Wednesday, August 24, 2011

Why Gold Tanked Today: CME and Shanghai Gold Exchange Hiked Margin Requirements


Gold Tanks Most Since March 2008 ... But Only Erases Two Weeks Worth of Gains

Gold tanked today, crashing $104 points.

That is the largest one-day crash since March 2008, erasing two weeks worth of gains.

Margin Requirements Hiked

Zero Hedge explains why gold tanked - margin requirements were hiked sky-high by two major exchanges:

Two weeks after the CME hiked gold margins by 22%, and two days after the Shanghai Gold Exchange sent them higher by 26%, here comes the CME, as we expected, with another 26% gold margin hike (previously: "Should we expect 3 more SGE margin hikes in the next 2 weeks? Or will the CME rightfully accept the baton and do everything in its power to dent the parabolic rise in the alternative reserve currency? We are cautiously looking at what the CME will do today and will advise readers."). And now we know that this particular margin hike was leaked well in advance, and explains the entire $100 plunge in gold today.

CME Gold 8.24

The New York Times has previously confirmed that increased margin requirements by CME can drive down precious metal prices.


3 comments:

  1. And I thought it was because they had just found some 300 odd tons of this stuff lying around in some North African country just waiting for some "liberating" force to come get it...

    ReplyDelete
  2. Raising margins on gold prices will make it more stable and less subject to shakeouts

    ReplyDelete
  3. Forex margin accounts allow currency traders to control a large amount of currency with only a small deposit This gives great potential for profit, and lets everyone enjoy the fun of currency trading.
    You can learn more about What is margin in Commonforex.com guide and FAQ.
    Good luck!

    ReplyDelete

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