Thursday, March 24, 2011

Whack a Silver (and Gold, Too), Like a Clockwork

The reason for the sharp intraday reversal from post-Hunt brothers' high on silver? CME hiked the margins, nth time, effective on March 25.

Here's the intraday chart of SLV, an ETF that tracks physical silver (and supposed to be backed by physical silver - good luck with that).

Zero Hedge (emphasis added 3/24/2011):

In tried and true fashion, just as Silver was about to viciously destabilize the global capital markets as it surged to new 31 year highs, the CME stepped in and did its usual 3-6 half life intervention by hiking initial and maintenance margins on silver futures from $11,138 and $8,250 to $11,745 and $8,700 respectively. This is merely the latest margin hike in what appears to be a neverneding series designed to reduce speculative "fervor" courtesy of endless liquidity. What it will do is merely provide a better entry point for those who by now realize that silver's next stop in the fiat endgame is $40, then $50, and so forth. Naturally, the price drop in silver caused gold to sell off too. And now that the CME accepts gold as collateral, we can't even visualize the reflexive loops that develop once the metal that is also a collateral currency becomes more and less valuable at the same time.

And while they are at it, the CME decided to remove some of the Uranium volatility by hiking maintenance and initial margins in Uranium Futures (UX) by about 50%.


I'm sitting on my precious metal stocks positions. As Tyler Durden says, the "half-life" of CME intervention is rather short.


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