Cme has raised margins for crude oil by 25% was announced tonight. I am expecting this to have a negative effect on all the big commodities over the next few days. " Some brilliant Chicago-based exchange apparatchik just ask himself this simple question: "If it worked so well with silver, why not do it with crude?" The answer is here: the CME, as we predicted last week, just hiked initial and maintenance margins on Crude and Brent by 25%, as well as FX, and other petrochemicals. And, oh yes, this is prudent risk management, because while the CME kept margins flat when WTI was at $115, the massive spike from $97 to $102 is unbearably destabilizing. At this point one can only stand back and watch as the CME proceeds with hike after hike, in an absolute vacuum from the administration, which certainly had nothing to do with this decision. And really who cares: free capital markets died on March 18, 2009."
The author ( the article is on several bull bullion sites) doesn't understand or doesn't want to understand that there is a difference between volatility and pricing. Increases of margin requirements decrease volatility ( speculation most often). It reduces how much of the market a player can control within a certain cost to the player. Sure, bulls would like to see all commodities increase rampantly, but margin increases tighten both sides to decrease moves to both upside and downside, making a more stable progression. So margin increases also will help prevent suicide causing crashes. IMO, Jim
I'm all for making strategic commodities tougher for any person or group to control. We're all "squeezed" so a few greedy people with capital can make fortunes. It's actually lawful and the obligation of the government (We the People) to stop such activities.
