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« Kinross Gold Corporation: Sold Our Stake | Main | The End of the Statist Quo »

Todays Pull Back in Gold Prices: Not All It Appears To Be

Gold Chart Kitco 10 November 2010.JPG

As we can see from the above chart gold prices suffered a pull back in yesterdays trading session on The New York Stock Exchange. At first we put it down to profit taking as this rally has been wonderful for the bulls, however, when we searched a little wider we came across another possibility that surprised us.

We found this article on Eric Kings site which is called King World News, if its a site that is new to you, then you might want to bookmark it and make a point of dropping in now and again to catch some of Eric's interviews, he has a knack of talking to the right people at the right time.

This is a snippet from an interview with James G Rickards who is the Senior Managing Director for Market Intelligence at Omnis, Incorporated, as follows:

“What was noteworthy was the catalyst for the pullback, specifically an increase in margin requirements for silver futures contracts.  There was no comparable change in gold futures margin but as often happens in markets there was instantaneous contagion from silver to gold notwithstanding the different circumstances.  Again, no surprise that the markets correlate to a great extent even when the news only affects one market or the other.

This is a pointed reminder to the readers and listeners of King World News and something we have discussed before.  Most markets consist of two parties, the buyer and the seller.  But in futures markets there's a third party in every trade which is the exchange and more specifically the rule making bodies and margin setting panels on each exchange.  They act not in the best interests of buyers or sellers but in the best interests of the exchange itself and its statutory duty to maintain orderly markets.

The point is, when buyers and sellers transact in futures markets, they're never alone.  Exchange monitors are always looking over your shoulder.   Never ignore the power of the exchanges and regulators and always remember they will use this power when it suits them, not you.”

We draw your attention to the 'increase in margin requirements' to anyone who uses margin aggressively, this change to the rules is the same as a margin call, whereby you have to stump up some more cash or sell part of your position in order to satisfy the boards request.

So there we have it, another ingredient to add to your long list of investment considerations.

Please click here to go Eric's site and read this article in full.

Please don't forget to take a look at our options trading service, where our total of closed trades to 38, with 36 winners. This means that a subscriber who had invested $1000 in each of our 38 trades would have banked profits of $15,636.00. We have just posted a set of charts demonstrating the importance of timing in any trade on gold-prices, please click here if you are interested.

SK Chart 23 Oct 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

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Reader Comments (7)

It just wouldn't do for the Powerz to see silver go parabolic as the Fed deep-sixes the clownbuck, so they increase margin requirements to suppress the price. Not surprising.

So, when do they declare that there can be no more long positions established...only shorts covered? Think Hunt brothers. And when do they declare that you can't take delivery and have to settle in cash?

To hell with the Crimex. Stay with physical and/or SLW

They can keep their damn fraudulent paper market.

November 10, 2010 | Unregistered Commenterfallingman

Well said

November 10, 2010 | Unregistered CommenterGold Prices

I subscribed to the options trading services last week or the week prior. How and when wil i receive your recommendations?

November 10, 2010 | Unregistered CommenterEmtea


Let me look into this and I will get back to you shortly. Thanks for your patience in the mean time.

November 10, 2010 | Unregistered CommenterGold Prices


We have emailed you regarding this issue, please check your email and ensure that is not being blocked by a spam filter.

If you have any further issues we're happy to help, just drop us a line at anytime.

Thank you for subscribing to SK OptionTrader.

November 10, 2010 | Unregistered CommenterGold Prices

Interesting - beginning this week I received a ton of margin violations with requests to cover from my internet broker.
Pass-through 1:1.

November 11, 2010 | Unregistered Commenterdonprizzi


Yes indeed and many more like you will have experienced the same thing, its a tricky one, its their exchange and they can change the rules as and when they think fit. So investors have to either put up more cash or reduce their position, the latter appears to be their objective!

November 11, 2010 | Unregistered CommenterGold Prices

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