Interactive Brokers Warns Gold Margin Hike Imminent, CME Next?

Tyler Durden's picture

The first shot was just fired in today's battle with daily record gold prices. IB always tends to be a few minutes ahead of the CME. And following last week's 22% margin hike in gold, we are confident the CME will do everything in its power to pull a "silver" on gold. Are we about to experience a barrage of margin hikes in gold? Stay tuned and find out.

Interactive Brokers bulletin board

 

To HKFE,HKMEX,NYMEX,NYSELIFFE traders:
Fri Aug 19 13:29:35 2011 EST

 

As a result of the volatile trading environment at the present
time, please be advised that Exchange margins and House margins are
likely to increase over the next couple of days. 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.

h/t London Dude Trader

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Dr. Acula's picture

Doesn't this increase the risk of a collapse?

 

SumSUN's picture

this is a dip worth buying.

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!

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.

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

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...

bankrupt JPM buy silver's picture

I told all my viewers to pull their accounts with IB

 

www.silvergoldsilver.blogspot.com

GetZeeGold's picture

 

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

 

JW n FL's picture
10,850.72
-139.86 (-1.27%) Real-time: 3:08PM EDT
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.

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

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.

http://goldandsilverlinings.com/?p=1567

 

trav7777's picture

how so?

Margin hikes won't suppress the price for very long

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.

 

gaoptimize's picture

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

faustian bargain's picture

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

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.

faustian bargain's picture

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

Sudden Debt's picture

I meanth about your logistic coffee problem.

faustian bargain's picture

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

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.

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.

Calculated_Risk's picture

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.

Chupacabra's picture

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

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.

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.

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.

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./

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

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?

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.

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;

 

http://tinypic.com/r/4vlatv/7

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.

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.

Scisco's picture

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

Id fight Gandhi's picture

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

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.

 

http://silverliberationarmy.blogspot.com/

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?

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?

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.

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" ?

max2205's picture

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

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?

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...

http://blythemasters.blogspot.com/