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<p>[QUOTE=&quot;hontonai, post: 1168424, member: 4703&quot;]&quot;Buying on margin&quot; means buying something with a partial payment only.&nbsp; In the stock and commodity markets there are specific margin requirements for various purchases.&nbsp; The lower the margin rate, the more someone can buy with the same investment amount.&nbsp; For example, if the margin rate is 50% and silver is at $25, then for an investment of $12,500 you can purchase 1000 ounces of silver.&nbsp; If the price of silver then falls to $24, you would face a &quot;margin call&quot; of $500, in order to bring your debt down to the $12,000 maximum for 1000 ounces of $24 silver.</p><p><br /></p><p>The basic theory is that you are betting on a price increase, and when you sell, say at $30, your profit is greater because you had more ounces than if you had been required to put up the full price of your purchase in the first instance.&nbsp; Brokers, of course, charge interest on margin accounts.</p><p><br /></p><p>The reason a &quot;margin hike&quot; or increase in the margin rate depresses the price is simply that it compels the buyer to come up with more money for the same quantity.&nbsp; That means demand drops, and in a free market that change in the supply/demand situation means lower price.</p><p><br /></p><p>It was a margin call of some $100-million which brought down the Hunt Brothers a little more than 30 years ago when their attempts to corner the market collapsed after it pushed silver to ~$50!</p><p><br /></p><p>Probably my college econ professor explained it better than that, but it&#039;s the best I can do more than half a century later![/QUOTE]</p><p><br /></p>

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