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To: Terry Mross
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!

9 posted on 08/03/2011 10:25:44 AM PDT by SAJ (Zerobama -- a phony and a prick, therefore a dildo)
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To: SAJ

That explains it. Thanks.


10 posted on 08/03/2011 10:35:46 AM PDT by Terry Mross (I'll only vote for a SECOND party.)
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To: SAJ

I bought mine at $17.00 (physical). Needless to say I’m pleased.


11 posted on 08/03/2011 10:59:31 AM PDT by traderrob6
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