I think they see a COMEX default on the radar
derryb
Posts: 36,825 ✭✭✭✭✭
Futures merchant becomes first to cease margin trading in gold or silver
Email to customers:
"Crossland LLC is requiring all customers trading the precious metals, more specifically Gold and Silver, to be margined at 100% of initial for intraday trading. Current margin for Gold is $7040 and for Silver is $12375. If it is the customers intention to trade the above products, it is recommended that you keep a minimum of $10,000 in your account at all times to trade Gold and a minimum of $15,000 to trade Silver."
I disagree with ZH on the reason. I believe Crossland has determined the risk of being left holding the bag in a COMEX default has reached the breaking point. Great risk anaylsis and response by Crossland in protecting itself and its customers.
If this spreads to other merchants it may very well be a temporary drag on spot prices. It should however reduce the amount of fractional shorting by the big players. An end to all fractional futures trading in PMs could, in the long run, be a very good thing to price discovery. Can't wait to see CME's response.
Email to customers:
"Crossland LLC is requiring all customers trading the precious metals, more specifically Gold and Silver, to be margined at 100% of initial for intraday trading. Current margin for Gold is $7040 and for Silver is $12375. If it is the customers intention to trade the above products, it is recommended that you keep a minimum of $10,000 in your account at all times to trade Gold and a minimum of $15,000 to trade Silver."
I disagree with ZH on the reason. I believe Crossland has determined the risk of being left holding the bag in a COMEX default has reached the breaking point. Great risk anaylsis and response by Crossland in protecting itself and its customers.
If this spreads to other merchants it may very well be a temporary drag on spot prices. It should however reduce the amount of fractional shorting by the big players. An end to all fractional futures trading in PMs could, in the long run, be a very good thing to price discovery. Can't wait to see CME's response.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
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Comments
<< <i>But wasn't COMEX supposed to have defaulted last week
Last minute slam to prices saved them from a run on the vault.
Comex Gold Default? Here's What Not To Watch
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
If this is the amount of money one has for trading commodities, then they should not be trading anything. This would be characterized as an unsophisticated investor and does not belong in the market. Or if they wish to play, they should be prepared to lose all and not blame the big bad banksters when it happens.
Knowledge is the enemy of fear
<< <i>it is recommended that you keep a minimum of $10,000 in your account at all times to trade Gold and a minimum of $15,000 to trade Silver
If this is the amount of money one has for trading commodities, then they should not be trading anything. This would be characterized as an unsophisticated investor and does not belong in the market. Or if they wish to play, they should be prepared to lose all and not blame the big bad banksters when it happens. >>
I see the word "minimum," did you?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Unfortunately, these minimum(ers) usually the quickest to cry foul. If it was up to me the minimum would be increased 10x.
I think the jist of the article is to rid the market of those mentioned above.
Knowledge is the enemy of fear
<< <i>I'll repeat what I said. If your account is minimum then you should not be trading and/or expect to lose everything.
Unfortunately, these minimum(ers) usually the quickest to cry foul. If it was up to me the minimum would be increased 10x.
I think the jist of the article is to rid the market of those mentioned above. >>
I think the jist of the recommendation is to keep a minimum cash balance in addition to any futures the account holder has in his account.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I agree. I would love to know at what price gold and silver would be valued if there was no paper trading.
Knowledge is the enemy of fear
All of us that buy physical have become dependent on the spot prices. Prices that are just balls of yarn being batted around by the commodity traders . Up down sideways with no relation to actual demand or world events.
Switch to 100% funded trading and only producers and users will trade and maybe we will see what its really worth.
Crossland LLC has to post collateral
with Comex to back up Crossland's positions. Comex has to watch Crossland's net positions in
gold and silver, not the individual positions.
For instance, if Crossland has long 1000 contracts of gold and short 950 contracts of gold
the net Crossland position with Comex is long 50 contracts. That is what Comex has to
monitor.
If Crossland has a 50 contract long day trader (day traders have lower margin) and gold declines $73,
5%, that trader has zero equity (or less as a day trader). In that example, Crossland
would be flat with Comex: long 950 - short 950.
Crossland would be hurt but Comex would not.
<< <i>An end to all fractional futures trading in PMs could, in the long run, be a very good thing to price discovery.
I agree. I would love to know at what price gold and silver would be valued if there was no paper trading. >>
Wouldn't the loss of ability to hedge with futures cause producers/miners to raise their prices?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Comex is part of CME, a $20 billion company. CME is very solid.
Crossland LLC has to post collateral
with Comex to back up Crossland's positions. Comex has to watch Crossland's net positions in
gold and silver, not the individual positions.
For instance, if Crossland has long 1000 contracts of gold and short 950 contracts of gold
the net Crossland position with Comex is long 50 contracts. That is what Comex has to
monitor.
If Crossland has a 50 contract long day trader (day traders have lower margin) and gold declines $73,
5%, that trader has zero equity (or less as a day trader). In that example, Crossland
would be flat with Comex: long 950 - short 950.
Crossland would be hurt but Comex would not. >>
If the failue of Crossland and similar brokers could not hurt COMEX, why is it necessary for COMEX to monitor their net positions?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>An end to all fractional futures trading in PMs could, in the long run, be a very good thing to price discovery.
I agree. I would love to know at what price gold and silver would be valued if there was no paper trading. >>
Wouldn't the loss of ability to hedge with futures cause producers/miners to raise their prices? >>
Probably not, but they may curb production. It would be up to the market to dictate pricing, not a cartel of mining companies
Knowledge is the enemy of fear
<< <i>
<< <i>
<< <i>An end to all fractional futures trading in PMs could, in the long run, be a very good thing to price discovery.
I agree. I would love to know at what price gold and silver would be valued if there was no paper trading. >>
Wouldn't the loss of ability to hedge with futures cause producers/miners to raise their prices? >>
Probably not, but they may curb production. It would be up to the market to dictate pricing, not a cartel of mining companies >>
Is it not very possible that if a cartel of mining companies can dictate price that a cartel of bankers could dictate price? And if they have motive is it not possible that they are doing it?
Too bad that diamond futures aren't traded on the commodities exchange. If they were I might just be able to afford a nice gift for the wifey.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
cartel of mining companies can dictate price
cartel of bankers could dictate price
Knowledge is the enemy of fear
<< <i>What would be the incentive of each?
cartel of mining companies can dictate price
cartel of bankers could dictate price >>
Profits, of course. You don't think the JPM and other big metal players aren't raking in profits, especially if they control price?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>What would be the incentive of each?
cartel of mining companies can dictate price
cartel of bankers could dictate price >>
Profits, of course. You don't think the JPM and other big metal players aren't raking in profits, especially if they control price? >>
Of course they make money. But for the miners it would be their sole source of income. Banksters can make money in other ventures. But arent the banksters, according to so many, dictating the price to prevent the world from imploding, or to steal gold from the sheeple, or to create a myriad of other illusions?
The banks are going to make money where they can, and nothing creates opportunity greater than a sense of fear. So far the bullion dealers have played into their hands perfectly, much to the detriment of those seeking comfort. Blame should be placed at the dealers, not the bankers. A bank has many avenues for generating profits, the dealers only one.
Knowledge is the enemy of fear
<< <i>
<< <i>
<< <i>What would be the incentive of each?
cartel of mining companies can dictate price
cartel of bankers could dictate price >>
Profits, of course. You don't think the JPM and other big metal players aren't raking in profits, especially if they control price? >>
Of course they make money. But for the miners it would be their sole source of income. Banksters can make money in other ventures. But arent the banksters, according to so many, dictating the price to prevent the world from imploding, or to steal gold from the sheeple, or to create a myriad of other illusions?
The banks are going to make money where they can, and nothing creates opportunity greater than a sense of fear. So far the bullion dealers have played into their hands perfectly, much to the detriment of those seeking comfort. Blame should be placed at the dealers, not the bankers. A bank has many avenues for generating profits, the dealers only one. >>
Herein lies the problem - the naked shorting by the bankers, particularly JPM, in the metals futures market is illegal. When one or more persons conspire to break the law you have by definition, conspiracy.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Where is the evidence of this? Is it really "illegal"?
I trade futures and can open a short position in silver. I have no intention of ever delivering silver. Why cant JPM?
If it was so detrimental to the price of silver, then why is silver at $24 when it was $4 just 10 years ago? Seems like a decent return especially vs other asset classes.
Knowledge is the enemy of fear
<< <i>If it was so detrimental to the price of silver, then why is silver at $24 when it was $4 just 10 years ago? >>
I know, I know, $48 to $24 had nothing to do with naked shorting.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
A retail customer selling short is completely different than a market maker selling short.
Knowledge is the enemy of fear
When Goldman comes in and goes short they are speculating. The Hunt brothers
were speculators. When Warren Buffett bought a lot of silver contracts years ago
he was a speculator. Anyone with $10,000 can do the same.
It is a very efficient way to play metals. High leverage, very low spreads, miniscule
commissions.
There are miners who sell futures to hedge and jewelry manufacturers who
buy futures to hedge, but it is speculators setting the price every day.
Most speculators look at things differently than the members of this forum. They pay very close
attention to charts, changes in open interest, investor sentiment, etc. They have a very short term
time frame. If gold declines $75, they can lose all their equity in an account. They are players.
Long term is a week.
That is neither a good thing or a bad thing, just the way it is.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey