Interactive Brokers Warns Gold Margin Hike Imminent, CME Next?

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Fri, 08/19/2011 - 14:00 | 1578153 Dr. Acula
Dr. Acula's picture

Doesn't this increase the risk of a collapse?


Fri, 08/19/2011 - 13:59 | 1578154 SumSUN
SumSUN's picture

this is a dip worth buying.

Fri, 08/19/2011 - 14:04 | 1578178 Troll Magnet
Troll Magnet's picture

oh i've been waiting for this! will be waiting to click some "buy" buttons with my plastic money this weekend. thank you EE!

Fri, 08/19/2011 - 14:08 | 1578199 spiral_eyes
spiral_eyes's picture

margin hikes, margin shmikes, they can hike margins against "speculators" all they want, but every dollar benny prints is a margin hike against people who hold dollars. 

Fri, 08/19/2011 - 14:11 | 1578213 HoofHearted
HoofHearted's picture

Seems to me that the margin hikes just reek of having lost control. I smell desperation in the air. And it isn't from my buddies and me that have stacks of silver and gold. And thanks to CME for letting me add to the stacks at a lower price over the summer. I'm pretty much about as "in" as I can be, but I'll scrape together some green paper to BTFD if it comes along...

Fri, 08/19/2011 - 14:29 | 1578306 bankrupt JPM bu...
bankrupt JPM buy silver's picture

I told all my viewers to pull their accounts with IB

Fri, 08/19/2011 - 14:59 | 1578420 GetZeeGold
GetZeeGold's picture


We just had a rate hike last week. The gold market seems to flipping the middlefinger salute to the report.


Fri, 08/19/2011 - 15:08 | 1578453 JW n FL
JW n FL's picture
-139.86 (-1.27%) Real-time: 3:08PM EDT
Fri, 08/19/2011 - 16:26 | 1578761 IQ 145
IQ 145's picture

you can sell short the DEC contract for gold on the CME right now at the market. Put a fork in it; it;s done. Absurdly overbought; it'll be goin down some.

Fri, 08/19/2011 - 14:24 | 1578279 Two Towers AU AG
Two Towers AU AG's picture

Me too... Thanks you CME.. please raise the margins daily .. for nect 30 days.. :) :) :) ... I want to buy more Physical AU

Fri, 08/19/2011 - 15:25 | 1578502 tiger7905
tiger7905's picture

Interesting update from Don Coxe, says gold is telling us this financial crisis is very different and he's coined the term 'The Deficient Frontier' to describe this market.


Fri, 08/19/2011 - 14:04 | 1578179 trav7777
trav7777's picture

how so?

Margin hikes won't suppress the price for very long

Fri, 08/19/2011 - 14:09 | 1578207 Sudden Debt
Sudden Debt's picture

They wanna make sure as many chinese can buy gold on the cheap before it flies to the moon.

I don't know how many hikes silver already had but it always recovers and just gives us the option to add some more at a low price.

This economic crisis will haunt us for the next 10 to 15 years, whatever happens in 1 year doesn't matter.


Fri, 08/19/2011 - 14:29 | 1578309 gaoptimize
gaoptimize's picture

I think you underestimate the healing ability of an economy after a complete collapse.

Fri, 08/19/2011 - 14:39 | 1578349 faustian bargain
faustian bargain's picture

Possibly you overestimate the ability of our centrally planned economy to avoid complete collapse.

Fri, 08/19/2011 - 14:47 | 1578380 faustian bargain
faustian bargain's picture

Quite likely my brain misinterpreted some things...not sure I meant to say what I said. I haven't had coffee today.

Fri, 08/19/2011 - 14:51 | 1578394 Sudden Debt
Sudden Debt's picture

What happened?


Fri, 08/19/2011 - 15:00 | 1578426 faustian bargain
faustian bargain's picture

I misinterpreted the meaning of gaoptimize's 'underestimate' as 'overestimate'.

Fri, 08/19/2011 - 15:54 | 1578626 Sudden Debt
Sudden Debt's picture

I meanth about your logistic coffee problem.

Fri, 08/19/2011 - 16:01 | 1578648 faustian bargain
faustian bargain's picture

lol...had stomach illness yesterday, trying to avoid stirring things up today.

Fri, 08/19/2011 - 17:31 | 1579139's picture

You could try snorting it.

Fri, 08/19/2011 - 18:16 | 1579290 JW n FL
JW n FL's picture

we dont need to encourage Family to go to rehab the long way around, do we?

Sat, 09/24/2011 - 00:21 | 1704458 AldousHuxley
Fri, 08/19/2011 - 14:13 | 1578228 midtowng
midtowng's picture

They can hike margins to 100%. It won't stop the gold bull, only delay it.

Hiking margins has a decreasing effect. The higher the margins go, the less effect the hikes have.

Fri, 08/19/2011 - 14:27 | 1578293 Raymond_K_Hessel
Raymond_K_Hessel's picture

Oh how quickly we forget.  Don't get too cocky.  Take a look back at what happened to silver when they hiked margins in May.  Buy short-term puts on GLD.  Use the proceeds from the pull back to buy the dip that is coming.  Bulls make money, bears make money and hogs get slaughtered.

Fri, 08/19/2011 - 15:09 | 1578458 Calculated_Risk
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silver is a much more volatile market than gold. you won't see a massive take down like that except in the paper market. premiums will just increase.

Sat, 08/20/2011 - 00:25 | 1580270 Chupacabra
Chupacabra's picture

Trying to snatch pennies with short-term GLD puts sounds a little hog-like to me, friend.  Just sayin'.

Fri, 08/19/2011 - 14:58 | 1578416 Man Bear Pig
Man Bear Pig's picture

yes. and margin hikes out of desperation add fuel to the fire. they have lost (the illusion of) control of the market and the market has figured it out.

Fri, 08/19/2011 - 18:02 | 1579247 disabledvet
disabledvet's picture

Actually i would argue the more you raise margin and fail to stem the price rise the more the market sees you as the weak hand. In other words its a price suppression strategy and nothing more. Once this insanity fails whose there to provide for an orderly market flow? If you say "obviously no one" then you will understand why institutions globally are fleeing to the safety of treasuries.

Sat, 08/20/2011 - 00:22 | 1580265 Chupacabra
Chupacabra's picture

Agreed.  These margin hikes will have increasingly less effect.  When the scramble for physical heats up and the run on the bullion banks starts, you can tinker with your margin requirements all you'd like.

Sat, 08/20/2011 - 18:06 | 1582137 HungrySeagull
HungrySeagull's picture

It might knock off a few young and inexperienced bulls but the big old bull with iron balls will crush you.


If being chased down by buffalo, don't bother mounting a horse. Both of you will be gored tired./

Fri, 08/19/2011 - 14:47 | 1578377 Azannoth
Azannoth's picture

You know what I like this suppression, the last thing we want to see is a Christmas tree chart of gold(like in 1980), it's good that they are dampening the rise, which also gives us more time to accumulate

We're on the same side here me thinks, they are making the metal cheaper for us to buy

Fri, 08/19/2011 - 17:02 | 1578983 Smiddywesson
Smiddywesson's picture

Trav's right.  They double tapped gold with two margin hikes last time and the gold market reacted to it like a charging rino to a BB gun.  It felt it, but it came right back at a full dead on run.

That problem with using up your margin hikes is they get used up.  Then what?

Sat, 08/20/2011 - 00:23 | 1580266 Chupacabra
Chupacabra's picture


Fri, 08/19/2011 - 14:06 | 1578180 centerline
centerline's picture

I have been holding for a decent dip.  The moves have seemed to be too parabolic, too quick.  Of course, at this time I look like a complete idiot.  But, it wouldn't be the first time (or the last).  Oh well is all I can say if I have to pony up a little more fiat here soon.


edit:  Had to go back just to complete a sentence.  Man, my posts are pitiful sometimes.

Fri, 08/19/2011 - 14:11 | 1578217 scratch_and_sniff
scratch_and_sniff's picture

you'll get your pullback... if it continues like this, im going to start worrying for real. This move has been brewing for a decade, its quite the parabola, here's the no 1 chart of the decade;

Fri, 08/19/2011 - 17:05 | 1579000 Smiddywesson
Smiddywesson's picture

Stocks rose 27x between Oct 1922 and Oct 1923 in Weimar Germany.

The gold markets laugh at your parabolas.  Rules of thumb for parabolas don't apply to these types of situations.  Anyone who sells is in for the regret of their lives.

Sat, 08/20/2011 - 08:17 | 1580680 scratch_and_sniff
scratch_and_sniff's picture

They arent "my parabola's", they belong to the abstract, and the gold market does not laugh. I, on the other hand, with have a fit laughing at you when the penny drops, ye big halfwit.

Fri, 08/19/2011 - 14:20 | 1578257 Scisco
Scisco's picture

I missed a GLD call by a nickel last week. Looks like I am going to get another stab at it.

Fri, 08/19/2011 - 14:19 | 1578253 Id fight Gandhi
Id fight Gandhi's picture

Probably worth buying some near the money gld puts. Buy some dips in physical.

Fri, 08/19/2011 - 14:38 | 1578341 Silver Bug
Silver Bug's picture

This to be expected, Silver and Gold are going to take turns on who is outperforming, and who is getting the hammer of God slammed down on them. Gold will get machine gunned with margin hikes. Just a good buying opurtunity. Overweight Silver at the moment, as Gold cools off, then I will simply switch back.

Fri, 08/19/2011 - 17:07 | 1579018 Smiddywesson
Smiddywesson's picture

I would have agreed a few weeks ago, but central banks are not buying gold.  Their buying provides the resiliency in gold.  Their last two margin hikes, used in tandem, were an abject failure.

How many hikes will it take this time to drive gold down a lousy 1.5% over two days?  Three or four?

Fri, 08/19/2011 - 18:02 | 1579250 BayAreaAlan
BayAreaAlan's picture

"central banks are not buying gold." Source please? I don't assert you are wrong, but how do you know you are right?

Fri, 08/19/2011 - 14:56 | 1578412 faustian bargain
faustian bargain's picture

can someone post a link to where I might follow CME margin updates? I've looked on the cme group website but I'm apparently not smart enough to find it.

Fri, 08/19/2011 - 15:31 | 1578528 fiddler_on_the_roof
fiddler_on_the_roof's picture

To scare weak holders of Gold - before it was "IMF gonna sell Gold", now it is "CME margin hike", next what is it going to be - "Uncle sam is going to confiscate your Gold" ?

Fri, 08/19/2011 - 16:42 | 1578896 max2205
max2205's picture

The 20 year t bond is up 40% in 6 months but no margin hike. Hummm

Fri, 08/19/2011 - 20:07 | 1579635 SWRichmond
SWRichmond's picture

Remember...this is a deleveraging, and gold is money.  This is more evidence of leverage being squeezed out of the system.  Gold is slowly (lately, rather quickly it seems) reverting to a cash market, which coincides nicely with the prefence of physical gold over paper gold.  Demand for gold continues to rise, and the purchasing power of gold continues to rise; this is exactly how money should behave in a deleveraging.

Think of the vaults at COMEX etc. as a bank.  There is a run on the bank.  The bank is trying to make it more attractive to leave the gold in the bank.  This also makes perfect sense; bank runs are common during deleveragings.  When the bank runs out of money, because it has promised / lent out too much via fractional reserve lending, people will rush the banks and hang the bankers from lampposts.

Are there still any lampposts on Wall Street?

Fri, 08/19/2011 - 20:09 | 1579641 SWRichmond
SWRichmond's picture


Fri, 08/19/2011 - 14:00 | 1578156 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Can JP Morgan actually afford the margin payments? Or don't you have to pay margin on naked shorts?

Might asked Blythe...

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