Those Slippery Skunks

It appears that the paper promoting masters of the commodity exchange are not taking a liking to the gold shorts being creamed by the unrelenting move of the precious metal lately.

Their solution - raise margin requirements.

From Marketwatch:

U.S. exchange operator CME Group CME +0.82% said late Wednesday it is raising the margin requirements for trade in a wide range of gold products, effective Thursday. The speculative margin requirement for a new position in Comex 100 gold futures will rise to $7,425 from $6,075, or to $5,500 from $4,500 for existing "current maintenance" margins.

Whether this will be effective is an open question.

Certainly the charts indicate that gold is moving toward overbought conditions.

But the fear gauge VIX hit 48 yesterday, so there might still be some upward movement of the precious metal before consolidation occurs.

In the end, the commodities exchange is unwittingly doing all of the gold bulls a favor. As margins are raised, the leverage in the system decreases and gradually reduces the ability to manipulate the market by large players.


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