In a very surprising move, after the close today the CME announced that it has lowered the margin requirement for gold, silver platinum and copper. 2011 saw multiple instances where the CME raised margin requirements, the most significant for silver which saw two series of margin rate increases during 2011 that coincided with sharp plunges in silver's price. Whether this about face will lead to a rise in silver, gold, platinum, and copper remains to be seen, but making entering a futures contract less expensive could lead to price gains. It can certainly be said that margin increases were accompanied by price declines in 2011.
Initial margin requirements and maintenance margin requirements were lowered by 12% for gold, and 13% for silver. It should be noted that the magnitude of these margin cuts don't match last year's increases.
It could be an interesting day for precious metals tomorrow.
However, it can be argued that these unexpected changes in the amount of cash required to take a position in the futures market creates unneccessary uncertainty. As any investor knows, uncertainty is always unwanted. It bears repeating that it is Gainesville Coins' view that the CME should be required to provide a standardized process that helps investors understand when margin changes could be forthcoming, and their likely amount. This shot out of the blue may be beneficial for precious metals prices, but it leaves questions on how the CME manages the markets in its purview.
Take Advantage: Gainesville Coins is offering the 1 oz PAMP Gold Bar at as low as $21.99 over spot. This is less than 2% over spot for one of the most popular gold bar investments. Silver bullion investors should check out our offer on the 2012 American Eagle Silver Coin Monster Box at as low as $2.59 over spot.