The Evil Empire seems to be rather unhappy with the results of a manipulative counter-attack it mounted against silver vigilante rebels who are driving up the price of silver. Last Monday and Tuesday we observed a classic downward silver price management episode. It came complete with a big hike in maintenance margin requirements, sudden dumping of huge numbers of transient short contracts into the market, the triggering involuntary margin calls, the closing of those same ultra-transient short contracts into the margin calls, and a vast reduction in the price of silver that abruptly reversed as soon as the Empire's shock troops withdrew from the battlefield.
A question and answer appearance of one of their own Field Marshals, Fed Chairman Benjamin Bernanke, managed to inadvertently cause their "deathstar" to blow up in their faces. The Evil Emperor, whomever he may be, was sure to be very unhappy. The manipulation just didn't work nearly as well as it would have a few months ago. Now, the Empire appears poised to attack the rebellion again, only few days after its last attack turned out to be a terrible failure. At the close of business on April 29, 2011, the COMEX performance bond committee raised the performance bond for silver, yet again, this time by a huge $1,250 per contract. The same metric had already been increased by $700 on Monday afternoon, but-- as noted above-- that first increase wasn't sufficient to allow the dark side to prevail.
We don't like short-term investing, but we do know that this second performance bond increase also will be an abysmal failure when looked at long term. Well capitalized long term buyers do not become run when the object of their desire becomes cheaper. When a wise investor is buying, he welcomes declines in value. This is because while he is
The Empire Strikes Back Against the Silver Price Rebellion
A. B. Goodman is a licensed attorney, securities industry dispute resolutions arbitrator, a writer of articles addressing issues of current interest, and a novelist. He is the author of the forthcoming action-packed Wall Street murder/mystery thriller, "The Bank."He holds a B.A. from Emory University, where he concentrated on history and economics. He also holds a Juris Doctorate degree from the University of California at Los Angeles Law School and is a member of the Bar, licensed to practice law in several jurisdictions. His career has consisted not only of prosecuting cases on behalf of clients, but in judging the claims of others. He serves as a member of the roster of neutral arbitrators of the National Futures Association (NFA) and the Financial Industry Regulatory Authority (FINRA).