...after hitting $38. http://www.zerohedge.com/article/and-clockwork-cme-hikes-silver-margins-halting-surge
A newbie asks, how do they do that and will it always happen when it spikes up? I mean, dont get me wrong, I just started stacking and Im clueless to everything about it and I dont have much to stack tho I am adding day to day as fast as I can but I dont want it to jump to 40-50 or higher until I have a $hit ton of it heheheh. Keep stacking!
It's their way of "mitigating risk and volatility". Basically what it does is shake out smaller buyers who can't afford the fees while leaving the market more in control of the big money movers. It also tends to target "longs" while short sellers are relatively unaffected by these type of margin increases. The impact on pure speculators is debatable. As you can imagine there are all kinds of conspiracy theories around these margin moves. The CME has done this over and over as silver and gold have been climbing. This type of increase will force speculative or weaker longs to liquidate their positions, and then the shorts can cover their positions at lower prices.
This isn't a bad thing, as it creates stronger hands. What are the margins at now 10% down? how about shift it to 50% down instead? I'd say get rid of this margin business all together (thereby getting rid of speculation and gambling). Slam
If you're long on your physical though, these moves are not really anything to be concerned over. A drop is just another buy opportunity and that's about it.
As above, the only reason to lose confidence in your phyical is when there are better invesment alternatives. Personally, I wont sell until I can trade my PM'z for an invesment property, and that is only going to happen after a property market crash. The drop overnight mimicked the gold price. Silver price has always been highly correlated to the gold price. The ratio might be dropping but the havent decoupled just yet. Maybe in the future they will move independantly.
The complete opposite would happen. Without margins the number of speculators able to enter the market would increase exponentially -- especially those looking to short.
How do you figure that? What you are saying is that with less available fiat more buyers will come in? huh? Speculators use margin facilities...right?
I believe there is confusion over the word margin. This is not leverage, it is the dollar amount you have to put down to cover the contract purchases and maintenance fees. When they raise this price/rate, those with smaller dollar amounts to invest can no longer afford to purchase contracts or pay the maintenance fees, whether it is as an investor looking for delivery or a speculator merely looking to trade paper. By removing all margins, no money would need to be put down to purchase a contract or to maintain it, which would allow a lot more people into the market. It can be debated either way whether this is good or bad. However, by continuing to increase the margin rate, the trading becomes limited to the larger buyers -- primarily the big banks.
I think Margin requirements have everything to do with Leverage. The higher the margin the lower the leverage. With physical purchases your margin is 100 % and leverage is 1 :1 - you are basically paying for it in cash, and the seller doesnt need to wait for you to pay the rest.
Auagau, as well as the investment property, you may consider a 30 year bond paying 15 % interest when the time comes. The compounding is great. ( This from someone who was paying interest @ 23% to a Finance Company in 1980)
Spot on. Margin requirements have not moved much in percentage terms. Only one comment below the ZH article pointing this out. I'm starting to feel uneasy with all the mania around silver.
Slam, sounds like you "perhaps" are not a risk taker but as we all know risks you have a double blade sword. "Perhaps" at this moment in time you don't have the funds to take the risk and you are a little grumpy or maybe you lean on the side of caution where as others don't. Personally I like the risk and I'm prepared to take the hit too. As long as I know I can take the hit I don't mind. Bumping up the margin I feel won't have any effect. It's only a couple of hundred $$ which is chicken feed to some players.
Margin requirements, what a joke... just as pathetic as credit cards or anything else that lets someone buy something without the money. GAHHH i hate it all!!!
