Margin requirements explained!

Margin requirement in silver: you have to put $16,200 down to bet on 5000 oz of silver. So $16,200 controls $200,000 of silver.

Raising the margin requirement means you have to put more money down as collateral before you can bet on silver.

If silver falls more than 8%, then a "margin call" happens and you have to cough up more dough or close the contract and your $16,200 is gone:
http://www.youtube.com/watch?v=RAKsMnAM8vk

Category:

Education

Tags:

• Silver
• margin
• requirement

[itsonelouder1]

Is there a limit on how much margin requirements can be raised to or can they do it forever? Does raising margin requirements reduce the amount of paper gold and silver traded, and in turn reduce volatility in the markets?

[silverfuturist]

@itsonelouder1 Yes, they can raise them so that silver can only be traded with cash up front, and not borrowed from the exchange.

[itsonelouder1]

@silverfuturist so is it correct that in the longer term it's good for the spot price of gold and silver because there will be less paper contracts?

[silverfuturist]

@itsonelouder1 Paper contract using cash different than paper contract using credit... paper contracts using credit will distort the price I think.

[wmh1982]

You should read Rothbard's Man, Economy and State. There is a section how speculators decrease volatility in a free market. It makes sense once you see it laid out.

[silverfuturist]

@wmh1982 That sounds interesting! I guess"free market" is the key concept, where banks don't get taxpayer money to gamble with.

[Equity213]

And come on guys. This is a free market channel. I can believe so many commentors are jumping on the 'speculators are evil' bandwagon.

The problem is not the speculators, the problem is that the government is keeping them flush with newly printed cash to bid up prices.

[SOLIDSTEELEDOTCOM]

At 4:05 you explain how the margin calls "Shake out" the players by increasing the margin requirements on EXISTING contracts, and i would guess this is a VERY short lived "Correction", and we go parabolic from here. Because no real change has occurred in the underlying valuation of silver, how would you explain this 40% retracement? - Excellent Views and Channel - THX!

[SweetDoug]

Why have the silver margin increases received so little press in the papers?

And who knew it was coming?

Hmm....

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[nottinmatterz2day]

thanks for the informative video now I understand what happened more completely

the CASINO GULAG!

[moltenmatty]

Great information, I love your videos! I do learn something everytime I watch one of your videos. Please keep them coming, and keep fighting the good fight!!!