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Everytime there is a smash of gold and silver it is always because margins were raised or are about to be raised.(as if the insiders on CRIMEX didn’t know it was coming) Don’t get me wrong, both metals were extremely overbought and many of us knew a correction was coming, but these criminals use the margin club to always exacerbate what would be normal corrections into outright massacares. That is why I never have, nor ever will, trade commodities on a futures exchange using margin! https://seekingalpha.com/news/3604370-cme-reportedly-raises-gold-silver-futures-
Well Spotted Chartsmaster !
Eventually, the futures market will blow-up and the CME will be asking for a bail-out (in worthless fiat), saying no one could have seen this coming.
Of course, I may not be alive when it happens, but it 100% is coming. They should just go to a cash market now to avoid prolonging the pain.
Let’s take a look at the facts. Gold margins are being increased from $9,750 to $10,320 (less than a 7% increase). Do you think an increase of 7% in margins would cause a massacre in prices? Also, as noted in your link, the increase comes AFTER the plunge, when prices fell more than 100% of existing margin in a single day. It would be irresponsible for CME to not be responsive to increased volatility.
If you would like to take a look at CME’s financial safeguards, see the link below. They are not interested in going under.
https://www.cmegroup.com/clearing/cme-clearing-overview/safeguards.html
After spending a lifetime in futures and margins, I am still surprised by the extent of misinformation and conspiracy theories people have about futures.
Well said.
Sounds like propaganda to me. It’s not the amount of the margins. What trader puts up more margin? If the exchange was operating properly they would increase margins repeatedly on the way up to dampen large price moves. No, they wait until a decline starts and pile on to help trigger stops. And the insiders know an increase is coming. Get serious!
Exactly. Changing margin requirements on the fly is no different than the Fed announcing they are ending QE or raising interest rates or heaven forbid announcing QT. Asset prices WILL react.
In effect, CME can modulate asset prices at will by adjusting margin requirements.
Moreover, when was the last time the CME raised margins significantly for US equities? I doubt they even did so after the 1998-2000 bubble.
Increasing margins during the run-up is exactly what they have been doing. Facts are good.
DATE MARGIN
April 14 9,150
March 25 8,350
March 17 7,000
March 3 6,000
Feb 27 5,500
Do they ever do so for US equity products? Is it anything close to magnitude and frequency gold and silver receive?
No the FED controls equity margin and hasn’t raised in decades. They don’t want to stop blowing bubbles so they never use it anymore.
His response with the dates of the increases just Proves my point! All the increases he lists were from Feb-March 25. Exactly when gold and silver crashed along with stocks. They Exacerbated (actually initiated) the liquidation during the stock market crash to save the bullion banks allowing them to cover their naked shorts at much lower prices.The last increase was April with gold under $1800. So they didn’t do what I suggested, they let gold soar almost $400 without raising margins and silver much more percentage wise. He just proved my point about using margin increases to smash metals prices.
CME has raised and lowered margins on stock index futures many times. You can scroll through the history of the various products here. Enough with the goofy baseless allegations.
https://www.cmegroup.com/clearing/risk-management/historical-margins.html
Nothing goofy or baseless in my points. Where were the increases on the recent rallies? NONE. The increases you listed caused the metals collapse in late Feb and March. Thank you for confirming that. Now after a huge rally in gold and especially in silver they exacerbate the correction. I stand even more strongly behind everything I posted.
This discussion is starting to beg the question: Chartsmaster, were you Out of the PM market on Friday before the collapse?
I bring this up because of the context on the board leading up to the Turn in PMs. It can be difficult focusing on the PM market while distracted by continual discussion of unrelated theories. I may be wrong, but I would wager that the folks that got OUT before the collapse were NOT involved in the lengthy off-topic discussions.
Thanks for the link. Is there a published formula they have for setting margin, or is part of it based on historical volatility, relative liquidity and then adjusted by someone based more using more art than science? I am assuming the later, since so many people complain about it. It would obviously be better if it was 100% transparent and predictable.
What about with the Hunt brothers? Don’t you think what the Comex did was wrong on some fundamental level? Why not restrict margin before a bubble is built? The whole system seems ripe for abuse and gaming.
Alfa8 what are you asking and what is your point? If you follow this board you know I am a pretty frequent poster and discuss my positions all the time. Whether I was in or out, partially in or out has absolutely no relevance to the discussion. I don’t know what your contribution was to this discussion anyway. One comment as a cheerleading fanboy of Jonny21. If you have something worthwhile to contribute, please do. Otherwise you are the distraction, no one else.
It seemed there was a rationalization theory you were developing to explain what exacerbated the correction. Sorry, but it sounded like sour grapes. And what does Milk have to do with it?
Alfa8 it wasn’t a rationalization nor sour grapes. I made an argument and Johnny21’s info Proved my point. I think you are getting confused. Milk was never mentioned on this thread. That was a posting this morning before trading hours about why kids seem less affected by Covid. Two different discussions.
Chartmaster – If you think my info proved your point, we have nothing to talk about. You have never traded futures and are just repeating the conspiracy garbage that perma gold bulls are always spouting (CRIMEX, insiders…). I showed you that the increase in margin was small and was made in response to the large down move in gold. Margins were raised several times this year, never lowered, and the gold market continued to advance. No, you can’t teach a Sneetch.
Your numbers DID prove my point. All the increases you listed were between FEB.-April. NONE during the huge run up in gold and especially silver from Aril,May,June,July. Not until 2100 gold and 30 silver did they raise, to exacerbate the decline that had just begun. I don’t use or follow anyone elses theories. I look at the FACTS make conclussions and post my opinions. You on the other hand seem to be a schill either for the COMEX, CFTC or some related entity assigned to try and obfuscate when someone identifies truth to what is actually happening in the markets.
Nautilus – Not a puplished formula, bur here is an explanation of what goes into the decision to make a margin change.
https://www.cmegroup.com/education/articles-and-reports/understanding-margin-changes.html#:~:text=We%20typically%20change%20margins%20after,and%20make%20arrangements%20for%20funding.