Tuesday, November 9, 2010

What Caused Precious Metal Sell-Off? CME to Blame?

It was not just gold, but other precious metals, too. Particularly silver, which hit $29 intraday and ended the day below $27.

Now, we may have a culprit whose mischief on behalf, no doubt, of the major bullion banks known to be very, very short silver caused the damage today not just on silver but across the board precious metals, dragging the stock market down along the way.

All it took was for the Chicago Mercantile Exchange, who operates COMEX, to change the margin requirements for silver.

SLV, an ETF that tracks silver, tumbled on almost 6 times the average volume.

From Zero Hedge:

PM Selloff Reason: CME To Raise Margin Requirements For Silver From $5,000 To $6,500

And if that doesn't work, there is always confiscation.

"CME confirmed silver margins raised from $5000 to $6500 (30%) effective 11/10 settl - no other metals effected"

Presumably, this affects the maintenance margin. And is a lovely way to kill paper longs.... but not shorts, of course.

This is also the last remaining self-regulating way for the market to tell the genocidal lunatic in the Eccles building to go fornicate himself, and his excess liquidity.

In case you don't know, "the Eccles building" is located at 20th Street and Constitution Avenue, N.W., in Washington, D.C., and it houses the Federal Reserve.

I don't think it was the "self-regulating way for the market", but "self-regulating way on behalf of J.P.Morgan Chase and HSBC".

It's getting to be a wild, wild world out there in the financial markets...

Zero Hedge has the actual announcement from CME.


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