IBs selling off commodities to raise cash?
I imagine that is what it is. Deleveraging in general, and this is the easiest and most attractive stuff to unwind, since unlike a lot of things on the book, it has a profit, and it is probably relatively less structured.
“””IBs selling off commodities to raise cash””””
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You are indeed correct about this. Hedge funds who operated on 10% cash and 90% margin until 2 days ago are dumping gold and commodities. In an effort to raise cash, investment banks have raised margin requirements on hedge funds and commodity pools. Massive margin calls along with a bounce in the US$ is the selling pressure. Gold has stabilized at about $920-$925 and the bounce in the $US Dollar Index is going to be short lived.
That’s IMO.