Silver Investors Dump Bets After Exchange Boosts Margins 84%

The biggest slump for silver since 1983 may not be over as the Comex exchange in New York makes it 84 percent more expensive for speculators to trade the metal, triggering an exit by investors.

The minimum amount of cash that must be deposited when borrowing from brokers to open new positions will rise to $21,600 per contract after May 9, CME Group Ltd., Comex’s owner, said yesterday. That’s up from $11,745 two weeks ago. Open interest in futures has tumbled about 15 percent since the exchange began raising margin requirements on April 25.

http://www.bloomberg.com/news/2011-05-05/silver-investors-dump-futures-as-comex-boosts-speculator-trading-costs-84-.html

COMEX Silver Firefight and an Exiting Obstacle at the CFTC!!!

The guns are BLAZING at the COMEX in the Silver pits.

The CME Group who owns the COMEX is struggling in the fight of their lives and have increased silver margins for the third time in two weeks!

http://www.cmegroup.com/tools-information/lookups/advisories/clearing/files/Chadv11-156.pdf

The COMEX is a Self Regulating Organization (SRO) so they are supposed to be watching over those late night trades in the after hours silver market when the latest smash began. They are desperately trying to help that massive silver short extract itself from their troubled short position.

Both the CME Group and that BIG SHORT are in MASSIVE TROUBLE if...I mean when there is a default on the COMEX Silver contracts. They are cheating as best they can but will lose the battle in silver. 

Now the REALLY good news that's circulating is the departure of CFTC Commissioner Michael Dunn at the end of May. I'm not saying Dunn is in bed with the Bad Guys but I'm not so sure he'd even know what that means. He is by far the weak intellectual link on the Commission and being an appointee of Bush you can bet he is told when to stand up, sit down and roll over. Will a newly appointed Democrat cast the third and deciding vote to implement the new rules and bring the hammer down on JP Morgan and Friends?

Time will tell but watch for Senator Feinstein's involvement in choosing his replacement as she has placed both Gensler and Chilton in their seats and one more will give the Good Guys a majority vote.

NOTHING IS MORE IMPORTANT FOR OUR CAMP AT THE MOMENT THAN REPLACING DUNN WITH SOMEONE WHO WILL DO THEIR JOB AT THE CFTC! 

So that's where we are and brace yourself because it's going to get VERY UGLY OUT THERE!

Bix Weir

www.RoadtoRoota.com

PM Investing: Expect Fireworks in Silver

MINYANVILLE:

The ongoing drama at the silver COMEX should reach a climax this week. Just to quickly review, for the month of March (a silver delivery month) 1,383 contract holders deposited enough cash in their COMEX accounts to fully fund the purchase of 8.9 million ounces of silver. As of Thursday, March 24, there were still 632 futures contracts open, meaning 3.16 million ounces are still awaiting delivery even though the month is quickly drawing to a close.

FULL STORY: http://www.minyanville.com/investing/articles/silver-silver-price-comex-comex-account/3/28/2011/id/33607

Silver ETF (SLV) Bar List Analysis

Silver ETF (SLV) Bar List Analysis

COMEX Deliverability

This week there was a very interesting development in our SLV bar list analysis. This week, about 6Moz of silver was withdrawn from SLV, more than any week since we started analyzing the lists in early July.
What few people realize, though, is that there is a significant difference between the bars removed last week, versus other withdrawals since July. The 5.8Moz removed in December, that seemed like it was going to COMEX, most likely was not. This 6.3Moz, though, appears to be mostly headed to COMEX, probably withdrawn by JPM. Let me explain.

Most of the silver that has been added to SLV since the beginning of July has been from Chinese and Russian refineries (we suspect that one of the SLV AP's has contracts with those refiners). That works fine, since these refiners are LBMA Good Delivery approved. And most of the silver that has been removed from SLV since July has been from these refiners (which makes sense, as it would be awkward to remove silver from the back of vaults, that had been put in there long ago). The problem, though, is that the Chinese and Russian refiners are not on the COMEX list of approved refiners.

For the week ending 03 Dec 2010, when 5.8Moz was removed, roughly 90% of that silver was from those non-COMEX-approved refiners (674,010oz was from Nippon Mining Japan, which is COMEX approved; Nippon Mining Japan has been supplying SLV with silver recently as well). That makes perfect sense, as they were some of the bars most recently added to SLV. However, these bars cannot be used to satisfy COMEX short positions, as they are not from COMEX approved refiners. In order for them to become COMEX approved, they would have to be melted and re-made by an approved refiner, and shipped from London to the U.S. That's a lot of expense and time to get the bars into COMEX.

However, for the week ending 14 Jan 2011, when 6.3Moz was removed from SLV, about 95% of the silver came from COMEX-approved refiners -- and most of those bars were not added to SLV in the past 6 months. It came from 2 separate vaults (the 2 JPM vaults), so it isn't likely that there just happened to be some pallets of older silver sitting nearby in one of the vaults. It definitely looks like the AP that removed the 6.3Moz this past week cherry picked the bars, making sure to get ones from COMEX-approved refiners.

We believe the AP involved in this was JPM. As custodian, they would have an easy time cherry-picking bars without anyone noticing (as far as we know, there is nothing preventing them from doing so). And all the bars removed were from the 2 JPM vaults (there are 3 other vaults, 2 run by Brinks, and one run by Via Mat). And they could do this without having to ask anyone for permission (unlike the other APs, who would have to specifically request the bars, and convince JPM as custodian to let them have the bars they want).

So if we see about 6Moz added to COMEX warehouses very soon, we'll know why.

CME Raises Gold Futures Margins By 6%, Hikes Silver Margins For Second Time In Under A Week

CME Raises Gold Futures Margins By 6%, Hikes Silver Margins For Second Time In Under A Week

COMEX Raises Gold and Silver Margin Requirements, Validates Bull Market Strength

The COMEX has raised the margin requirements for gold and silverfutures contracts. Additionally, gold is trading in minor backwardation but this is probably not serious. The margin requirement rise validates the strength of the bull market. There will likely be additional margin requirement increases during this upleg.

MARGIN REQUIREMENT
A margin, or performance bond, is collateral that the holder of a position in futures contracts, securities or options has to deposit to cover credit risk. The use of margin greatly amplifies either the gain or loss with a position. The higher the margin requirement the more capital is required to control the same amount of the underlying asset.

One consequence that can result from using margin to purchase assets is a margin call. If the margin posted in the margin account is below the minimum margin requirement then the broker or exchange issues a margin call. The investor has to either increase the margin deposited or close the position and can be accomplished by selling the securities, options or futures if they are long and by buying them back if they are short.

If they do not do any of this the broker can sell his securities to meet the margin call. If the exchange is unsuccessful in executing margin calls and receiving enough capital then the exchange could fail.

The COMEX has recently raised the margin requirements for gold and silver contracts...

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