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Commodity Exchanges Scrambling (Alert: Margins widening!)
Published by ZgartZ on February 12, 2008 09:31 am
under Gold, Stock & Commodity Mkts
History repeats once again. During the commodity boom of the 1970’s the big (commercials) commodity traders got caught short and could not cover their margin calls so the exchanges widened limits and increased margin requirements. The small speculators could not meet the increased margin requirements and the widened daily limits made trading available to the commercials who were short. Consequently prices dropped and the commercials got out. Of course the exchanges were owned the commercials in those days.
Now it’s happening again. Last week gold margins were raised. Today wheat margins will widen from $3,038 per contract to $6,076 per contract. The daily limit will rise from 30 cents to 40 cents per contract. Guess why?
ZgartZ just came across an interesting letter sent to the US Department of the Treasury in which Senator Durbin and Rep. Rahm question the actions of the Treasury Department in their requests to the CME Group Inc. The CME Group Inc. is now a public company so the principals have a harder time getting their big investors out of their short positions.
Read the letter and decide for yourself at:
http://cmegroup.mediaroom.com/file.php/194/Durbin_Rahm FINAL to DOJ.pdf
THINK BACK to LOOK AHEAD
ZgartZ
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