It's Baaaaaack: Interactive Brokers Just Hiked Silver Margins!

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In light of recent unprecedented volatility in silver markets, the exchanges that offer trading in silver derivative contracts are increasing the margin requirements on these products. In an effort to adequately address the inherent risk resulting from this volatility, IB is increasing margin requirements on silver derivative contracts to a level exceeding that which the exchanges are implementing.

The silver market has been manipulated for decades, ever since the gov’t took out the Hunt Brothers 30 years ago. Since two huge banks controlled 90+% of the trades, the price has been suppressed and subject to huge swings up and down. By hiking margin requirements, the amount of leverage a trader can have is reduced and thus the swings in prices should be less. The fraudster banks and the exchange always resort to raising margin requirements whenever they start to lose control of the prices.

Now, for the first time, the Anglo-American monopoly over silver is being challenged by the formation of an alternate exchange in Asia...............

This is the news that I have been waiting for and is probably the reason why silver has been so strong the past couple of days. The HKME is starting its silver contract this Friday July 22nd! This officially breaks the Anglo American monopoly on silver. This will be the first time that Asians can buy and take future delivery of silver in Asia. No longer can the CME raise margins close to 100% in 8 days. (Then refuses to lower them despite a 30%+ drop in 5 days.) The extended hours should also stop the 10 am smack down since traders can now access the HKME.

The silver shorts should be fearing the hundreds of millions of Asians that will be entering this small market. China alone has Trillions of dollars and they could drop .01% of that money into silver and explode silver beyond the control of the Anglo American Elite. The HKME contracts are also a lot smaller,only 1,000 ounces versus 5,000 ounce contracts. I am reaching out to see if I can get more information like if JP Morgue or HSBC has any ownership in this exchange. Stay tuned,but this new demand for real physical silver is something to be very happy about.

HKMEx to Launch Silver Futures Contract
New contract to take advantage of surge in global demand for silver
HONG KONG,18 July,2011 – The Hong Kong Mercantile Exchange (“HKMEx”),China’s international commodity marketplace,announces today the launch of a US-dollar silver futures contract to begin trading on 22 July,2011,following the successful introduction of its gold futures two months ago.

The new contract,launched on the back of surging global demand for silver,will trade in units of 1,000 troy ounces and be delivered in Hong Kong. Trading will last for 15 hours every day,Monday to Friday,beginning at 8am and ending at 11pm Hong Kong time,with a 30-minute pre-opening auction starting at 7:30am. Clearing and settlement of contracts will be conducted through the independent clearing house LCH.Clearnet.

Between 2008 and 2010,demand for silver rose 67% in China and 17% globally to reach 7,495 tons and 32,870 tons respectively,according to market data compiled by HKMEx. China alone,accounted for nearly 23% of the world’s silver consumption last year,reflecting its importance as a global manufacturing powerhouse.

“The new contract will enable buyers and sellers in China to trade effectively with their counterparts across the world,while at the same time,allowing investors to gain exposure to silver price movements and broaden their investment portfolio,” said HKMEx president Albert Helmig.

Sure, Terry. When one trades commodity futures, one does NOT put up 100% of the value of the futures contract traded. For example, nearby month silver futures are trading at $41.98/oz. as I type this. The silver futures contract that is actively traded on the COMEX/CME exchange is 5,000 troy ounces, and is thus worth, right this minute, $209,900. A futures trader is required by the exchange to put up only $21,600 in order to buy or sell a contract of COMEX silver. This $21,600 acts as a performance bond that the trader will be responsible for any losses incurred while he holds the silver contract, and is usually (if imprecisely) referred to as "margin" or "margin requirement".

However, many brokerages do in fact require MORE than the exchange requirement. This article/announcement is an acknowledgment that a particular brokerage has increased its **internal** margin requirement for silver traders. As a general thing, such an increase in margin requirement has the short-term effect of causing under- or poorly capitalised traders to liquidate their positions and leave the market under consideration, in this case of course, silver.

Hope this explanation is of some use to you, and good trading!

Terry, What SAJ just told you is correct.

Also, Margin hikers aren’t worried about trends. Even though Gold and Silver are trending the same way.

You must observe this -— Silver is much more volatile than Gold and has the ability to blow out and destroy more underfunded traders.

Silver is about 2 times more volatile then gold and has about 2.8x more margin requirement.

I remember just a few months ago when Silver was approaching $50.00/oz. After most Brokers announced a hike in Margine requirements, Silver dropped quickly back to as low as $33.00/oz before slowly climbing back once again to something like near $40.00/oz today.

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