Is there any chance that the POS started falling purely because $50/oz was a trigger point for many players to sell and that's what caused the price to fall?
I think there is a lot to this but the run up over the long weekend and subsequent margin hikes even after the price started dropping is odd to me. Also the big sell off in the minutes before the markets opened monday was odd as well. Why push the market so high and low in odd hours. Price got ramped up to an obvious trigger point it seems to me. If it got there in a slower manner the sell off might not have been anywhere near as significant. Silvers trading the last couple of months has taken a bit of steam out of the commodity sector short term which will be all the better for the long term in my opinion. edit spelink.
well said CH i got caught my point was $50 AUD to dump some so i have to wait now .No great loss i dont need the $ .I was getting trigger happy but got greedy for that extra few bucks Oh well i miss out on some gold which is what i was going to buy with the profits
Do margin hikes also affect silver shorts? If so, the greater the hike, the better it would be for those holding silver as shorting would become more expensive?
The current players of COMEX are using leverage to play this paper game. You may have heard of this, it is called marginal loans in Commsec I think (or something similar, the theory that is, I'm not sure the intricate details of COMEX) Basically what they do is they have a 'deposit' of cash and trade something that is multiple times in value, I think it is 1:12 at the moment and they are reducing it to 1:9 (guesstimates, I forgot). So if I wanted to trade $12k on COMEX I would only need $1k in equity. However with the new margin requirements I would need $1333 in equity. Of course these guys aren't trading a measly $12k so these margin hikes will force them to liquidate or pony up more money. Some people won't be able to obviously pony up the money and by force liquidation the supply with increase on the market and drive prices down even more. So for us people getting physical, their little paper games benefit us because we get cheaper physical silver
But if they have to put more down as a deposit, and there are huge naked shorts keeping silver down, as the margins are raised, then there can be less 'shorting' of the market, couldnt there? Do you get what I'm saying, if 90% of futures out there are short, and 50% of futures get cut due to price hikes, then the price of silver increases. Correct?
So if the margins are increased to drive the POS down, does this mean the POS is still increasing? If the POS actually falls, do they readjust their margins to increase the POS?
There are some weak, nervous hands currently at the tiller Iron Mike, this squall should shake them off
Margins increasing means some of the more leveraged players may not be able to afford to hold their positions and be forced to liquidate and this creates an artificial supply and pushes prices down. It is obvious the prices have been dropping lately yet they still increase the margins. If and when they do increase their margins I bet it will be after JPM et al close off all their short positions...
What has me excited is that if they can do this to the downside of silver, just think what they can do to the upside of silver when they change teams
well if margins increase and extra money is needed to hold positions than it creates an artificial lack of demand and pushes prices down a bit.
No it doesnt, look at the subprime, when the amount of lending restrictions are loosened, every joe and his dog borrows money and an * ARTIFICIAL* demand from property is created due to the amount of money and lending available. Low margins are Just the same as what happened in the housing bubble in america where mortgages with ZERO deposit were allowed. What it seems like people are misunderstanding is, margin levels at the comex are JUST like deposits. If you put them too low then people dont need much money to buy into silver contracts, people just put in $5 for every $100 of silver they buy. To me this is leverage and not showing real demand (its false demand fuelled by leverage). It seems easy for people to relate 100% - 110% home loans in america to the defaults and crash of the housing market but abit more difficult for people to relate the same dynamic of 5% margins and its leverage levels to the silver market ?! If you raise it to 10% then only people who can afford it will hold their positions and if you raise it to 50% ONLY people who REALLY need it will buy it, speculators who leverage are gone and this TRUELY shows the REAL demand for the metal. Dont look at it as *why did the price drop* LOOK at it from WHY did the price get so high in such a short time in the first place ...
