 - 14:51 | 1600958 Shineola
Shineola's picture

Exactly!  And the other commodities traded on this market feed the world.   When the CRIMEX ox cart goes into the ditch, food prices will be hosed right along with everything else. 


It is definatley time to Buy The Phyzz.

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