Mon Post #1: Shanghai Exchange Hikes Silver Margin By 20%

You will notice that in overnight trading Silver got hammered down to the low $26.00 mark.

The Shanghai Gold Exchange, the Asian counterpart to the CME, hiked their margins on Silver by 20%.  This follows the CME move on Friday which hiked margins on that exchange by 16%.

Will we see multiple margin hikes like we saw at the end of April/beginning of May 2011?

Stay tuned... this will be a week to remember in precious metals. Silver has already swung from $26.00 to $30.00 and back to $28.00 this morning.

To characterize this time as one of 'violent volatility' is almost an understatement.

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Email: village_whisperer@live.ca
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The Panic is palpable... but not from physical Silver owners

As trading in Asia opened on the Globex on Sunday night, Silver was hammered.

In about four minutes, Silver plummeted $6.10.

On Friday we talked about how the COMEX has raised margins twice on Silver trading last week. First it was for 9%, the second for 10%... in just one week!!

Following up on this, MF Global (run by former Goldman CEO Jon Corzine) join the fray and has hiked its silver trading margin to $25,397. That's a hefty margin increase. The CME margin is $14,513, or about 6% of the contract value of $241,750 if you assume a silver price of $48.35. That means MF Global's margin is 175% of the CME!

These two events had the desired effect.

Unable to meet margin requirements when trading opened on Sunday night... delinquent accounts were liquidated at a time when volume was very low.

Supply and demand.  Lots of product, few buyers, price plummets.

This came after the manipulation last week beat down a price surge that almost hit $50 not once... but twice.

For chartist (investors who follow charts like a religion) this action had painted a 'double top'.  In the chartist world, 'double-tops' are indicative of an imminent price plunge. 

Last week, when Silver was originally touching $50, a host of stories started popping up in the media warning the Silver was due for a crash.  Then the 'double top' was painted on the charts.  Finally liquidation of delinquent margin accounts at market opening Sunday night would complete the scenario.

Silver plunged over $6.00 per ounce in about four minutes. 

Que the panic selling..............

One small problem.  Where was the fear? Where was the panic? Much to the horror of the Cabal, buyers surged into the overnight market and Silver climbed back above $47.00! 

And with what is a clear sign of how palpable the panic is becoming, the COMEX took further action today and raised margins for the third time in past 7 days; this time adding an additional 12% the to maintenance and initial margins.

You can see the result above, it has temporarily pushed Silver down again.  Will we see panic or will it be treated as a fire sale yet again? Either way, it is clear what is being attempted here.

If Silver surges over $50, the broader investment market will start pouring into it... which is why we are seeing such desperate attempts to prevent the price of Silver moving up any more.  Think about what we have seen the past two weeks.  Unprecedented paper contracts being dumped on the market, repeated margin hikes, a coordinated media campaign calling this the 'top' in Gold/Silver and the painting of a double chart top.

I promised you the short term Silver ride would be a roller coaster and it is not disappointing us. Can you smell the desperation? The fear?

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Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.