Discussion in 'Bullion Investing' started by Eminem, Apr 18, 2014.
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Homie I said it once and I says it 'gain, you do not need to use the word 'dollas' if you have a '$' sign already. A homie in my neighborhood got yelled at by the pole-eese for throwing up that many money signs!
All sarcasm aside......I listened to the jive that was coming from the bearish types when silver was at $30 and rising......"people will sell when it hits $35..........When it hits $40, there will be a mass exodus from silver. $45 is almost unprecedented......look for it to fall should it hit the $45 mark." Yet despite the pessimism, silver rose until Comex put their foot down. I`m not going to rehash the debate as to who might have made the request to them to do so, as it`s all water under the bridge now, but as for me, I`ll gladly keep buying it at its current levels.
Let it hit $15.......I`ll be on that like white on rice, fo real G.
It wasn't the PRICE that Comex reacted to, it was the level of leverage.
Comex does not CARE what prices commodities trade at. Why would they? They make money on the trades, they only want more "action" like a vegas casino. However, they are also the "house". They guarantee settlements. So, they were looking at the market going up, (increasing their potential exposure), and the amount of leverage going up, (also increasing their exposure), and adjusted their margin requirements. If there truly was demand for silver at that price, real demand, then margin requirements would not matter. If people physically wanted the silver then margins are irrelevant. Since the market reacted the way it did, its proof the run up was all from speculators and not real demand.
The CME has done this repeatedly, for decades, with multitudes of commodities. Its common practice, yet in the PM world its some huge damn conspiracy.
Btw, "listen to the jive of the bearish types when silver was $30", umm, were we right? Is silver $50 today, or less than $20? If you listened to all of our "jive", then you made a whole bunch of money, right? Or, in other words, you sold your silver at $30 and can buy 50% more today with that same money. You're welcome.
Medoraman, layin' the smackdown on all you fools! Word. Or whatever.
"But on January 7, 1980, in response to the Hunts' accumulation, the exchange rules regarding leverage were changed, when COMEX adopted "Silver Rule 7" placing heavy restrictions on the purchase of commodities on margin."
Ofc people can come up with excuses, but the fact is that if the government or mega-banks decide its in their best interest to either increase or decrease the price of precious metals, they can heavily affect the price through various means.
The article states that the increased margin rule was put into effect because of Hunt's huge margin purchases. That is what I am saying. If Comex starts to worry the market is too erratic, and too much is being bought on margin, then the CME is at risk of having to replace this money if the market drops sharply. This is what they guarantee the markets, but they NEVER want to have to do it. So they manage margin requirements in order to manage their risk of having to do this.
So, where in this does "mega-banks" and "governments" come in? Nowhere. Why don't you research the 100 other times the CME has raised margin requirements on things OTHER than PM? Pointing out one or two instances where it happened to PM, and conveniently not explaining it happens regularly in all commodity markets, is misleading in my eyes. This misleading selection of facts that is self serving is the bread and butter of pro and anti pm commentators.
Just another example that people can quote FACTS all day long, (yes, this margin requirement change happened), but it does not mean you UNDERSTAND what it means. To do that, one must have KNOWLEDGE how the entire commodit market works.
Its my biggest fear of the internet age. Way too many facts, way too little knowledge to properly understand the facts and put them in context.
leverage were changed, when COMEX adopted "Silver Rule 7" placing heavy restrictions on the purchase of commodities on margin."
Your quote is true. Now read this also
You can see that the CME tried to fulfill their responsibility under the preceeding margin requirements, but Hunts , possibly collaborating with Saudi and other foreign concerns didn't play fair ( IMO ) and was forced to change the number of contracts that could be held on margin.
I know that some people believe it was just another conspiracy to keep bullionists down, but it was 3 or so bullionists trying to make multimillions quickly. The Hunts tried the same process with Water in southern California, and the Feds stepped in and stopped it. It was their MO.
"but the fact is that if the government or mega-banks decide its in their best interest to either increase or decrease the price of precious metals, they can heavily affect the price through various means."
Any person group of people or company with access to trading futures and a few billion in funds can readily change ( either direction) the price of any stock or commodity, with or without assistance. What prevents this from occurring is limitations with margin. You should notice that the Rule 7 mentioned by you only limits the number of contracts under margin, not if originally purchased for delivery. So the Hunts could have continued buying physical silver contracts if they were just stacking, but they were not.
When it does drop to $15/ounce, please, please don't come out with a Slim Shady Re-mix like: "Will the real Silver Stackers please stock up". I don't want anyone else to know and buy, buy, buy like I will. Thank you Homie.
Is this really such a stretch to believe???? I mean it would not be the first time a salesman was less than truthful. I mean think it through guys, they say they hate paper dollars but they were very happy to have you part with yours and take every last one you sent them. The conspiracy was not "the man" keeping prices down, the conspiracy was the unscrupulous convincing you that it was "the man" that was hosing you but, it was actually them.
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