Metals - Gold, Silver, etc.

[shy]

Kitco's

All metal quotes    http://www.kitco.com/market/
Live & Historical Charts & Data   http://www.kitco.com/charts/

[999]

Heres an interesting chart which I have been making for 2 years.  It shows the ratio between the cost of gold to silver.  The webbots predicted that silver would uncouple from gold, and silver would take off.
Look at the curve, and thats exactly what has been happening.
The horizontal scale is days since Jan 1 2009, so the chart covers the last two years.

[999]

On November 9, the price of silver dropped $3 in about 3 hours.  This is evidence of massive manipulation.  This has been done before by changing the trading margins.  Big investors buy and sell pms on margin, which means they put up only a percentage of the cost.  If investors buy $1 million worth of silver today on 20% margin today, the investor only has to put up $200,000.  If the the SEC changes the margin requirements to 25% tomorrow, the investor has to come up with an additional $50,000 OR sell off enough of the silver to cover the margin call.  The selloff to cover margin calls causes the price to drop quickly and dramatically which causes another round of margin calls.  The SEC did this to the Hunt brothers back in the '80s, and crashed the silver market and the Hunt brothers (Nelson and Bunker Hunt) overnight.

[thirtyhz]

Excellent explanation 999, and thanks.

I have a question:

Are we certain the market manipulation is coming from the traders.
Looks like the SEC can trash the market just as quickly.

 

[999]

The only thing traders can do is buy and sell.  Of course the big guys like banks have a lot more influence than little guys who buy 100 coins.  Buying a couple hundred ounces of silver has no more effect on the market than pissing in the sea raises sea level.

But the exchanges like COMEX can change their margin requirements whenever they want.  I think they can't go below whatever the SEC sets, but they do have some latitude, and therefore they have a lot of influence with nothing but a stroke of the pen.  Brokerage houses can and do manipulate the market this way.  He who makes up the rules stands a good chance of winning the game.

http://online.wsj.com/article/SB10001424052748704804504575606892541865722.html

Of course, my suspicious mind makes me ask who or what may have influenced COMEX to change the rules.

[Mizar]

Good posts 999.
M