Thursday, May 5, 2011

Nuking Silver

As the insane CME margin hike for silver run on course, silver is playing out some of the most spectacular plunge of 29%.

Rumors are strife that bankers are suffering huge paper loss in the silver bull market. In the latest ambush, the nefarious COMEX didn't simple make one margin hike, but rather a whopping five margin increase in ten trading days.

Besides, the later margin hikes occur when silver is falling on a cliff. Henceforth, silver future is the least leverage-able. Below is taking from Jeff Nielson.

We can also demonstrate the illegitimate nature of the CME Groups actions by viewing them over the longer term. As I noted earlier, raising margin requirements acts like “the brakes” for commodity markets. However, unlike any mechanical braking device, raising margin requirements can only be done once. As you raise the amount of funds which any/all traders must post with each contract from 20% to 30% to 40%, this progression can never be repeated. Thus, in frequently and rabidly raising margin requirements for the silver sector (totally out of proportion to any other market), the CME Group is using-up its “brakes” for this market.

What happens when margin requirements reach 100%? The CME Group will have no means of any kind to restrain this market further. This means that all of these hikes in margin requirements (while silver remains far below any fair-market value) are illegitimate on a collective basis, because rather than “adding stability” to this market, the reckless managers of the Crimex exchange are wearing-out their “brakes” – much like the corrupt and intellectually bankrupt Federal Reserve has done in slashing interest rates to zero.

As precious metal rises and fiat monies falls in value, be prepare for the transition period of painful wars, depression and even shortage of material well-being. At the end of the transition, we will see the destruction of USD as well as the Anglo-bank complex.

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