Monday CME turmoil

If I am wrong here please correct me, but the situation i see we face is this:

currently COMEX 5000 silver futures initially 'cost' - US$24,975 ( initial margin requirement )
current VALUE of said silver is $34.12/oz * 5000 = US$170,600
current initial requirement as a percentage of spot, US$24,975 / $170,600 = 14.6%

current maintenenance requirement = US$18,500 or 10.8%
difference between maintenance and initial = 26% or $6,475

also if you bought a new long contract yesterday, then to recieve a margin call tommorrow the price would have to drop 3.8% ( 14.6%-10.8% ) or $1.30 per ounce, for your equity to fall to the limits of the maintenance requirement, and kick that margin call in.

so the most somebody can be hit, with the new rules, per contract is US$6,475, assuming they were a bee's D!c& away from recieving a margin call anyway.

now, they are making the margin maintenence requirement = the initial requirement.

so if my logic is right, with the new rules, if you buy a new (say, long) contract and the price drops AT ALL then you could be subject to a margin call.
also considering that the circumstances (i at least) assume a price drop. then who would buy a new long contract in a falling market if you had no leway for further price drops without getting a margin call?

Is that right or am i missing the board here?

anyway, I think that the ptb are looking at the entire commodities sector and going: "ok you have $X invested in the market, now were gonna give you margin calls on everything, whatcha gonna liquidate and whatcha gonna keep?, oh, and make sure you have some 'spare' cash invested 'somewhere' because of volitility. or your gonna be between a rock and a hard place."

I think it's crap and all but.., well if it was chess it'd be a good move.
 
Yes - hit the nil on the head Az...

But the biggest problem is that the exposures for these huge companies & clients across the board is that they're totally spread throughout the WHOLE comms matrix... hards, softs... and everything inbetween...

VRS ;)x
 
BlackSheep said:
I have no idea what effect it will have - so often the market seems to react in ways that seem counter-intuitive to me :/

Given that more than a few traders will probably be madly cashing in whatever they can to meet their obligations I'll be very surprised if the metals don't take a big hit though.

I'm considering some short term trading in EPTMAG if it does tank early next week - yeah I know I know it's paper yagiida yaggida etc etc (actually it's zero's and ones on the computer not even paper!)

Should any funds I put towards that little experiment not magically dissapear in a puff of smoke I'll use the profits (if any) towards some more Ag or Au as it would be money for jam. If i do lose it I won't be too stressed as it's the devils money (won from gambling on the cup) :cool::lol:
Click to expand...

No wonder Gainsville is offering specials on silver at the moment. Seems they may be locking in some deals to the current price before mondays anticipated drop. One of their specials is for 10 oz bars at just .59c over spot !
 
luckylukeonline said:
BlackSheep said:
I have no idea what effect it will have - so often the market seems to react in ways that seem counter-intuitive to me :/

Given that more than a few traders will probably be madly cashing in whatever they can to meet their obligations I'll be very surprised if the metals don't take a big hit though.

I'm considering some short term trading in EPTMAG if it does tank early next week - yeah I know I know it's paper yagiida yaggida etc etc (actually it's zero's and ones on the computer not even paper!)

Should any funds I put towards that little experiment not magically dissapear in a puff of smoke I'll use the profits (if any) towards some more Ag or Au as it would be money for jam. If i do lose it I won't be too stressed as it's the devils money (won from gambling on the cup) :cool::lol:
Click to expand...

No wonder Gainsville is offering specials on silver at the moment. Seems they may be locking in some deals to the current price before mondays anticipated drop. One of their specials is for 10 oz bars at just .59c over spot !
Click to expand...

And of course only those who HAVE to sell to meet calls from other investments will be forced to... Anyone like you & me aka 'the little guy' will either not sell a thing, panic sell... or do the semi-smart thing & back up that truck we keep hearing so much about... Personally I'm going to be topping up as best I can by buying in $2k-$8k chunks - if that is I can get the metal... but I know exactly who I'm going to hit up first if we do start diving seriously on Monday...

VRS :)x
 
I don't think it will make a great deal of difference...
There is no change on Initial margin requirement, which is the proportion of the total market value of the securities that the investor must pay for in cash when buying securities on margin. The board of governors of the Federal Reserve has the responsibility to set initial margin requirements, but individual brokerage firms are free to set higher requirements.
In futures contracts, initial margin requirements are set by the exchange, and we know they have already jacked up the price not too long ago, but as far as the Maintenance margin requirement (a calculated sum, usually smaller than but PART OF THE ORIGINAL MARGIN, which must be maintained on deposit at all times) they are simply increasing that price to a level that blends the two requirements together.
Remember it's only if a customer's equity in any futures position drops to, or under, the maintenance margin level, that the broker must issue a margin call for the amount at money required to restore the customer's equity in the account to the original margin level.

The truth of the matter, they are slowly but surely making Futures irrelevant, and eventually it will become as important as the Dodo was to the trees from which survival was only secured by passing the seeds through their digestive system...

:cool:
 
Mick said:
Bix weir is seeing this as the beginning of the end of silver price suppression:

"Zerohedge.com just posted some startling news. The CME has upped margin requirements to 100% ensuring the total destruction of all small and medium sized participants come Monday morning."

Monday will be interesting Indeed!

Mick
Click to expand...

Yep, i saw this on ZeroHedge too, pretty exciting news, This happening tuesday morning .... be ready guys :)
 
Mick said:
If margins are increased to 100% Monday should see see silver price plummet as investors sell their paper silver to cover margins. This will not be reflected in physical price though in my opinion

Mick
Click to expand...

So if spot went to 25 bucks, you would still pay the current prices of 37 - 40 for a standard silver oz bar ?! When spot is $25 ? Not sure if everyone be thinking the same way ...
 
pmstacker said:
Mick said:
If margins are increased to 100% Monday should see see silver price plummet as investors sell their paper silver to cover margins. This will not be reflected in physical price though in my opinion

Mick
Click to expand...

So if spot went to 25 bucks, you would still pay the current prices of 37 - 40 for a standard silver oz bar ?! When spot is $25 ? Not sure if everyone be thinking the same way ...
Click to expand...

Yea the difference between the paper and 'physical' price is simply mark up's by dealers rather than any 'demand' this is one thing the more hardcore stackers have been pushing for a while. I suspect it to be a total myth that the decline of the paper price will not be followed by the physical price, but if anybody can prove me wrong on this i would be happy to appologise.

Any data to suggest the price collapse earlier this year did not follow soon if not immediately after with drops in physical metal prices.
 
It always seem to amaze me that every time there a sharp downturn in silver, we get to know about it after the market is closed on Friday and no one can do a thing about it..Markets open Monday, it's all over. :)

Regards Errol 43
 
errol43 said:
It always seem to amaze me that every time there a sharp downturn in silver, we get to know about it after the market is closed on Friday and no one can do a thing about it..Markets open Monday, it's all over. :)

Regards Errol 43
Click to expand...

Either that or the AUD will tank at precisely the same time :mad::lol:
 
I am stationed in the Middle-East right now, and the gold/silver markets are open here on the weekends.

I was thinking of going and unloading 20 of 82 PAMP kilos tonight so I can go back later and buy more. Is this advisable, keeping in mind that the physical price doesn't fluctuate too much here, although it does after some time. I've never done any short term trading, and feel like this time is my opportunity to try. I do understand that there is some risk involved, and would be willing to undertake a bit of risk.

Any advice appreciated.
 
errol43 said:
It always seem to amaze me that every time there a sharp downturn in silver, we get to know about it after the market is closed on Friday and no one can do a thing about it..Markets open Monday, it's all over. :)

Regards Errol 43
Click to expand...


Best you can do is if you have a trading account , buy some silver put options or buy a reversed etf as early as you can, other then that, if this is a tank you gotta ride it down .... its the roller coaster that everyone talks about ..
 
Nukz said:
pmstacker said:
Mick said:
If margins are increased to 100% Monday should see see silver price plummet as investors sell their paper silver to cover margins. This will not be reflected in physical price though in my opinion

Mick
Click to expand...

So if spot went to 25 bucks, you would still pay the current prices of 37 - 40 for a standard silver oz bar ?! When spot is $25 ? Not sure if everyone be thinking the same way ...
Click to expand...

Yea the difference between the paper and 'physical' price is simply mark up's by dealers rather than any 'demand' this is one thing the more hardcore stackers have been pushing for a while. I suspect it to be a total myth that the decline of the paper price will not be followed by the physical price, but if anybody can prove me wrong on this i would be happy to appologise.

Any data to suggest the price collapse earlier this year did not follow soon if not immediately after with drops in physical metal prices.
Click to expand...

Well some of the more premium silver might preserve some price and the super premiums will preserve almost all of it but thats why i mentioned bars, standard 1oz - 1kg bars. As far as i know a tank in spot, produces a tank in the standard bullion also. Just look at abcbullion.com.au where they have the realtime prices , it updates immediately and you can buy on the spot when the price tanks ...

If it happens at night you can buy the bullion online and get it at the bottom ... that talk of price splitting or price preservation is BS cause as i mentioned above you can buy the bars on ABC online for much much cheaper after the price tanks. The premiums are just the dealer overheads, not the fact that we are running out, not yet anyway ...
 
Update on zerohedge

http://www.zerohedge.com/news/cme-i...s-usher-more-risk-less-liquidity-mf-aftermath

Seems that as mentioned earlier, the inital margin and maintenance margin will now be the same amount, but it was interpreted as being an increase of the maintenance margins to match the initial.
Now it seems that although initial and maintenance margins will be the same going forward, it is the initial margin that is being reduced.

So does this mean we will see a spike on Monday as traders can leaverage up more?

Will we see all the conspirists cheering that the comex has reduced margins? After all the outrage at the increases earlier in the year I will be watching carefully to see the reaction and comentary.

edit for spelling
 
Preciousmetal said:
I am stationed in the Middle-East right now, and the gold/silver markets are open here on the weekends.

I was thinking of going and unloading 20 of 82 PAMP kilos tonight so I can go back later and buy more. Is this advisable, keeping in mind that the physical price doesn't fluctuate too much here, although it does after some time. I've never done any short term trading, and feel like this time is my opportunity to try. I do understand that there is some risk involved, and would be willing to undertake a bit of risk.

Any advice appreciated.
Click to expand...

I think most of us here don't unload based on todays news, cos tomorrow's news can reverse quicker than you can load up again. It is a long term thing for physical.
 
thanks for that post. I just went to ebay in a panic. I better cancel.

So this means price will most likely rise not fall afterall?
 
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