I’m starting to think Fed Chairman Ben Bernanke has some close friends at the Comex. On the heels of the Reserve’s inflationary proclamation that QE2 will continue on and interest rates will remain near zero for the “foreseeable future,” the Comex has raised silver margin requirements 13 percent. Silver prices dropped more than 10 percent on the new rules as silver traders with inadequate margin have been forced to deposit more cash in their accounts or liquidate their silver holdings.
The new requirements took effect after the market’s close on Friday – just two days after the Comex raised margin requirements 10.8 percent on April 27. Clearly, the CME Group (which operates the Comex) has decided to snuff out speculation in the metal while margin requirements on gold remain unchanged.
The move marks the ninth time in the past year that the Comex has increased margin requirements over the past year. The latest increase pushes initial margin requirements from $12,825 to $14,513. All told, margin requirements have soared 105 percent over the past year (a year ago initial margin requirements would set you back just $4,250).
The rule changes are designed to tamp down speculation in the metal, but they also have wider implications for investor sentiment towards silver and other precious metals. A rapid decline in prices could lead to capitulation selling, which might trigger more margin calls and even lower prices. It’ll be interesting to see if the silver market can buck the sell-off and continue its assent. The true test will be in the days to come.
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Tags: gold price, gold price forecast, silver manipulation, silver price, silver price forecast
