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Old 12-16-2011, 12:24 PM   #1
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Snidely Margins and leverage in the futures markets

Originally Posted by James McShirley :
As always the corrupt CME never lowers margins whenever gold and silver prices are collapsing. At today's $28.53 low for silver the futures leverage is now a paltry 5.83-1. The gold leverage has shrunk to 13.66-1. The high margin/ low leverage not only serves the interest of cabal shorts unable to deliver physical, but probably exacerbates selling by former MF Global clients already in crisis. The silver leverage is as low now as low as any time that I can find in available data. The wicked and corrupt nature of derivative markets has reached Machiavellian proportions. Judging by their terror of gold rising there must be something BIG right around the corner.

It is no coincidence that whenever ANY major financial institution or brokerage collapses the result is ALWAYS a subsequent collapse in precious metals, along with commodities in general. Gold has plummeted 10% since the MF crisis began the weekend of October 28th, much of it the past 3 days. When failed trading firms are taken over by cabal players paper derivatives are always sold to create an illusion of PM weakness. EVERY single collapse, including the Asian crisis, LTCM, Enron, Refco, Lehman, AIG, EU nations, and MF Global has resulted in gold and silver getting hammered. The message is always the same: gold is a terrible idea whenever paper assets are in crisis.

Savvy investors worldwide are now scooping up the incredible physical PM bargains being afforded by a corrupt derivatives scheme. The majority of U.S. citizens will remain clueless to the end. That's the power of the MSM inflation expectation message. If the viciousness of this attack is any indication 2012 should be a really big year for physical PM owners. Sub-$1,600 gold will one day look as ridiculous as the 1999 "Brown's Bottom" at $250. Maybe this one will be known as Corzine's Bottom. It fits, Corzine is a proven ass.
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Old 12-16-2011, 01:32 PM   #2
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Seems to me this is grinding an axe pretty hard. More margin is a good idea whenever volatility is high - the direction of motion shouldn't be the issue, it's the speed, since you could be either long or short. So yeah, if margins got to be high because beta was high going up, with beta still high going down, what's the diff? As he even points out, this is good for phyzz pm buyers anyway.
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Old 12-16-2011, 01:36 PM   #3
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I say bring on the margin calls. This shakes out the paper hangers and makes PM's attractive and cheap. I have some dry powder I want to fire off anyway. In fact, make margins a hundred percent. That would end nearly every vehicle but physical from existence.
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Old 12-16-2011, 01:41 PM   #4
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To be fair margins should reflect the risk of the underlying asset.
The fact that silver has higher margins is justified given it´s higher volatility compared to gold.
The problem, however, is that the volatility is created artificially to supress prices.
Another issue is that margins on treasury and S&P500 futures don´t reflect their inherent risk.
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