Precious metals have been very resilient lately.
In spite of numerous factors that should have the metals heading south, they have been staying strong at their current levels.
As silver broke $38 last week, the COMEX did the same thing it did last time silver was on a record breaking run. They increased the margin requirements on silver contracts.
If the raising of margins for silver has been a sign for anything, it is higher prices. Each time the CME has raised margins for silver, prices drop slightly, stabilize and continue higher. The last time the CME made an announcement mid day like they did on March 24th was back in November when silver was bee lining for $30, which we wrote about here. Similar activity followed with silver dropping down to around $26, leveled here for a short time and then continued the rise past $30.
This time silver was heading to $40, flying from the $36 range past $38 in less than 72 hours, and causing the CME to raise margin levels once again.
According to the CME, when this is done it is to insure that there is enough metal out there to satisfy the contracts that are written, and to protect investors from being hurt in case of a sharp decline in silver prices.
We see at as a resting point for silver as it makes it’s way up to $50/oz., an opportunity to buy more at reasonable prices.
You will find a link below to the advisory notice from the CME the day it raised the requirements, it is on page 12 of the 19 page notice. There were many other contracts that were adjusted as well, including numerous gas and oil contracts.
Here is the link;