Did Silver take commodites down?

[pscot]

Apparently the sell off in oil was fed by margin selling. That sounds pretty scarey.

....the CME’s repeated hikes to the silver-margin requirements sent the metal, which as of April 29 had risen nearly 60% for the year, tumbling, with benchmark silver futures losing more than 25% since then.

But a variety of other news, including a Wall Street Journal report that billionaire financier George Soros was selling off his holdings, helped the losses snowball, and on Thursday, silver fell 8% on the Comex division of the New York Mercantile Exchange, its largest one-day percentage drop since Dec. 1, 2008.

This touched off massive selling across the commodities complex.

“Silver really just burnt off in a big way and that fed through to other commodities,” said Michael Turner, strategist at RBC Capital Markets.....

http://www.marketwatch.com/story/speculators-seen-leading-commodities-crash-2011-05-06?link=MW_story_popular

[elleng]

1. No explanation provided, unfortunately.

[Curmudgeoness]

2. This seemed to explain it all....

From the article: Noting that much of the drop included a large volume of margin selling, he added that the fall also showed “just how much stupid money there is in the oil game.”

[Andy823]

3. Well...

ALL bubbles must burst someday, just like the last "oil" bubble, the dot com bubble, the housing bubble, now oil, again, and silver, maybe even gold will burst soon. As long as speculators can get away with creating the bubbles, it will just keep on happening and the rich will get richer and the rest of us will suffer!

[westerebus]

4. Margin hikes.

What spooked the oil traders, for that matter traders who use margins, was the five rate hikes in a row. The CME pulled the liquidity out from under the traders and invoked a panic for paper traders.

The CME claimed it was to reduce volatility in the market. Silver and oil are by their nature volatile. It's the churning that makes these markets what they are, a casino controlled by the insiders. JP Morgan has special rights in the CME. They are not alone.

The exchange was at one time long long ago a place to discover the price for a commodity come next planting season or next quarter. It was intended to help farmers and miners get access to capital by selling forward at a contracted price.

Times changed and thanks to Phil Graham and assorted others, the CME became another crony capitalistic scheme.

[pscot]

5. Unlike stocks, everyone knows

commodities markets are a casino. You don't put the rent money into silver. Obviously the big players try to game the markets, but little fish can swim with the big fish and pick of a scrap here and there when the sharks feed. And commodities are moved by more fundamental considerations than the stock markets. I think they are actually easier to understand. At least you know how you went broke.

[westerebus]

6. Do not trade FOREX.

You can go broke before, during and after you know it. LOL.

This advice is not intended to influence you investing decisions.

Really.

Not.

wink

wink

[Art_from_Ark]

11. If you know what you're doing, precious metals are OK

Jumping on a bandwagon because everyone is doing it is bad investment strategy, but I'm not going to complain about my own personal silver investment, which averages out to less than $5 per $1 face value of US 90% silver coins.

[golfguru]

7. Threat of weakening economy did

Silver was just the catalyst.

[girl gone mad]

8. I think it was a combintation of the above.

The downward revision to estimated GDP did seem to spook a lot of people. The relentless margin hikes added to the sense of panic. These trades have become increasingly crowded and with so much interconnectedness and program trading, shifts in momentum get magnified.

[pscot]

9. But things settled down a bit on Friday

The seemed to subside pretty quickly.

[golfguru]

10. I got cold feet and soldout on Friday

When you subtract 62,000 hired by McDonald's last month,
the numbers do not look all that good.