Silver Drop

Invest in some good umbrella stock. Folks walkin' around the city are gonna need umbrellas to fend off the hordes of high rollers who will be pitching themselves off of building tops.

Stocks are diving? Good time to buy......

 

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This makes good sense. Seems like a sell-off/profit-taking scenario.

 

The ana show is in less than two weeks, obviously everyone is selling so they will have cash to spend at the show.

 

I call this one, "The CoinTalk Theory". I believe it comes from the Keynesian school of economics.

 

I think that the author of the article was confused between "margin requirement" and "margin calls". I heard all afternoon that margin calls were occurring, but nothing about margin requirements changing. Margin requirements reflect the value of the underlying security. Thus when the value of your holdings in a margin account, stocks, commodities,ETFs, etc. drop like they did today, you have to reduce your holding level to match the margin you have. If you still hold onto the stocks, commodities, etc. there is a margin call for cash in the account to make up the difference. The margin requirement didn't change.

As in the above scenario, say your account is the same dollar level, and they raise the margin requirement, you either come up with the additional cash to cover the % raise, or enough of your account is liquidated to cash to cover the new amount. The market may be stable.

Receiving a margin call is just the result of one's personal level of aggressive investment and is their fault under the market conditions, and comes from their broker ( someone said Interactive Brokers were caught badly and had to issue a large number of margin calls~ I guess they had a high ratio of aggressive holders.

Margin requirements such as with PM comes from the exchanges like CME to protect themselves from unequal call/put ratios.

But in the end , they cause holdings to require more cash to be injected into the account, either by cash transfers , or by selling of stock in your account. So it is not good either way if you are long, and are in a margin account.

Jim

 

Sorry, my bad. Here's at least the article about a Magin Hike with IB's announcement

[h=1]It's Baaaaaack: Interactive Brokers Just Hiked Silver Margins[/h]
Submitted by Tyler Durden on 08/03/2011 11:01 -0400

• Volatility

Here we go again...

Aug 03, 2011 10:43 EDT

NOTIFICATION - Margin Increase on Silver Derivatives

In light of recent unprecedented volatility in silver markets, the exchanges that offer trading in silver derivative contracts are increasing the margin requirements on these products. In an effort to adequately address the inherent risk resulting from this volatility, IB is increasing margin requirements on silver derivative contracts to a level exceeding that which the exchanges are implementing.

Please monitor and manage your risk accordingly.

Interactive Brokers Customer Service
​

Here we go again. IB raises Silver margins.
Go ahead and stop delaying the inevitable. The quicker they all go 100% cash only trades on silver, the quicker we proclaim they have NO MORE FIREPOWER.

Volatility? WTF. Its been basing at $33-35 for 2 months. What volatility. IB just lost my account, I suggest an immediate withdrawal of all of your funds from Interactive Brokers immediately. This is uncalled for. Now I am mad.

​

Posted by silvergoldsilver at 10:30 PM

Here's link to the about IB announcement of margin hike:
http://3.bp.blogspot.com/-R0xUmE_Pdhk/TjYP0GI6iVI/AAAAAAAAAjg/poa4I93aETo/s1600/IB.png

 

[video=youtube;OyOghZum-Io]http://www.youtube.com/watch?v=OyOghZum-Io[/video]

 

Oil was down 5% today as well. Silver is the most volatile and I would expect it to be hit the hardest. I guess it's a question of the chicken and the egg. We've seen the silver market used before to influence markets. It is certainly one of the easiest to influence. The chain is that silver price impacts gold, which impacts the dollar, which impacts everything denominated in dollars including stocks and commodities. It's all loosely interconnected to a degree.

 

http://www.www.istockanalyst.com/finance/story/5213442/a-not-so-marginal-risk-in-silver

From reading this article, it seems the Interactive Brokers are increasing their account margins at a multiple to any that CME does. If a brokerage is low on cash reserves, I could understand why they would do it either after the CME raised margins , or if IB anticipates an increase. IT is their risk and account holders can switch to a different broker if they wish. I think the drop of PM was due more to the brokerages raising their margin than the direct CME accounts.

However, It appears that once the margins settled, Gold and silver both settled in a range. I did do some PM trading near the end of the session.

 

There's been speculation for days about margin hikes and other commodities had been selling off before silver did. So there was plenty of time to protect profits.

 

Looks like it's time to make another buy, I'm still siding with the bull.

 

silver in solar panels and many other things. I think long silver is still good too.