Metals

February 1st, 2021, 09:24 AM

mongoose

Just playing around with TPO charts from Tradovate after watching their webinar last week, decided to pull up the SIH1 chart. Showing 14,500 contracts traded in the first 30 mins vs under 1k last Sunday evening.

Yeap volume overnight was higher than it was all day Friday!

Sagal

We have made strategic decisions to procure additional metal, locking up any metal we can find in the market place. We suspect premiums will rise and rise quickly, as we are seeing significant increases in our costs, when we can even locate the metal. It is also highly likely that we will need an additional day or two to fill orders based on current order counts. The one guarantee we can make to our customers is that you will only be sold metal that is on-site, or we have procured the metal with a firm commitment date from our partners.

ie.. we are ready and fully prepared to make as much as possible from the spot premium that we expect to materialize.

February 1st, 2021, 05:42 PM

Surprisingly in the end Volume was less than double Friday!

Some wild prices in the spreads - mainly due to illiquidity I suppose. HK had a 53c range, KN 30c, NU 17 and UZ 21c.

On another note CME Gold Margins going up 10% effective Feb 2nd from $11k to $12.1k. Non-member margins probably 110% of this. Didn't see anything about Silver.

February 1st, 2021, 06:12 PM

Meanwhile, gold trades an inside day on lower volume and copper prints a little doji right in the middle of last week's range.

Without any participation from either industrial or precious metals, I'd be extremely skeptical of this silver spike. And I certainly wouldn't be paying a large premum for spot right now.

In fact, I'd be almost tempted to look at the GC/SI spread here

February 2nd, 2021, 03:59 AM

Without Gold participation, it is very difficult for Silver. 28-30 is a strong resistance area. On top of that I noticed that reddit community is quite divided on the Silver issue. I took some profits (micro futures part) and I am prepared for a better entry..."Rolling over" in my mind doesn't mean I am always in anyway but signals more an intention to get in contracts after contracts with each good opportunity...My target for Silver is 36

PS I didn't want to write it before confirmation but effectively on top of that CME/COMEX raised margins request on Silver futures effective end of this day

Quoting

The Chicago Mercantile Exchange, which operates trading in New York of silver futures and options, said it was raising the margin required to trade silver futures after what it said was a �normal review of market volatility to ensure adequate collateral coverage.�
Analysts warned that the music might stop for retail buyers of silver sooner than it would for small-cap stocks like GameStop. Silver is a significantly larger market and may make it harder to drive prices higher.
�We believe the new entrants into the market may tire and begin to liquidate silver holdings, with a commensurate price impact. Buyer beware,� said James Steel, chief precious-metals analyst at HSBC, in a note late Monday.
The change will come into force after the end of trading Tuesday.

from WSJ

February 2nd, 2021, 10:05 AM

Maybe I missed it but the CME announcement I saw on Silver margins effected Option Volatility scanning ranges and not margin on the actual futures.

February 2nd, 2021, 11:46 AM

2021 is the year of metal per Chinese astrology. Good luck traders

February 2nd, 2021, 12:08 PM

Palladium is primarily used in catalytic converters for cars. It is surprising to see the price increase as the demand for gas powered vehicles will decline significantly in the next decade and onwards.

February 2nd, 2021, 12:10 PM

Silver is being treated like GameStop in which retail investors have identified the massive short positions on the commodity. I have an account in reddit and they are talking about purchasing silver to cause another short squeeze in the market to weed out hedge funds

February 3rd, 2021, 04:48 AM

SMCJB

Maybe I missed it but the CME announcement I saw on Silver margins effected Option Volatility scanning ranges and not margin on the actual futures.

I cannot find the exact statement from CME but it is clear that Maintenance margin is now 16500 usd
https://www.cmegroup.com/trading/metals/precious/silver_performance_bonds.html#sortField=exchange&sortAsc=true&clearingCode=SI&sector=METALS&exchange=CMX&pageNumber=1

It is also all over the place that the increase is 17.9% (bloomberg, wsj etc,)
From Kitco:

Quoting

"The precious metal complex (gold, silver, platinum, and palladium) traded under pressure, with all precious metal futures contracts closing sharply lower on the day. Silver futures sustained the largest drawdown, with the most active March contract losing $2.70, a decline of 9.17%, and is currently fixed at $26.71. This action followed the Chicago Mercantile Exchange (CME) decision to raise the margin requirements needed to trade a single contract of Comex silver by 18%. The former margin requirement of 14,000 per 5000 ounces per Comex contract to $16,500."

https://www.kitco.com/commentaries/2021-02-02/Silver-plummets-and-gold-sells-off-sharply-following-the-CME-margin-hike.html

It is clear that it is extremely difficult to corner Silver's market as clearinghouse (CME/COMEX and others) can increase at will the requirements for margins. Success remains possible with a long term approach where individuals will buy more and more physical silver, gold, platinum as well as physical ETF of the same and as well with precious metals miners, keep them and then...prices will go up...and stay up...

I have the confirmation by several sources that Silver is also concerned by the India government decision to decrease import custom duty to 7.5% (instead of 12.5%)
https://timesofindia.indiatimes.com/business/india-business/budget-2021-government-cuts-import-tax-on-gold-silver-to-7-5-from-12-5/articleshow/80628402.cms.

February 3rd, 2021, 11:19 AM

Sagal

I cannot find the exact statement from CME but it is clear that Maintenance margin is now 16500 usd
https://www.cmegroup.com/trading/metals/precious/silver_performance_bonds.html#sortField=exchange&sortAsc=true&clearingCode=SI&sector=METALS&exchange=CMX&pageNumber=1

My apologies. Your right I missed it. CME sent out two Performance Bond Requirements for Metals on Feb 1st. The first (https://www.cmegroup.com/content/dam/cmegroup/notices/clearing/2021/02/Chadv21-047.pdf) included margin changes in Gold, Platinum and changes to the Silver volatility scanning range. The second (https://www.cmegroup.com/notices/clearing/2021/02/Chadv21-048.html) included the Silver margin changes. I missed this one (probably thought it was a duplicate of the first one).

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