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Edmund Law
17th November 2010, 09:11
The CME have done it again and now the initial margin will be $9,788 for 5,000 oz, and maintenance margins are up to $7,250.
Remember two things which together make this very bullish for silver.
1. This makes silver market more of a physical, i.e. true, price-discovery mechanism. Hugely bullish for silver. (See previous thread on CME Margin raising). As the shorts are naked they post no silver physical metal so for them the more leverage the better. The physical buyers buying real metal obviously can't leverage physical metal and can't service loans with an asset that pays no interest and which makes no cash profit until sold. So medium/ longer term margin raising will hurt the shorts more than the longs.
2. Twice in a few days will garner market attention by yet more hegde funds and Asian buyers willing to test the COMEX by insisting on physical delivery knowing thereby they can precipitate a delivery failure, the suspension of COMEX spot and then its re-establishment at a much higher price.
Much as the CME must hate this and against all their instincts they are being forced little by little by physical buyers into making silver a proper price-discovery market instead of a rigged paper market. They do this in a way most calculated to help the shorts in this futures delivery / option month but which they must know will increase the power of the longs in the subsequent delivery / option month and every month after that. Short term gain for long term pain for them at least.

They are losing and by now they must know this so expect to see some novel shenanigans. Meanwhile as ever China and India need silver re-monetized to compete with gold as they don't hold enough gold but have plenty of silver for when the fiat system finally collapses. The USA allegedly has the gold. So they need silver as a monetary standard otherwise again otherwise they lose out to the USA if there is only a gold standard in a post fiat currency world.

silverheartbone
17th November 2010, 09:44
The CME have done it again and now the initial margin will be $9,788 for 5,000 oz, and maintenance margins are up to $7,250.
Remember two things which together make this very bullish for silver.
1. This makes silver market more of a physical, i.e. true, price-discovery mechanism. Hugely bullish for silver. (See previous thread on CME Margin raising). As the shorts are naked they post no silver physical metal so for them the more leverage the better. The physical buyers buying real metal obviously can't leverage physical metal and can't service loans with an asset that pays no interest and which makes no cash profit until sold. So medium/ longer term margin raising will hurt the shorts more than the longs.
2. Twice in a few days will garner market attention by yet more hegde funds and Asian buyers willing to test the COMEX by insisting on physical delivery knowing thereby they can precipitate a delivery failure, the suspension of COMEX spot and then its re-establishment at a much higher price.
Much as the CME must hate this and against all their instincts they are being forced little by little by physical buyers into making silver a proper price-discovery market instead of a rigged paper market. They do this in a way most calculated to help the shorts in this futures delivery / option month but which they must know will increase the power of the longs in the subsequent delivery / option month and every month after that. Short term gain for long term pain for them at least.

They are losing and by now they must know this so expect to see some novel shenanigans. Meanwhile as ever China and India need silver re-monetized to compete with gold as they don't hold enough gold but have plenty of silver for when the fiat system finally collapses. The USA allegedly has the gold. So they need silver as a monetary standard otherwise again otherwise they lose out to the USA if there is only a gold standard in a post fiat currency world.

Thanks for the explanation.

What is your theory of 'Why did silver spot go gown on the previous silver only margin raise?'.

SawgrassSilver
17th November 2010, 10:52
Thanks for the great explanation Edmund Law

Edmund Law
17th November 2010, 10:57
It was already going down and that's when the CME decided to raise the margin. By waiting until silver was going down (already) they hurt the longs not the shorts as was their intention. This exasperated the move down. The already negative sentiment re silver at the time also camouflaged their intention i.e. makes the move down seem to be nothing to do with the CME.

silverheartbone
17th November 2010, 11:00
It was already going down and that's when the CME decided to raise the margin. By waiting until silver was going down (already) they hurt the longs not the shorts as was their intention. This exasperated the move down. The already negative sentiment re silver at the time also camouflaged their intention i.e. makes the move down seem to be nothing to do with the CME.

Thanks once again.

skijake
17th November 2010, 11:26
It was already going down and that's when the CME decided to raise the margin. By waiting until silver was going down (already) they hurt the longs not the shorts as was their intention. This exasperated the move down. The already negative sentiment re silver at the time also camouflaged their intention i.e. makes the move down seem to be nothing to do with the CME.

Good point Mr. Law!
Why do the Shorts always get the breaks? {rhetorical}