Friday, November 4, 2011

Prepare for a wild week coming up...

Stunning things are happening this weekend and next week could be wild for Silver and Gold.

First off the Commodities and Futures Trading Commission (CFTC) has released this vague statement regarding their enforcement investigation of the Silver markets:

  • “In September of 2008, the Commission announced the existence of an enforcement investigation into the possibility of unlawful acts in silver markets. Since that time, the staff has analyzed over 100,000 documents and interviewed dozens of witnesses and obtained expert advice. It has been a long, detailed, and thorough investigation, and it continues in an appropriate and considered manner.”

Shortly afterward, on the blog King World News, CFTC member Bart Chilton gave a bombshell interview in which he has confirmed there is manipulation in the silver market and that there have been "violations of the Commodity Exchange Act". Chilton states that the manipulation should be "prosecuted to the full extent of the law."

Following this, and once the markets had closed, the CME issued a memo stating that on Monday they will be raising maintenance margins to initial margins on all products.

Because maintenance margins are 20-30% below initial margins, this is effectively a 20% + margin hike for holders of ANY maintenance position. This means that by close of business Monday, millions of options and futures holders will be forced to deposit billions in additional capital to the CME just so they are not found to be margin deficient, and thus receive a margin call.

Naturally, since it is very unlikely that this incremental amount of liquidity can be easily procured in one business day, it is anticipated that this will lead to the issuance of hundreds of thousands of margin calls Monday, followed by forced liquidations of margin accounts across America... and the world.

Have the pending charges against JPM for silver manipulation hit a nerve with the banking cabal? Will the massive forced liquidation dramatically drive down Silver/Gold prices so that JPM can quickly exit their remaining short position?

Regardless, Monday should be the start of a wild and rocky ride in the precious metals.

More as the weekend progresses.


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  1. So to be clear you think Monday will see a temporary drop?

  2. What could happen is widespread selling on Monday preparing for what's coming. At close of business Monday you could see widespread (read massive) liquidation of small and medium CME accounts unable to meet margin calls. It could have the potential to make the massive raid at the end of April seem like child's play. More thoughts on this as the weekend progresses.

  3. Interesting.... Im *definitely* looking forward to reading more. I have this horrible fear that the USD will become significantly more valuable against everything else. Its silly.

  4. Does one smell a buying opportunity before QE3?

  5. If margins go to 100% then we'll begin to see the true value of PMs and not values set by speculators and the investment banks that can manipulate the prices. This is a good move IMO because it will clear out a lot of the noise and let prices more truly reflect the underlying demand and the economic situation we are in. If the specers get cleared out, there will be a great temporary buying opportunity before the next leg up in prices.