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Old 06-02-2011, 15:22   #801
Catshooter
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I'm fairly sure we're on our way to that here too.


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Old 06-02-2011, 18:42   #802
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so where is silver headed in june/july?
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Old 06-02-2011, 19:23   #803
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That's also true, but if it can happen there, it can happen here.


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I still hesitate to say that with such certainty.
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Old 06-02-2011, 19:28   #804
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so where is silver headed in june/july?
In normal markets, the summer is usually flat. Bob Chapman believes silver could likely break this pattern and move up to $40 or so, with $50 breached again by August-September.

Hard to call a market that is manipulated by our govt. to their own ends.

We believe eventually market forces will prevail and $100 silver will rule the day.

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Old 06-02-2011, 20:22   #805
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I don't see it going down the way things are going. The economy appears to be going off a cliff again, maybe worse than in '08, and this time around we have the debt limit fight and a possible downgrade of the gov's credit rating.
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Old 06-03-2011, 09:17   #806
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I still hesitate to say that with such certainty.
Warp,

I only say it can happen here, not that it will. I sure hope it doesn't. I expected finacial collapse when I first read Howard Ruff. Didn't happen, that was in the early 70's. Long time ago now.

Who can tell for sure? Not me, that's sure. I just get as ready as I can.


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Old 06-03-2011, 15:47   #807
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So today Moody's is warning that they will downgrade the U.S. gov's credit rating if it doesn't come up with a plan by mid-July.

This is gonna be a rough summer. I think shortly we'll be looking back at the crisis of 2008 fondly as the "good old days".
Again, I'll go back to the same thing I said before (or asked rather)... no matter how bad the economy gets and how grim the outlook, what prevents the big boys from pulling the same margin hike crap again? If there is a limit...what is the limit? If a specific or range of numbers can't be given, what would have to happen to reach that limit?

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Old 06-03-2011, 23:06   #808
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Again, I'll go back to the same thing I said before (or asked rather)... no matter how bad the economy gets and how grim the outlook, what prevents the big boys from pulling the same margin hike crap again? If there is a limit...what is the limit? If a specific or range of numbers can't be given, what would have to happen to reach that limit?

Thanks

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It is possible they could eliminate buying on the margin all together. That would be the limit of margin increases. The government does not set the margins, the exchange does. It is a private corporation. They determine how much money they lend, how much risk they want to take.
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Old 06-04-2011, 22:18   #809
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I'm new but been doing alot of reading including the kitco forums. I dont see it going much lower right now. Found 25oz bar for 1.50 over spot and thought it was a good deal.
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Old 06-05-2011, 00:46   #810
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Old 06-05-2011, 00:56   #811
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It is possible they could eliminate buying on the margin all together. That would be the limit of margin increases. The government does not set the margins, the exchange does. It is a private corporation. They determine how much money they lend, how much risk they want to take.
The elimination of buying on the margin...lets talk about that...

It sure sounds like it would eliminate margin increases. But why would the exchange do such a thing? I mean what does it stand to gain by the move? Seems like they would be tying their own hands no? Because then they would be losing the ability to influence buying and, as a result/by proxy, the price of Silver.

Please share your thoughts.

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Old 06-05-2011, 08:30   #812
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EMT says discuss elimination of the margin requirements by not allowing margins.

1. if you control the rules, you control the game.
2. the rules are changed when it is to the advantage of those who control the rules.

A person usually buys on margin because he wants to own some stock, but usually doesn't have the money to pay the full amount. He borrows the money to make up the difference between the price and what he has paid. The loan will become due and the stock, as collateral, will be sold if the price drops a certain amount and the investor does not come up with the loan amount nearly immediately.

In the most benign scenario, the price does not go up for the stock. The interest payments on the money borrowed eats up the anticipated future value on the stock, so the stock is sold and the loan is repaid.

In the worst scenario, people immediately realize that the stock value will not go up because the margin requirement has been increased, so they sell their stock as fast as they can and the price drops very quickly, causing margin calls.

The same applies to buying blocks of commodities.

Who benefits? Not the person who loaned money. He is simply paid interest.
How about the insiders who sell short and know that the margin requirements will be increased????
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Old 06-05-2011, 11:37   #813
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EMT says discuss elimination of the margin requirements by not allowing margins.

1. if you control the rules, you control the game.
2. the rules are changed when it is to the advantage of those who control the rules.

A person usually buys on margin because he wants to own some stock, but usually doesn't have the money to pay the full amount. He borrows the money to make up the difference between the price and what he has paid. The loan will become due and the stock, as collateral, will be sold if the price drops a certain amount and the investor does not come up with the loan amount nearly immediately.

In the most benign scenario, the price does not go up for the stock. The interest payments on the money borrowed eats up the anticipated future value on the stock, so the stock is sold and the loan is repaid.

In the worst scenario, people immediately realize that the stock value will not go up because the margin requirement has been increased, so they sell their stock as fast as they can and the price drops very quickly, causing margin calls.

The same applies to buying blocks of commodities.

Who benefits? Not the person who loaned money. He is simply paid interest.
How about the insiders who sell short and know that the margin requirements will be increased????
So again, why would the exchange eliminate trading in regard to the margin?? Have they ever done this?

Thanks!

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Old 06-05-2011, 14:33   #814
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So again, why would the exchange eliminate trading in regard to the margin?? Have they ever done this?

Thanks!

-Emt1581
They would increase margins when a commodity get volatile. If the margin 10% and a commodity starts swinging more than 10% in a day, then you cannot call on your margin fast enough to insure that the loan will be repaid, so you increase the magin (don't loan as much) so you are better protected. It is like a mortgage loan, if you think the value of a house will never go down, and only go up, making a 100% loan is not really risky. If you thought prices might go down, or if one would have to discount a house 20% to sell it fast, you would only make 80% loan.

So the margins are determined by the volatility of the underlying security (silver), the rates they can get on the money(interest on the margin loan), and the risk tolerance of the lender (exchange).
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Old 06-05-2011, 20:30   #815
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They would increase margins when a commodity get volatile. If the margin 10% and a commodity starts swinging more than 10% in a day, then you cannot call on your margin fast enough to insure that the loan will be repaid, so you increase the magin (don't loan as much) so you are better protected. It is like a mortgage loan, if you think the value of a house will never go down, and only go up, making a 100% loan is not really risky. If you thought prices might go down, or if one would have to discount a house 20% to sell it fast, you would only make 80% loan.

So the margins are determined by the volatility of the underlying security (silver), the rates they can get on the money(interest on the margin loan), and the risk tolerance of the lender (exchange).

I appreciate the info.

So again, why would the exchange ever do away with margins?

It seems like it's a way for them to protect themselves or maybe "hedge" if that can be said. So doing away with margins/hikes/etc. would seem to be like a cop taking off their body armor right before arriving on the scene of a "shots fired" call IMO.

And again, has the exchange ever done away with margins?

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Old 06-05-2011, 23:35   #816
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Not do away with margins as in 0% margin, but 100% margin. In other words, they would no longer allow buying on the margin. They would do it because they felt the risk outweighed the rewards.

I have been unable to find historical margin levels.
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Old 06-06-2011, 05:46   #817
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Not do away with margins as in 0% margin, but 100% margin. In other words, they would no longer allow buying on the margin. They would do it because they felt the risk outweighed the rewards.

I have been unable to find historical margin levels.
Right, so you would pay for exactly what you buy instead of just a percentage of it...yes?

But that wouldn't make much sense especially if the presses are still going and we just entered QE3 territory. In fact when would ANY commodity be THAT risky?

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Old 06-06-2011, 05:52   #818
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Not do away with margins as in 0% margin, but 100% margin. In other words, they would no longer allow buying on the margin. They would do it because they felt the risk outweighed the rewards.

I have been unable to find historical margin levels.
I looked for them too and could not find a chart or even good data. In the 1929 crash they were at 90% so a 10% margin call brought the market to it's knees. I remember from a school that one of the big reforms to make sure that the markets were safe made the maximum margin very small, I am thinking 25%. I also recall that being raised just 3 or 4 presidents ago back to a high number that I think was 75%.

Anyway these are the numbers that you want to know (even if they are not accurate find out the correct ones) along with how much of the market is on margin today, I don't think it's that high of a percentage overall, but seems to be in silver.
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Old 06-08-2011, 21:24   #819
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I'm doing a face to face deal this weekend to trade some of my Silver for Gold at 42:1. I just want some Gold really. I have my choice of Eagle fractionals (1/10, 1/4, 1/2) and 1oz coins. I want at least one of each and maybe a few additional 1/10oz. pieces.

Is this a bad idea for any reason? Is another combination more desirable?

Thanks

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Old 06-08-2011, 21:55   #820
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It's okay if you want to acquire some gold. Premiums are usually a bit higher for fractional coins, but in the longer term it won't matter much.

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