Precious Metal Margin Warfare Jumps The Pacific, As Shanghai Hikes Gold Margins For Second Time In A Month, Prepares To Crush Silver

Tyler Durden's picture

Wondering why gold dropped by almost $100 today? Wonder no more: today the Shanghai Gold Exchange lifted gold margins for forward contracts the second time this month to 12% beginning on Friday, in a move that is starting to resemble the CME's vendetta with silver back from May. 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. In the meantime, here is what else happened in Shanghai: "China’s main precious metals exchange will also widen daily trading limits for those gold contracts to 9 percent, up from 7 percent, the SGE said on its website on Tuesday. The contracts to be affected include Au(T+D), Au(T+N1) and Au(T+N2). This is the second time the exchange has raised collateral requirements on gold forward contracts this year — both times in August — as international gold prices hit a series of record highs over the past few weeks, boosted by a flight to safety on worries over a stalling U.S. recovery and crippling sovereign debt in the euro zone. Shanghai Gold T+D contract lost half a percent to 387.8 yuan per gram, or $1,884.47 an ounce, down from an intraday high of 391.9 yuan when the market opened."

More from Reuters:

“Gold prices on the global market have been rallying strongly and at an increasingly faster pace. The margin hike is a pre-emptive move in case prices crashed and caused great volatility in the market,” said Li Ning, an analyst at Shanghai CIFCO Futures.


At a time of market turmoil, exchanges routinely increase the margin requirements to cover the risk of a default.


With the SGE’s margin requirement exceeding its daily trade limit, the hike seems aimed at squeezing some speculative froth out from the market, some traders said.


The Shanghai Futures Exchange could raise margins on its gold futures contract soon too, said Li.


The new margin would require an additional 490.4 million yuan ($76.6 million) to be posted to the exchange.


Trading volume on the most popular gold forward contract hit a three-month high of 26,032 grams on Aug. 11, and eased to just shy of 20,000 grams on Tuesday as the exchange finished the afternoon session. The average volume so far this month stood at 14,999 grams, compared to a daily average of 9,138 grams in 2010.


The exchange also said it was closely eyeing silver contract price movements and would consider raising trading margins, transaction fees or costs of rolling over forward contracts should volatility persist.

At least the cause is now known. And when the effect from the SGE has been priced in and diluted, it will then be the turn of the CME. Unless of course it is much sooner.

That said, to all those who have been looking for a dip in gold, here it is.

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lolmao500's picture

Volatility on silver? WHERE? It's not there. The only ones creating volatility are the bastards at CME and JPMorgue! Hike requirements on THEM...

Hugh G Rection's picture

"Hike their requirements indeed."


Anyone know how long Turd's site has been down?

LongBalls's picture

Trying to protect their dollar holdings?


Troll Magnet's picture

PM's on SALE, Bitchez!!!!!

rocker's picture

Physical Only !!!  Too many HFTs manipulating everything.

The HFTs have one goal at this level. To take your money before correction.  The can see every dollar going in.

ShouldveLeftHer's picture

Hey, anyone notice how Hurricane Katrina started out? Follow the path. Irene starting similar, no real Hurricane has hit East Coast in over a decade. Im from MA, Cape Cod. Everyone here has become stagnant in Hurricane preperation over the past decade. Im predicting another Captains Hook Dirty South style, but the East has felt invincible till todays quake so it would be ripe for the picking. Stay long insurance if you have any, and buy some supplies if youre on the East Coast JIC SHTF but dont count yourselves out in the Gulf. If youre not prepared everywhere for everything youll end up with a bloodu cum dumpster for an ass these days. BTFD.

reader2010's picture

I was in Provincetown at the tip of the cape when hurricane andrew hit in 1992. It was like the end of the world.

Turd Ferguson's picture

The site went down at approx 4:30, about 10mins after filing my latest post which discussed the impending margin hikes that I raised as a possibility last evening. Massive DoS attack. Still trying to get it fixed.

dlmaniac's picture

Does that mean you've got CIA's attention from now on?

nope-1004's picture

No coincidence Turd.  The alternative reserve currency will be beat down at all costs, right to the end.

However, what I like about these margin increases is that each progressive increase leaves stronger and stronger hands in the game, and each progressive increase has marginally less and less of an effect.  It will go to 100%, for certain.

At any rate, since I don't have a bucket of cash, as I accumulate FRN's, I hold and wait for times like these, then buy and stack.  Like I said before, the Blythe monkey machine is wholly lacking any long term vision.  For that, I am grateful.


Smiddywesson's picture

I like what Nope seems to be saying.

Parabolic prices are dangerous, not only because prices move too fast and gets overbought, but more importantly, it allows the weak hands to stay in the game and clusters stone cold killers on the other side of the trade.

However, what I like about these margin increases is that each progressive increase leaves stronger and stronger hands in the game, and each progressive increase has marginally less and less of an effect.  It will go to 100%, for certain.

When anyone says gold prices are parabolic, and imply they are dangerous, point out that margin hikes don't factor into the usual trader's rule of thumb.  These are not speculative parabolic prices, regardless of the price curve.

nope-1004's picture

Correct.  Been watching the manipulation for some time.  I was at my terminal watching PM prices that Sunday night in May when markets were closed and the raid began.  Of course, markets needed to be closed.  Can't have an open market to operate within, that wouldn't be fair capitalism, now would it?

Of course, many were kicked out of PM's that night.  But only kicked out of the paper game that Comex was trying to control.  My physical PM's went no where.  In fact, I bought more, as did others I know.  The manipulation and margin increase mantra is having the opposite effect of what is desired, as it only enables the strong hands to acquire more.  I know one individual who sold all his gold after that raid and replaced it with silver, reversed back to gold, then back to silver......

There are many out there smarter than the CME and JPM.  Manipulation will only work if you aren't in the physical game, and actually helps those who are in the physical game.

BTFD.  They are getting desperate.



nmewn's picture

"There are many out there smarter than the CME and JPM.  Manipulation will only work if you aren't in the physical game, and actually helps those who are in the physical game."

Dats a fact ;-)

RockyRacoon's picture

Yup!  Raising margins just forces the trade into stronger hands.   Where's the problem?   Nary a peep of this on CNBS today, just a bunch of yelling about how gold is getting crushed.   No real explanation of why other than its "parabolic moves" being unsustainable.   That's code for "bubble".

Hephasteus's picture

It's a momentum play. The only way to get it to show momentum down is to let it fade up or run up quickly. Which they do. They keep trying to focus the momentum in a downward stage but to do it they have to let the upward stage have it's show. They have to make it bigger and bigger. I mean look. Get people to buy at 1900 and then wake up next day to 1840 gold. They'll be doing it bigger. Get peope to buy 2300 to wake up next day to 2180 gold.

nmewn's picture

"Where's the problem?"

Dead on, center mass

I'm comfortably in the black (in their fiat terms)...they never ask, how did the dollar fare today? ;-)

Hugh G Rection's picture

Thanks Turd, I was starting to go through withdrawal.  I dont believe in coincidence anymore, keep up the good work!

unky's picture

Maybe its not an DoS attack, just plenty of people informing themselves ;- )

seek's picture

Congrats, your blog is important enough to target now! Really doubt it's a coincidence.

trav7777's picture

this article is was technically overbought and there were a number of us looking to short it.  I had planned to enter short today but the drop began overnight and I just couldn't find my price

Vint Slugs's picture

Agree.  Did you catch that turn of phrase:  "the CME's vendetta with silver ...." ?

Libertarians for Prosperity's picture


While I was expecting you to blame the gold drop on black people, I was pleasantly surprised to see you didn't.  

Yes, indeed, this article is utter nonsense.  

This article also flies in the face of all the doomer goons who claim that gold is going parabolic due to a loss of faith in the currency.  If/when gold is being hoarded because people are loosing faith in their currency, then the price cannot be easily manipulated by crushing specs with stupid Shanghai margin hikes.  When that news was released, gold only fell $30, then it consolidated in a range for 9 hours, before falling as the day was closing.



trav7777's picture

i blame black people for things they are to blame for, moron.

As far as faith in the currency, that's horseshit so far.  I expect that somebody has been printing somewhere, explaining gold's strength in all currencies.  Or maybe everyone is.

Cash_is_Trash's picture

i blame black people

Hahaha black people are so fucked up! Never will they get their shit straight.

Anyone name ONE country that has a successful black population?

Libertarians for Prosperity's picture

South Africa. 

80% black African, and an incarceration rate less than half the US. 


mynhair's picture

Was white first.  Been downhill since Mandela.  Just because the police are ineffectual is no reason to tout a hell-hole.  Just ask my new Afikaner new neighbor.

MsCreant's picture

Your pussy is awesome, I hope it continues to grace this blog with its presence.

RockyRacoon's picture

I'm going to delete my own comment, Missy, in deference to your more awesome reply.

Dangertime's picture

And where every white family has a razor wire fence around their house.

Try again, I have been to South Africa.

akak's picture

What WilliamtheBastard fails to mention is that EVERY nation on earth has an incarceration rate well less than half that of the USA (shocking, but yes, it is true).  In fact, the incarceration rate in South Africa is above the world average.

William, you truly are a bastard.  Now go change your handle once again so that you can pretend you are a new poster, and not the same old piece of shit posting under his 14th name here.

Libertarians for Prosperity's picture

.....EVERY nation on earth has an incarceration rate well less than half that of the USA (shocking, but yes, it is true....

Not true.  Russia is quite close to US rates, ~85% there.  And Russia is virtually all white.

Secondly, I'm not "WilliamTheBastard."

You guys really are a despicable, loathsome group of people. Bigotry, racism, and bloodlust is just part of the doomer goon culture, isn't it?

akak's picture

Not true.  Russia is quite close to US rates, ~85% there.

So I failed to remember the ONE exception to my earlier claim about the shameful and shockingly sky-high US incarceration rate, which is only the exception that proves the rule.  That still takes nothing away from the fact that your statement regarding South Africa's incarceration rate was disingenuously misleading, as is virtually every one of your truth-twisting and hate-filled comments here.

Secondly, I'm not "WilliamTheBastard."

Go tell it to the the guy yelling at pigeons in the park --- we all know just who and what you really are, you vile, despicable, statist, lying, pro-Establishment sack of shit and hate-filled troll.

MsCreant's picture

If you are really trying to fight racism, I think it would be best to do it without all the hatred. Why should anyone listen to insults and heckling?

I don't approve of the stance of many here regarding race. But many have their reasons for it. Maybe they have been hurt by someone of another race and they over generalized. In my case my family is racist and it does not matter how much I argue. I still love them, no other way to be.

I'm not suggesting you have to love people here (fuck, I can be a real bitch at times) but you would be more convincing to someone like me if you were not spewing hatred all over the screen when you type. People come to the conclusions they come to. Until you take the shame away, there is no chance to heal it. In dissecting my own beliefs, I had to see I inherited it from my family, and it did not mean I was evil. Once the shame is off it, I can look soberly at my beliefs and see what is true and not true vs. blindly defending a point of view I had years invested in.

Of course it helped that I had the priviledge to have people around me from other races that loved, accepted, and at times defended me.

Love does that.

RockyRacoon's picture

You ole softy.   I knew it.

Libertarians for Prosperity's picture


On virtually all occasions when someone presents an argument or facts which run counter to the ZH groupthink, it is met with extreme hostility and antagonism. I'm not sure if this is a "doomer" thing, or a libertarian thing, or just a "ZH fight club" thing, but it can't be denied.  Almost without exception, opposing viewpoints are met with vulgarity, hostility and narrow-minded fanaticism which discourages anyone from making counterpoints, unless they're looking for a fight.  Say one thing critical about silver, gold or Ron Paul and watch the sneering jackals circle you with foaming mouths and shit in their palms.  

Besides, do I really care if I offend a bunch of racist and bigoted pigs?  Do I really care if I offend doomer goons who take delight in watching the world burn?  Um, NO - I don't.

Now, I happen to remember ZH from the early days when the community here was full of incredibly intelligent people.  In my opinion, when Tyler started pandering to the silver goons last summer, the intelligent ones got replaced with doomer neanderthals who operate mostly with their lower brain stem. And this place hasn't recovered since.  

All I'm trying to do is make it increasingly difficult for the goons and super-pigs to post their tripe around here.  Perhaps, then, it'll make room for the smart folks who got chased out by the jackals.  If Tyler tells me to tone it down, I'll respect it and comply.  Until then, I will continue to call out the bullshit. 



tmosley's picture

No, you lying shit.  You get attacked when you LIE about those things.  You are a known liar.  When you aren't lying outright, you are warping the truth, like trying to claim that Ron Paul was somehow owned by the banks, even though they contributed less than a quarter of a percent to his 2008 campaign.

You can get the fuck out of here, you pro-tool using motherfucker.

akak's picture

What a loathesome, illogical and hate-filled perversion of a human you are.

There is NOTHING in your posts but blanket generalizations, implicitly pro-Establishment biases, and a rabid and blind hatred for those who are willing to challenge and fight the power elite and their innumerable lies. 

The simple fact is, WilliamtheBastard, you add nothing to any debate, but merely subtract from the levels of intelligence and civility (such as they might be) that already exist here --- just as you have done under your 12 other sock-puppet troll incarnations here.

Many different opinions are routinely responded to here with calm and rational argument.  Your flaming and hate-filled rants, however, are only intended to incite similar negative emotions and kneejerk responses, and you have perfected such flaming to a fine art.  You neither demonstrate respect nor do you deserve it.

DeadFred's picture

Sadly he is very good at it too. Check out how much of the commentary on this post he has hijacked. The banks will give him a bonus this week and maybe send some coworkers for him, probably turning over stones to find them even now.

RockyRacoon's picture

ZH from the early days, you say?   What user name did you use then?

Member for
12 weeks 4 days
akak's picture


WilliamtheBastard, you have just been hung by your own retard.

tmosley's picture

Come to think of it, Johnny Bravo once made a very similar comment.  He sucked up to one of Tyler's responses to his nonsense saying he would "tone it down" if Tyler asked.

Makes one wonder.  It certainly explains his inane hatred of me, if they are the same person.

fuu's picture

The only thing that is regularly met with hostility is bullshit.

MsCreant's picture

You made a good faith effort in your reply to me. I feel it. Thanks. I am afraid you also look like you have missed my point and you may have an agenda (conscious, as the guys suggest, or unconscious).

Sometimes you don't fight at fight club, you just watch and see where it goes.

Carry on Hitler smiley.

trav7777's picture about this:  I was never hurt by anyone from another race.  I can't see how you can say "reason" and then emotionalize in the same sentence...oh yeah, you're a woman.

I am stating FACTS, Ms.  FACTS.  Call them "hate facts," as I do...but they are still facts.  And that is what unsettles you the most.  There is nothing in error about any fact I have stated, yet they still seem rayciss.  That would indicate that the problem is on your end.  Facts should not cause you to have this sort of reaction.

I don't know wtf individuals or these people from other races have to do with the generalization.  Individual cases say nothing about valid statistical generalizations (and the converse is true too).

Some of us DO NOT take one or two anecdotes and apply them as generalizations.  In fact, I've known vastly more noncriminal black people than the opposite over the years, but this DOES NOT CHANGE the valid statistical generalization.  It does not change that areas with high concentrations of blacks will have high crime rates.  It does not change that black HS graduation rates are 50% or that herpes infection rates among black women are 50% despite the black women I've slept with not having been infected and the blacks I know all having graduated highschool.

It would be the height of idiocy to PROJECT (as you have done) the traits of the blacks or hispanics or asians or indians or anybody else that *I* know as representative of the larger trends of groups they belong to simply because MY situation is not typical either (nor is yours)!  To understand larger trends, you must simply study them.  I have known a couple of white murderers and one hispanic.  Does this mean that homicides are 66% white and 33% hispanic-committed?  Of course not.  My personal situation is NOT representative and neither is yours.

And love got nuthin to do with that.  Love away, but keep your ass out of black-concentrated neighborhoods if you want to stay unrobbed and unraped.

tmosley's picture

Says the bigot who hates all Chinese people.

Get the fuck out of here.

Hephasteus's picture

"You guys really are a despicable, loathsome group of people. Bigotry, racism, and bloodlust is just part of the doomer goon culture, isn't it?"

Don't be trying to make the doomer goon culture sound more attractive than it already is. It's too magnetic as it is.