Email of the day (5)
"Just in case you missed it, Monday it was announced that the CMG Group is raising margin requirements for Silver futures contracts, the change to take place at the close of business Tuesday, April 26th.
"Makes one wonder if this rise in margin requirements (6% I believe) was the catalyst for the sell off, and if the majority of speculators who headed for the exit, were mainly the overleveraged traders who liquidated their positions for no other reason than they cannot meet the new higher capital requirements. Which begs the question, is this move really over, perhaps Mr Bernanke will help tip the scale on Wednesday? To use one of your oft used phrases...we live in interesting times.
"A similar situation occurred for gold futures contracts on March 24th with a one-day sudden sell-off on the news.
"Anyway, it would appear higher margin requirements - and the selling to square-up positions - is bending current inter-market relationships."
David Fuller's view The main catalyst, I believe, was the
parabolic acceleration to the upside, rather than the modest increase in margin
requirements which exchanges usually require when prices spike.
By the end of last week, silver (monthly, weekly & daily) had risen for 12 out of 13 weeks. That is atypical, needless to say. If we include Monday's high of nearly $50, and if silver manages to close above $46.077 this Friday, it will be 13 out of 14 weekly gains in which the price has nearly doubled.
As market historians, we know that the seemingly unprecedented or 'impossible' does occasionally occur, and our money control tactics should allow for this possibility, however remote.
However, as experienced observers of markets, which most subscribers are, what would you expect, 9 times out of 10, following an accelerated move to the upside such as we have just seen for silver?
(See also yesterday's review of precious metals.)