Margins will rise to $16,500 per contract from $14,000, effective Feb. 2, based on "the normal review of market volatility to ensure adequate collateral coverage," CME says.
This is the first response from the Comex. They will try to dampen the price rise by raising margins. If that doesn't work, they will raise them again. Anything to cover up the fact that they don't have much silver backing the hundreds of thousands of futures contracts trading every day.
The leverage of paper silver to real silver is something like 500 to 1. Exorbitant amounts of silver compared to real silver in storage or even against annual production. AND the bullion banks are allowed to short huge amounts of silver anytime the price threatens to get away from them. Nobody is regulating the big banks that control the market.
Many commodity markets use futures to hedge against actual production. Farmers who sell wheat will hedge their production until the crop comes in to minimize price risk. In contrast the silver market is seldom used by silver producers to hedge price. Silver is a byproduct of base metal production so is not the primary source of revenue for most mines producing silver. The people shorting silver are the big bullion banks who are manipulatiing the market to ensure speculative profits for themselves. It is a classic monopoly situation. The Banks have relatively unlimited access to capital so individuals betting long don't have much chance. As long bets are made, the bullion banks just pile on the shorts until the longs have to cave. You can see the banks enter each day, typically around 10AM. Must be after going to coffee with their trading buddies.
Ok, rant over. Back to my cave.
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If the Commodities Boom is Over, I am just a Gold Bug headed for the Windshield of LIFE
AI
