This article was originally printed in the latest issue of Numismatic News.
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Gold crossed the $1,400 threshold like it didn’t exist and silver popped over $29, then quickly retreated nearly $3 when the CME suddenly raised margin requirements for futures contracts by about 30 percent.
In plain English; The Chicago Mercantile Exchange raised the margin on silver contracts from $5,000 to $6,500 without warning.
Collecting and Investing Strategies for U.S. Gold Coins
The result was to shake up the active traders and they scrambled to raise more capital within 24 hours or get sold out. This is the same tactic and similar timing used in 1979 when markets were running wild.
Now it is logical to have higher margins as prices and risk escalate, but why not index it to the price and market activity and let the market set margin requirements at a predetermined level? I believe the answer is simple: it takes away a tool that allows those in control to cool down a hot market, or attempt to boost a quiet market. I can’t prove it, but I would bet my bottom dollar that shortly before that announcement some well connected people went short made a lot of money.
Gold is up $50 from last week, silver $2 and platinum $30. Gold type coins seem to have finished contracting their premiums as bullion has pushed closer to the eagle and double eagle prices. It seems nobody likes EF-BU coins at these levels. Don’t be stupid if you like gold. What makes more sense, a 100-year-old collectible coin or a newer gold bullion item at about the same premium over melt? At a big show you can probably find the old guy cheaper. Circulated silver dollars are cheap with dealer bids barely over melt.