-- Posted 14 April, 2006 | | Source: SilverSeek.com
I went back to 2000 to obtain the NYMEX silver futures margin requirements history. They are indicated on the following chart. London PM price fixings for the corresponding dates are:
04/27/00 - $4.98
01/08/04 - $6.20
02/19/04 - $6.62
04/06/04 - $8.14
09/16/05 - $7.08 << decrease
11/28/05 - $8.27
01/10/06 - $9.04
01/27/06 - $9.69
03/07/06- $10.00
04/04/06-$11.75
04/12/06-$12.75
As anyone can see the pace and frequency of increases has become compressed now with five coming in just the past 4 months. A sense of urgency now prevails. For the years 2000 thru 2005 there were but five increases for this entire 60 month period. One indicated decrease in September '05....isn't that about the time silver began its serious liftoff? Gold futures got a margin decrease from $2,025 to $1,350 on 5/13/05 which could have given underlying support to gold's bull run beginning in early May '05. As you can see they gave no help to silver in the period 2000 thru 2004, content and gleeful that it drifted lower.
So, what does all this mean to us silver bugs?
In my opinion it reveals a sinister and self-serving mechanism is employed to serve the special banking interests. Margin decreases and increases act upon commodities as a collorary to the Fed Funds rate as another tool to expand and contract credit. Margins are able to manipulate the availability and supply of goods to the consumer.
Following the Katrina debacle futures margins were increased dramatically for the energy complex, notably natural gas. By doing so the government crushed prices, but more important
restricted the necessary investment sources to ensure adequate supplies in the future. This same meddling mindset currently prevails for silver. Margin increases will suppress the exploration for new mines and development. In effect, they are aggravating an already critical shortage of physical silver. During Katrina (but not 9/11) a
force majeure was declared for existing energy contracts. Will this same justified escape hatch be twisted and used to compensate the bankers when the derivative bomb detonates? Yes.
You may have noticed, but in the same
CBOT margin increase announcement on silver there were changes to some of the "soft", ie, agricultural commodities. I am not a futures expert by any means, but it appears they are lowering the margins for selected items. I could guess that it's a maneuver to attract hedge fund and investor funds away from precious metals into other areas. Whatever their motives, we should all be outraged that they are meddling and trying to manage our food supplies. People will turn to collectibles of all sorts for haven. In the 70s/80s it was comic books, rare coins, and baseball cards. Antiques and art soared. Real estate plunged as interest rates went higher and higher.
Slamming silver now will simply delay the day of reckoning - just as another hurricane will wreak havoc on our energy supplies again - more silver will not be brought into the supply chain. Mining operating expenses will not be counterbalanced by a predictable and rising price for their gold or silver. They'll know that with each bull cycle move the banking cartel is there ready to knock it back down. How does a miner work his plan with a regulatory environment like this? We are being forced to live and cope with perpetual crises not of our own making.
This is how paper controls the metals, but at some point their system will break down. In an environment which is closing in on hyperinflation our financial markets will be overcome. Their methods will cause shortages in critical commodities. No amount of margin will be high enough to halt silver's explosion. They may have to shut down their paper market, but physical will be nearly unobtainable at any price in dollars. Price controls will be tried again. Some of you will recall your experiences of the '70s when brown supermarket bags disappeared along with, of all things - toilet paper!
So, that's what rising margin requirements on silver futures mean; the real McCoy, certified and genuine silver bugs have the real thing.
And toilet paper.
- - CV
-- Posted 14 April, 2006 | |
