Riding The Gravy Train

Beating the markets is fun and profitable. This is how we do it.

Monday, February 13, 2012

CME Cuts Commodity Margins

Effective tonight, margin requirements for gold, silver, and virtually all other commodities will drop significantly. Click this text to read the announcement in .pdf form.

Many think it's bullish, but we're unconcerned with respect to our silver short. We already have a large profit that can't be taken away, and a tight stop on the current position.

It's comical to us that the internet is not buzzing with the usual ill-informed outrage and ridiculous conspiracy theories that normally accompany margin changes for gold and silver. Of course, as is typical of these types of people, they've got no problem as long as they think a given action benefits them. It'll also be typical when the top comes and they're too busy squawking and finger-pointing to take responsibility for making the proper trade.

The truth is they've nothing legitimate to complain about when margins are cut, and nothing to cheer about now. If gold, silver, and other commodities do rise in the wake of this change, it's likely more coincidental than causal, and it just makes for a bigger fall when the time comes for everyone on margin to liquidate. If we don't make more profits shorting silver now, we almost certainly will at that time.


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