Thursday, August 25, 2011

Gold Margins Raised, leverage lowered to 11X. S&P leverage maintained at 45XHypocricy

So yea, CME raises gold margins on YG futures which results in 11X leverage to day trade the contract. Keep in mind folks you can trade ES (S&P 500 mini Contract) at 45X leverage. Volatility in indexes is totally OK but god forbid gold starts going parabolic!

Its just plain sad... they tried this with silver and it did not do much after the initial panic selling.

The simple fact is that more and more people will move to owning physical and these contracts which whose other side are taken by banks using fractional reserve lending much like your deposit accounts will come to an end and we will experience two kinds of markets, the physical market which will IMO command a 20-30% premium over the paper market (GLD, YG futures, etc.)

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