Earlier, I mentioned the dramatic plunge in silver. Dave Kansas at the WSJ has a nice summary:
Silver selling continued after the official Comex market close, sending poor man’s gold down more than 11% on the day to $34.980. Silver has lost nearly 30% this week.
And the pressure may continue. At the close today, CME, which owns Comex, will enforce a 16.7% increasing in trading deposit requirements. That means speculators in the benchmark 5,000-ounce silver contract will now be asked to put up $18,900 per contract to open a position, and maintain $14,000 of that to keep the contract overnight.
Investors must exit positions if they can’t afford the higher margins requirements. The exchange raises margins during times of high volatility to ensure market participants are adequately capitalized.
Silver traded as high as $48 at the start of the week. It is still up more than 100% in the last year.
Joe Weisenthal of Business Insider has described silver as being like a highly leveraged equity position (aka, a high Beta trade) and I think he’s exactly right. In other words, whatever the market does, silver is likely to do two to three times that.