CME Hikes Gold Margins By 22% And Gold Drops by....0.4%, Resumes Climb

Tyler Durden's picture

Just after hitting a new all time high of above $1815 in spot gold, the CME immediately sent out a notice to members advising that gold margins for Tier 1 members were increasing by 22% for both initial and maintenance positions, from $4,500 to $5,500. Unfortunately for the CME, this predetermined move was telegraphed to the market weeks ago, and with rumor 57 out of 22 finally turning out correct, this latest move only managed to push gold down modestly, and at last check was once again trading above $1,800. Just like all central bank interventions, which now have a half life between 1 hour and 4 days max, so this latest exchange attempt to subdue prices will fail spectacularly. Naturally, just like in the case of silver, this will merely embolden the CME to proceed with hike after hike, which in turn will kill speculative elements while merely reinforcing the strong hands. End result: in one month gold will be above $2,000 with almost 100% certainty.

In addition, the CME also hiked CHF futures by 443%, Yen futures by 25%, Ruble futures by 36%, as well as TEN, UBE and I3. The only margins that were cut were those of Uranium which dropped from 1320/1200 to 990/900 for initial/maintenance.

CME notice goes out at 6:31 pm, and gold promptly resumes upward climb:

And CME notice:

 

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Flakmeister's picture

It is time to to put trailing stops on CEF and the like...take some gains but don't be greedy...As for physical in the hand, since when is that for trading???

All calmly typed, might I add, while stroking a tube of kruggers....

Flakmeister's picture

You clearly are an ignorant fool....now run back to Yahoo or whatever hole you crawled out of.

bankrupt JPM buy silver's picture

Shorts are going to get absolutly tuned tomorow on this hike.  They are in a world of hurt.  Maybe there is some method to this JPM $2500?

Flakmeister's picture

Hence the trailing stops....

No, $2500 may be for real, but there is a host of new longs, weak hands that need to be flushed out of Au... GSR seems to have serious resistance at 45, I look for it to return to 35 by year end...

Thomas's picture

Like so many interventions, this tactic is losing its oomph. Traders have learned that they can ignore these clowns if they are wiling to weather turbulence for a couple of days.

Flakmeister's picture

It all depends on who has fresh cash and how their other positions are levered....Look, I've seen stuff like this before, Ag not so long ago. Au has gone parabolic, tread lightly with your tradable assets, as for the real stuff, sit back and watch the show, accumalate on their knock down, my gut tells me that Au will retest (and pass with flying colors) $1700

Thomas's picture

As lies go, that one is a big one.

spiral_eyes's picture

margin hikes no longer effective, inverse waterfall in sight.

http://azizonomics.com/2011/08/10/how-high-will-gold-go/ 

trav7777's picture

have you not been paying attention to the rest of the market?  shit is absolutely cratering.

You trade with a trailing stop in this volatility, you'll be stopped out.  Better to spend the money on a downside put for insurance.

The CHF has gone even more apeshit than gold

Flakmeister's picture

CEF doesn't have options.... Watch the action in the producing Juniors... years of hard research is starting to pay off. Energy MLPs have weathered this very well.

All my liquid position are options, but I keep converting the profits into physical

Speaking of apeshit, see the latest WTI-Brent spread?? Hit $24 today... something is seriously amiss.

DosZap's picture

WTI-Brent Spread, yes, odd, very odd.

Mr Lennon Hendrix's picture

 

 

The SPR release provided a location for JPM shorts.

Flakmeister's picture

That is definately part of it.... to what end, I have no idea... Prices at the pump are tracking Brent.

malikai's picture

That Brent/WTI spread is fucking unbelieveable. Right now I'm printing a ratio of 1.28! I'm seriously tempted to jump in on the compression trade, but there's no liquid options for Brent over here, so I'm holding back, for now.

spiral_eyes's picture

I have no idea what is causing this ratio, but I see no good reason that whatever is causing it will give you an arbitrage opportunity in the immediate to short term.

malikai's picture

I encourage you to have a look at the spread/ratio volatility since February, when the serious drift began. Daily close is sufficient to see what I'm talking about.

T1000's picture

People don't realize this is a total transition from paper to metal; it's like the economy is a transformer. This isnt a bubble, it's the new reality.

redpill's picture

Correct. Issuing "margin hikes" on the now-defacto world reserve currency is not like issuing it on a commodity.

Flakmeister's picture

Yes, I agree to a point...

Very little stuff that I trade is real gold... I have been slowly turning paper profits into physical for 5 years now....

What you describe is a transition not an event....If Sept 2008 was the first inning, we are now in the top of the sixth.

Like I said, I ain;t shorting, just putting on trailing stops.... pigs always get slaughtered.  

UGrev's picture

Au-bots, roll out.. 

Temporalist's picture

Decpticons still fits for their archenemy.

mayhem_korner's picture

I'd supplement by stating that it's a transition from paper to real.  Physical stores of many things are gaining in value, albeit in a less visible way than PMs. The purchasing power transfer to PMs will lend to a second phase, in which scarcity premiums for staples will skyrocket as the dislocation from the currency transition sets in.  Purchasing power wins the day post the Big Reset.

I'm not a trader, and leave it to others to collect those arbitrage gains.  As an 'accumulater', however, I am very comfortable with the stockpile of physical things within a sand wedge of where I'm currently sitting. 

New reality is right.  The return of real currency is not the bubble...what it's replacing is.

 

T1000's picture

Yes, it's a transition from paper to real. What we're seeing now is the decoupling from the old reality to the new reality.

TPTB are sending a clear signal to people that the new value is gold. Value only exists within the human mind. They're training the human animal to devalue paper and to value gold. Like in animal farm, Two legs good, four legs bad.

Gold good, paper bad.

"Au-bots, roll out!" love it.

theprofromdover's picture

Exactamundo.

The world of stops & shorts & hedges is the old world; intrinsically worthless, only leads to extinction.

 

SME MOFO's picture

Sure the premiums for staples are through the roof, but did you notice that paper clips aren't available at any price?  God knows what kind of paperwork is coming down the line from the secret government!

Troll Magnet's picture

Watching the price action in gold for the past couple of weeks has been really funny.  While Obama and his BFF Boehner were putting on a show to distract Americans in order to pick their pockets, the world has decided to step in and fuck them over by driving up the price of gold.  Justice is being served!

thatthingcanfly's picture

Flak,

A week ago I might have agreed with you. But today's action shows a complete decoupling of the HUI from the broad equities markets. (And about bloody time, too!) I'm thinking there's not going to be much more weak-hand-flushing going on any time soon in the gold market.

Yeah, I said it: "This time it's different."

Flakmeister's picture

Like my posts have said, don't be greedy, be ready to take profits on tradeable assets...

It is different, but not quite yet....

By the way, it is about bloody fucking time that the miners started to move...

Spitzer's picture

I dunno man...they could go absolutly apeshit too.

LongBalls's picture

All the same be careful. These crooks will stop at nothing. Don't over leverage. What the CME is doing is attempting to put on a show for the average guy who has started to look into golds direction due to headlines but does not fully understand it's drivers yet. Gold has gone CRAZY (Real money does in this enviorment). JPM and Goldman raised the outlook for gold for this very purpose I believe. They wanted to cram GLD full of sheeple and smack them across the face to teach the sheeple a lesson for even looking at gold. Only 1-1.5% of the American people really understand golds role. Lets just hope enough of the "newbies" don't give a crap and are hedging disaster as they should!

BTD!!!!!

Flakmeister's picture

What do you think Paulson is going to do with his GLD shares?

Spitzer's picture

Looks to me like he will save his funds by buying gold, not selling it.

Bastiat's picture

Polishing an '84 Morgan on my pantleg . .

Flakmeister's picture

Nice, I don't have much old stuff...  1882 Newfoundland $2 gold piece is the only comparable (1/10 oz)... Got a mittful of Peace Dollars though (paid $12 a piece for them).... 

Bastiat's picture

Yeah I just got a few these and I've got to say I love the historical vibe:  "One Dollar."

Temporalist's picture

I got my first one a few months ago.  `83.  I love it too it's my only one but it reminds me there was a time before the Fed, for one thing.

TheFourthStooge-ing's picture

Polishing an '84 Morgan on my pantleg . .

I've been carrying a '90 Morgan in my pocket for the last five years. Whenever a cashier at the supermarket or hardware store does the rudimentary authenticity test on a 50- or 100-dollar bill, I tell them, "it's all fake." I then show them the Morgan and tell them that it's probably the first real money they've seen all day.

BTW, if you just carry that Morgan in your pocket for a few weeks, it'll polish itself and develop a gleaming shine.

 

Dave Thomas's picture

I used to carry a Mexican Liberdad in my wallet. But every so often when I'd flip it open, the Molly Ringwaldesque bubblegum popping cashier would roll her eyes at me "like he really needs that big a condom!".

So now I carry a 1/10oz eagle doing a better job at impression management.

When silver is 100 bucks an ounce maybe I'll switch back to the Liberdad.

 

zhandax's picture

I have been carrying a $100,000,000,000,000 Zim note in my wallet for the last few years for shock value.  Tonight I gave it to our local version of Robo who sorely needed a lesson in real value and told him to take it home and Google it.  Now if I can just remember where I stashed the other 19 when I bought them on eBay and they would still buy a cab ride in Harare.....

Spastica Rex's picture

You call it "a tube  of kruggers?" Never heard that one.

Flakmeister's picture

Now, now, take your mind out of the gutter.....

My handle ain't Gold Dick, ~1.25 lbs of swinging meat would make the ladies run away screaming....

KowPie's picture

"My handle ain't Gold Dick, ~1.25 lbs or swinging meat would make the ladies run away screaming..."

Hmmmm.... 1.25 lbs x 16 x 28 =560 grams.... 526 grams of gold (roughly) 2.75"long by 1.5" circumference.... I think they would be laughing more so than screaming. Unless of course they knew it was solid gold, and they thought that it was just the "root" of the stash, then they would see 12" and a Bugatti Veyron in their future.

yabyum's picture

Ten Hail Mary's and ten Our Fathers, and the stroking will be forgiven. PS Strong work!

Hugh G Rection's picture

Diminishing MARGINal Returns.

 

Blastoff Bitchezzzz!

WhatCouldGoWrong's picture

Tyler,... OK, this margin increase has been telegraphed for some time and I think this is just the beginning. What jumped out in your post was the 443% increase in margin rates on the Swiss Franc. I found that absolutely unbelievable (but, hey, we live in unbelievable times). I checked the CME/CBOT site and found no reference to that kind of hike. The CME release you posted with the short article lists SF futures going from 3780 intial to 5400 intial (with corresponding mnt. margin hike for specs.). This is a 43% hike not a 443% hike....

a fat-finger mistake?

disabledvet's picture

I'm trying to think what the Swiss make that the US is utterly dependent on. Hmmmm. still thinking. still thinking. still thinking. tennis stars! there! i came up with one!