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Post by graybeard on May 7, 2011 10:43:41 GMT -6
Silver has paused its freefall at about $35, which is about 1/43 of gold. That's not too far from historical average ratio.
GB
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Post by waltc on May 7, 2011 11:04:17 GMT -6
Ordinary people have zero business directly playing commodities futures. 90% of them lose money.
If you want to play avoid margin calls altogether, just buy commodity option puts and calls. At least then you won't get burned like all the silver pricks did trying play with the big boys.
This is no different than what happened to all the real-estate speculators a few years back.
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Post by jeffolie on May 7, 2011 11:06:05 GMT -6
Silver has paused its freefall at about $35, which is about 1/43 of gold. That's not too far from historical average ratio. GB Using historical guides means picking which event to guess will be repeated. The most recent was 2008 when silver crashed from about $20 to as low as below $10. “History doesn't repeat itself - at best it sometimes rhymes”. Mark Twain is one of my favorite investment and political guides. HFT trading house algorithms dominated the accelerated crash like adding gasoline to a fire this week but fundamentally I expect the Dollar Index to set the trend for metals and most investments this year. The weaker the Dollar Index, then the higher other investment will go...the sudden jump in the Dollar index set fire to burning down other investments this week.
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Post by jeffolie on May 7, 2011 11:29:50 GMT -6
Ordinary people have zero business directly playing commodities futures. 90% of them lose money. If you want to play avoid margin calls altogether, just buy commodity option puts and calls. At least then you won't get burned like all the silver pricks did trying play with the big boys. This is no different than what happened to all the real-estate speculators a few years back. I agree. JP Morgan had no trading losing days last quarter...humans now always loses to algorithm trading houses. I understand the limited loss attraction of options but almost always little options investors lose...just like gamblers always provide significant profits to the casinos...while bragging winners back at the job entice more to gamble and you never hear stories from the losers to discourage potential gamblers. I almost never trade...it does not suit me...makes me irritating, sleepless and very bad company no matter if I make profits or losses. But, that is just me.
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Post by waltc on May 7, 2011 14:48:28 GMT -6
Yeah commodity options aren't much better, IMS the percent losing is around 90% as well.
In truth, most people are better off sticking their money in a mattress or going to Vegas for a good time.
When I played it, I never made squat. You not only have to be right but have exquisite timing(which I have zero of). Also you need to have enough cash(basically money you can afford to lose and not worry about) to keep you in the game until you win.
I think these instruments are much more suited to professional gambler types who can really handle the emotional ups and downs, at least according to some of trader bio's I've read.
That said, the spike downwards was to be expected, with HFT and the institutions now messing with commodity markets.
All in all non-pros have zero business playing futures or options in this market.
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Post by jeffolie on May 7, 2011 15:04:15 GMT -6
Longer term I believe metals are a good alternate store of value compared to the longer term decline in fiat currencies.
Timing is important.
Metals were dead money for about 25 years, trading without annual gains while simply earning interest in savings account was superior. Even while the Dollar declined for much of that 25 dead money years, metals were zombies. Only when a currency starts into crisis do metal gain as an alternative value to replace fiat currencies. Metals act very well in currency crisises when restrictions are place on even being allowed to get your devaluing money out of bank accounts that become limited access account because of limited number and amounts of withdrawls. We are talking crisis times here, not normal times. These types of crisis do happen such as in the 1997-8 Asian currencies crisises and the USSR currency crisis.
We will have this type of crisis...timing is important.
When...not now...I continue to guess 2014 and/or beyond.
So, I often posted that I would sell if metal 'spiked' this year...but I did not because I wanted a higher price. Oh well, no loss because I own physical metals and am a longer term holder...2014 an/or beyond.
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Post by jeffolie on May 7, 2011 15:13:38 GMT -6
Silver has paused its freefall at about $35, which is about 1/43 of gold. That's not too far from historical average ratio. GB 62 The most common gold silver ratio has been about 62 to 1 during the last decades. But, these are not common times. I have seen estimates of 15:1 and 25:1 written as likely ratios by respected authors while zealots think even lower. These are not common times...High Frequency Trading algorithms run by trading houses dominate while the old fashioned trading and common times of as recently as 3 years ago are gone. JP Morgan's trading had no loses last quarter...you can not expect a gold:silver ratio to mean anything useful to a JP Morgan algorithm. Half the oil market is algorithms...ratios mean nothing.
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Post by jeffolie on May 8, 2011 9:07:10 GMT -6
BART saw this coming and did not follow the herd:
bart has mad, good skills as shown so many times...recently by his May1st silver top posting...awesome
I do not know if 2008 is the best rhyme for repeating silver's history...there may be no good pattern to repeat
The combination of the 1.jump in the Dollar Index from Europe's decision not to raise rates next month was important, but how long will this rising Dollar Index last and will a country drop out of the Euro 2. the 6 margin increases this year with 4 happening very quickly and recently was important 3. the sentiment and flood of negative pieces on the 'parabolic' chart was important 5. the captured CTFC not imposing 'position limits' was important especially to the bullion banks concentrated short positions 6. and perhaps most important are the 'black boxes', HFT algorithm trading houses that cross many investments vehicles faster than a human can blink resulting in 'flash crashes' that are now often a series of 'mini flash crashes' as happened in the one day oil decline recently...JP Morgan & BoA trading arms had perfect last quarters without even a single losing trading day...while 2008 was different.
After 2008, silver did not get back to its $20 high for years. In 2008 silver dropped over 50%...so far in 2011 it is over 25%
Another planned margin increase becomes effective at the close of trading Monday.
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Post by waltc on May 12, 2011 21:10:41 GMT -6
Bottom line:
All the old rules on trading these markers have went out the door thanks to Bernanke, HFT and G-S.
Right now the Silver market looks dead for the time being, it's gonna be churned for a while wiping out more of the Silver pigs playing the market. Won't take long at the current burn rate either.
It's rather amusing to watch the buggers squirm at ZeroHedge. I tune into everyday as a form of entertainment.
Best price support for Silver looks to be around $24 to $32 per .oz. Then again if Bernanke doesn't like what he see's, he's gonna order a hike in the margin reqs and vaporize more traders.
Long term the prices may be up, but it's doubtful it's going to go where the Silver pumpers want it to go. Those guys have lousy crystal balls and many seem to be misanthropic SOB's who want a Mad Max future. And that one, even the winners are losers. The stupid shits don't see it, yeah they that stupid.
And when we get a major currency crisis and default. The gov't will just issue a new currency that probably only has half the purchasing power of the last one. But don't expect people to give you $100 new dollars for that Silver Eagle you bought at $50.00.
Oh, here's what you better sweat like hog in summer about. You better hope that the Fed doesn't issue you some sort of EBT card like they do welfare folks and do away with cash entirely(we have the tech to pull it off now). Your Silver will only be worth what a blackmarketeer will give you for it. And watch the Feds criminalize the hell out of illegal trading.
Prison time anyone?
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Post by jeffolie on May 12, 2011 23:14:18 GMT -6
If history rhymes with the 2008 more than 50% decline, then silver which was over $49 could match that decline to below $25.
Silver recovered its 2008 losses and then ran up in 2010 or about 2 years later.
Hypothetically....
Thus, 2 years from now or in 2013 silver would have recovered from a more than 50% decline similar to the 2008 decline...to get back from under $25 and regain $49.
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Post by waltc on May 12, 2011 23:41:27 GMT -6
Silver recovered its 2008 losses and then ran up in 2010 or about 2 years later.
Past performance is no indication of future performance.
BTW it was created almost entirely by quick buck operators working the media and internet selling people a get out of jail card for the Mad Max future they predicted. It was clearly unsustainable from the beginning and I say this as a Silverbug who buying when it was just $6 a oz.
It was a bubble just like Real-Estate and the internet stocks. Basically a ponzi scheme.
Bubbles like that don't come back very well as they tend to wipe out a lot of people. Look how long it took to reach the levels it did under the Hunts.
Also you're assuming TPTB aren't going to cut commodities off at the knees again should they become too attractive.
That said, this current systematic butchery of Silver pumpers and hedge fund traders who put serious dough into the market is going to hurt the Silver market for a long time to come. A lot aren't going to come back at all.
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Post by jeffolie on May 13, 2011 7:08:54 GMT -6
I do not know if the 2008 pattern will repeat now...I doubt it
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Post by jeffolie on May 13, 2011 9:19:53 GMT -6
2008 was significantly different than today.
2008 was a freefall, waterfall, housing collapse, shadow banking system crisis and traditional banking system crisis year coming off a housing peak of 2007.
Today all of that is not new and the waterfall, freefall is not happening...today is kind of stagnant, gridlock
Today's metals, commodities declines happened significantly for different reasons...those reasons: Europeans decided not to raise interest rates next month resulting is a sharp Dollar index bear market rally, 6 margin increases in silver (4 of which were in the last 2 weeks), margin increase in oil, unbridled algorithm/program trading.
I believe the significant differences between the more fundamental, traditional 2008 general financial collapse from todays trading tweaks to margins and algo's mean that silver will not fall 50% or more as it did in 2008.
So, I severely doubt silver will get down to $20...below $30 may not happen and I do not think below $25 is very likely...these are just my expectations......I doubt $32.00 will be broken.
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Post by waltc on May 13, 2011 10:50:42 GMT -6
The thing is fundamentals aren't working too well when Ben Shalom Bernanke can cut vaporize commodity traders at will via margin hikes, cash settlements, rule changes, etc.
Then there is G-S screwing with the markets and running pump and dump schemes in the commodity markets.
This all makes for a very toxic market.
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Post by unlawflcombatnt on May 14, 2011 11:12:14 GMT -6
The primary cause of this change is not just the accelerated size and growth of China, but also its astonishingly high percentage of capital spending, which is over 50% of GDP, a level never before reached by any economy in history, and by a wide margin. I meant to comment on this point earlier, because it has broader implications (though somewhat out of context in this thread.) China's 50%+ capital spending fraction of GDP is what I calculated as well from the CIA site's assessment of China's economy. This number means that less than 50% of China's GDP is available for consumption--either by Government or consumers. (I've incorporated this statistic into some of my calculations of Chinese wages and consumer spending.) For example, if China's GDP were $4 trillion, then a max of only $2 trillion would be available to purchase consumer goods--including imports. Thus our ability to sell consumer goods to China (or exports to China), is limited to $2 trillion. Thus, to sacrifice any part of the US's $10 trillion+ consumer market--in order to gain access to a consumer market that is limited to $2 trillion at most--is idiotic from an economic standpoint. (In reality, most of that $2 trillion is already taken up by Chinese domestic production. China simply doesn't have the buying power to import significant amounts of manufactured or finished products from the US. They do, however, have the power to kill American manufacturing--by displacing American production from the American consumer market.
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Post by jeffolie on May 14, 2011 12:09:15 GMT -6
The primary cause of this change is not just the accelerated size and growth of China, but also its astonishingly high percentage of capital spending, which is over 50% of GDP, a level never before reached by any economy in history, and by a wide margin. I meant to comment on this point earlier, because it has broader implications (though somewhat out of context in this thread.) China's 50%+ capital spending fraction of GDP is what I calculated as well from the CIA site's assessment of China's economy. This number means that less than 50% of China's GDP is available for consumption--either by Government or consumers. (I've incorporated this statistic into some of my calculations of Chinese wages and consumer spending.) For example, if China's GDP were $4 trillion, then a max of only $2 trillion would be available to purchase consumer goods--including imports. Thus our ability to sell consumer goods to China (or exports to China), is limited to $2 trillion. Thus, to sacrifice any part of the US's $10 trillion+ consumer market--in order to gain access to a consumer market that is limited to $2 trillion at most--is idiotic from an economic standpoint. (In reality, most of that $2 trillion is already taken up by Chinese domestic production. China simply doesn't have the buying power to import significant amounts of manufactured or finished products from the US. They do, however, have the power to kill American manufacturing--by displacing American production from the American consumer market. Back in 2006, I concluded that China's export dependence would doom it when America declined and produced threats under 'The Decline and Fall of China'. I posted that China would not fall any sooner than after the 2008 Olympics...recently I concluded that as long as China sucessfully exports to #1 Europe and #2 America that China would not fall until the general financial system collapse starting with a significant Dollar crisis raising Treasuries resulting in Derivative imploding in most likely 2014 and/or beyond. Exporting competitors such as India, Brazil, Indonesia, etc will limit China but they currently lack infrastructure such as ports, rail, energy to one on one challenge China's exporting status quo and by the time they build enough infrastructure to challenge China, I expect the significant Dollar crisis. If China developes a significant domestic market for its current 400 million export manufacturing workers then I would change my view of China's export dependence...this has not yet happened. China ballooned its capital, money supplies without any restraint and accelerated this capital expansion in its 2008 bailout. Much of this went to building more export manufacturing capacity while some went to domestic infrastructure. Silver/gold are purchased by Chinese as part of their continuing culture of high savings...as much as 30% of family budgets. Real Estate has until just recently been a target of these savings but now China's government is suppressing real estate and promoting the sale of gold and silver...a shift MAY BE happening away from China's savings vehicles.
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Post by jeffolie on May 30, 2011 16:10:06 GMT -6
$32.00 was not broken as I expected (see below post). $50 "...Next nice round number, $50 area may have much more selling..." was true. I have often posted about a physical silver short squeeze over the last 3 years...now silver inventories are relatively low (see the 2 nd post below) ============================================== 2008 was significantly different than today. 2008 was a freefall, waterfall, housing collapse, shadow banking system crisis and traditional banking system crisis year coming off a housing peak of 2007. Today all of that is not new and the waterfall, freefall is not happening...today is kind of stagnant, gridlock Today's metals, commodities declines happened significantly for different reasons...those reasons: Europeans decided not to raise interest rates next month resulting is a sharp Dollar index bear market rally, 6 margin increases in silver (4 of which were in the last 2 weeks), margin increase in oil, unbridled algorithm/program trading. I believe the significant differences between the more fundamental, traditional 2008 general financial collapse from todays trading tweaks to margins and algo's mean that silver will not fall 50% or more as it did in 2008. So, I severely doubt silver will get down to $20...below $30 may not happen and I do not think below $25 is very likely...these are just my expectations...... I doubt $32.00 will be broken. Read more: unlawflcombatnt.proboards.com/in ... z1NsMpG3j9 ================================================================ 30 May 2011 Comex Silver Deliverable Inventory Continues to Decline to a New Low 31 Million Ounces The long steady decline in Comex Silver inventory available for delivery continues to reach new lows, now at just over 31 million ounces. The current front month for silver futures is now July, with an open interest of about 60,000 contracts of 5,000 ounces representing 300 million ounces in terms of open interest. The available silver is an increasingly low percentage of the futures shares traded in the front month. This is further complicated by the volatility. On Thursday of last week 83,000 contracts changed hands. www.jessescrossroadscafe.blogspot.com/
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Post by waltc on Jun 5, 2011 11:39:58 GMT -6
Longer term I believe metals are a good alternate store of value compared to the longer term decline in fiat currencies.
Well unless people bought in when it was around $6oz your return will be worse than investing in select stocks. If people had bothered to invest right after the 2008 crash in select stocks they would have made more than those goldbugs ever did.
Hell look at APPL, if you bough it back in Jan 2009 you would have made 3.5x on your investment.
Tiffany's would have done the same but at 1/5th the entry cost.
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Post by jeffolie on Jun 27, 2011 10:25:05 GMT -6
Silver again at the $33.50 area for the 3rd time in 2 months ... will my expectations that silver will not go below $32.00 hold?
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Post by waltc on Jun 27, 2011 11:36:06 GMT -6
It's irrelevant whether or not Comex has silver or any commodity for that matter, the whole notion of a commodities warehouse has went the way of the dodo.
It's just a gimmick of the silver promoters to goad people into buying more.
Silver hedgers make deals with the silver mines not Comex anyways.
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Post by jeffolie on Jul 1, 2011 10:55:11 GMT -6
Yet again silver dropped to $33.50 ... 4th time in 2 months ... is this base building or merely a temporary support that will be broken to the downside?
I continue to expect silver to remain above $32.00 ... please keep in mind that I am not a trader and do not have any trading positions in any investment but our family does have physical metals that I purchased in 2008 when silver was as low as below $10 for a short time...our modest family hoard of metals are purposed to ride through the coming fiat currency issues to the other side.
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Post by jeffolie on Aug 4, 2011 7:36:19 GMT -6
jeffolie wrote:Yes, this is a breakout from the trading range of 2 months ... $39.26 early in the morning on the international markets Sometimes, breakouts come back down to retest the top of the trading range ($38) multiple times before heading on up, leaving the old trading range in the dust. I agree with bart's initial target of $42-43. ... bart has mad, good trading skills that he has proven over and over again. Silver is printing $42 to $43 ... bart has mad, good trading skills Yes, silver did retest the top of the trading range ($38) multiple times before heading on up, leaving the old trading range in the dust. taoeconomics.com/ss/viewtopic.php?f=1&t=1435&p=20000#p20000
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Post by jeffolie on Sept 23, 2011 9:22:42 GMT -6
I first posted the $32.00 support price on May 13, 2011 This morning silver approached $32.00 Today what is different from the below analysis is that I have posted that IMHO eventually the 'guardians of defining recessions' will look back in 2 years to declare that 'guardians of defining recessions' declare a double dip recession started in August 2011. I no longer expect "... today is kind of stagnant, gridlock ..." is true as it was in the orginal post on May 13, 2011. [ I first called this a double dip on Aug 30, 2011 "... Aug. starts recession, confidence down in West ... " unlawflcombatnt.proboards.com/index.cgi?board=general&action=display&thread=9541#ixzz1Yn7PCrqH ] ============================== taoeconomics.com/ss/posting.php?mode=edit&f=1&p=140982008 was significantly different than today. 2008 was a freefall, waterfall, housing collapse, shadow banking system crisis and traditional banking system crisis year coming off a housing peak of 2007. Today all of that is not new and the waterfall, freefall is not happening...today is kind of stagnant, gridlock Today's metals, commodities declines happened significantly for different reasons...those reasons: Europeans decided not to raise interest rates next month resulting is a sharp Dollar index bear market rally, 6 margin increases in silver (4 of which were in the last 2 weeks), margin increase in oil, unbridled algorithm/program trading. I believe the significant differences between the more fundamental, traditional 2008 general financial collapse from todays trading tweaks to margins and algo's mean that silver will not fall 50% or more as it did in 2008. So, I severely doubt silver will get down to $20...below $30 may not happen and I do not think below $25 is very likely...these are just my expectations...... I doubt $32.00 will be broken. Read more: unlawflcombatnt.proboards.com/index.cgi?board=gold&action=display&thread=8937&page=2#ixzz1NsMpG3j9
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Post by jeffolie on Sept 23, 2011 10:57:16 GMT -6
$32.00 clearly may be breached ... the background no longer is a gridlock, stagnant economy because IMHO a double dip recession started in August ================================================= Silver heading for record fall September 23, 2011 Silver prices are sliding sharply for a second straight day. The metal SI1Z is off $3.75 an ounce, or 10.3%, at $32.83 in recent action. Friday’s slide would be among the 10 worst percentage falls for the metal in the past 20 years and the second largest nominal decline, after Thursday’s $3.89 drubbing, according to data compiled from FactSet Research. Silver’s 10 worst percentage declines: blogs.marketwatch.com/thetell/2011/09/23/silver-heading-for-record-fall/
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Post by jeffolie on Sept 23, 2011 13:43:19 GMT -6
Silver drops 18%, worst in decades; platinum sinks SI1Z PA1Z HG1Z SAN FRANCISCO (MarketWatch) -- Silver futures on Friday dropped 17.7% to log their biggest one-day percentage decline since least 1984, according to data from FactSet Research dating back to November 1984. Platinum futures also fell the most in a single day since May 20, 2010. The metals market suffered from a "massive, no-holds barred flight from risk to cash and the U.S. bond and dollar market," said Tim Murray, general manager of precious metals marketing at Johnson Matthey. December silver -15.95% dropped $6.48 to close at $30.10 an ounce on the Comex division of the New York Mercantile Exchange. October platinum sank $97.40, or 5.7%, to end at $1,613.20 an ounce. December palladium /quotes/zigman/2304931 PA1Z -4.49% lost $21.55, or 3.3%, to end at $642.50 an ounce and December copperHG1Z -5.29% closed at $3.28 a pound, down 21 cents, or 6%. www.marketwatch.com/story/silver-drops-18-worst-in-decades-platinum-sinks-2011-09-23?dist=countdown
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Post by jeffolie on Sept 23, 2011 16:28:03 GMT -6
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Post by unlawflcombatnt on Sept 24, 2011 10:40:00 GMT -6
Jeff, Can you explain what the referenced chart means? Attachments:
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Post by jeffolie on Sept 24, 2011 10:46:21 GMT -6
A Word About Precious Metals Margins By Barry Ritholtz - September 24th, 2011, 6:21AM There has been a bit of misinformation and faux outrage about the CME margin requirements for Gold, Silver, and other precious metals, as well as Copper. I do not think people understand what this means, and why the CME is doing this. To begin with, commodities are purchased with futures contracts, which offer enormous leverage to speculators. As of this Monday, the minimum cash deposit for trading gold futures will be $11,475 per 100-ounce contract — at $1700 per ounce, that is a $170,000 position. The leverage is nearly 15 to 1. Stocks and bonds, for comparison, trade at 2 to 1 maximum leverage using firm margin. At 15-1, a less than 7% move against you wipes out your capital entirely. Put it in other terms, if you have $100,000 to speculate with, you can purchase $200,000 worth of stock, or using the same $100k, you can buy $1,481,481.48 in gold futures. Back in Q1 2009, when Gold was $1000 per ounce, you only needed $5,807.70 to buy 100 ozs of gold in futures (worth $100,000); That’s a little more than 17 to 1 leverage. At those levels, a less than 6% move against you wipes out your capital. Hence, as Gold has been purchased by more speculators who are highly leveraged, the exchange is trying to ensure that these gold traders have sufficient posted cash as a margin of safety in case of any significant move against them. Given the vertical spike in Gold prices the past few months, this is merely prudent risk management. Call it managing margin and counter-party risk — something we haven’t seen in other non exchange traded items like CDS or CDOs. Had they been exchange traded with margin rules, perhaps the 2008 collapse would not have been as significant as it was. ~~~ The recent history of CME margin changes for Comex 100 Gold Futures is after the jump. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> Following are the percentage changes in the Comex 100 Gold Futures <0#GC:> initial and maintenance margins since 2009 (in U.S. dollars per contract) more ( see the margin increases since 2009) ... www.ritholtz.com/blog/2011/09/a-word-about-precious-metals-margins/#more-70529
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Post by unlawflcombatnt on Sept 24, 2011 14:13:15 GMT -6
Thanks Jeff,
It was the 100 oz purchase part that threw me.
So the amounts listed in the chart are the amount of money needed to "margin-buy" 100 oz of gold.
No wonder prices fluctuate so much.
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