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« Tensions mount as we wait for Ben Bernanke to speak | Main | 85th Trade Takes SK OptionTrader’s Model Portfolio to Gains of 396.58% »

Margin requirements to trade gold have been increased

We kick off with a quick look at Myra Saefong's article on Market Watch which summarizes this announcement by the CME Group Incorporated and then we have a missive that we received today from Jim Sinclair.

For the second time this month, the CME Group Inc., the parent company of the main metals and energy exchanges in the U.S., announced late Wednesday an increase in margin requirements to trade gold. It raised the amount of money needed to trade gold contracts by 27% to $9,450 per 100-ounce contract.

The move comes on the heels of a $104-an-ounce drop in gold futures prices, which some analysts had blamed partly on speculation that the CME would raise margin requirement again.

Gold’s approach to $2,000 an ounce “invited excess speculation and therefore margin concerns for exchanges,” said Richard Hastings, a macro strategist at Global Hunter Securities. “The quasi-exponential price behavior was dangerous and the exchanges today view this with significant concern — and act quickly.”

Brien Lundin, editor of Gold Newsletter, said “raising margin requirements after a major decline doesn’t affect the speculative bulls as much as the bears.”

“We may see this move help foster a rebound by forcing shorts to cover,” he said.

In electronic trading on Globex, December gold GC1Z was trading $3.70 higher, after closing at $1,757.30 on the Comex division of the New York Mercantile Exchange.

-Myra Saefong


My Dear Extended Family:
What is at the heart of the violent markets? The answer is Skier Illustration number 3.
Will Bernanke do something in the coming week? It does not matter in reality as business conditions are headed to a double dip in which the double could be wild on the downside. The Fed will act because of the balance sheet condition of the US and Western world financial industry devoid of false OTC derivative values.
Liquidity will be provided and Skier Illustration number 3 will take place, taking the US dollar lower and Gold to higher highs either now or very soon. As far as margin rates are concerned, they will rise to cash on both gold and silver before either sees full valuation.
You have heard from me on this gold reaction. Now hear from the extremely accurate Alf fields:
"The good news is that once the anticipated correction has been completed, gold should commence intermediate Wave 3 of Major 3. This should be the longest and strongest up-wave of the entire Bull Market. Expect high volatility and very high prices during that up-wave."
Now let's here from Kenny Adams, Master Technician, on long term trends:
"So far we have the potential for a topping action that may generate a moderate to deep correction - but not a long extended correction - not a termination of a bull trend."
Now lets hear from Dean of Gold, Harry Schultz:
"Don't bother me now. Call me when gold trades at $2400."
So stop worrying. At the worst this is a fast, deep correction before much, much higher prices for Gold.

Despite today's correction we are holding fast and intend to ride this one out. The focus of attention is now firmly on the words, actions, inuendo and the spin that goes with of the Federal Reserve Chairman, Ben Bernanke.

Its also expiry day for silver traders tomorrow so we expect prices to stay suppressed, however, this is a dip and maybe it should be bought. Too tight for us to call.


For those subscribers who are too busy to trade their own accounts we are now able to offer an Autotrading program with our SK OptionTrader service, as we are pleased to announce that we have entered into a partnership with GlobalAutoTrading and therefore auto trading is now available for SK OptionTrader signals

Our model portfolio is up 396.58% since inception

An annualized return of 119.04%%

Average return per trade of 42.21%

85 closed trades, 82 closed at a profit

Average trade open for 45.41 days

sk chart return on SK OptionTrader Model Port 22 aug 2011.JPG

The above progress chart shows our performance when profits are re-invested, 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)

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Reader Comments (5)

The Shanghai Gold Exchange will raise margin requirements for its gold forward contracts for the second time this month to 12 percent starting on Friday, in a move aimed at curbing excessive risk-taking following the rapid rally in gold prices.

August 24, 2011 | Unregistered CommenterGold Prices

Thanks again for your input and particularly reminding me about Market Watch. I used to follow their site regularly but lost track after my email address changed when a number of important sources vanished.

August 25, 2011 | Unregistered CommenterJohn Ell

Cheers John,

We do try and reference other sites that we think the readers might like to visit from time to time, the wider we can all read the better - hope that you are fit and well and making a few bucks!

August 25, 2011 | Unregistered CommenterGold Prices

Fit and well, thank God. As to making a buck that is the "X" in the equation. If I make a few, just a very few, the big spenders in DC take their cut, and that leaves me zilch. But, thanks for asking which, by the way, reminds me to get started on the options!

August 26, 2011 | Unregistered CommenterJohn Ell

Good man!

August 26, 2011 | Unregistered CommenterGold Prices

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