"The CME always seems to raise silver margins when silver is moving sharply higher and when all of the evidence points to physical silver shortages."

Isn't that what they're supposed to do? Maintain an orderly market? I don't see anyone getting upset when they raise margin on corn or soybeans, but raise it on silver and they all go nuts like it's some kind of ambush.

Let me pose a question. Is everyone happy with the price of oil? Would we be overjoyed if it went to $200/bbl with no attempt to rein in leveraged speculators? That's what's driving silver right here. It's what happens when you flood the markets with cheap money.

Personally, I think they should stop all this nonsense right now. Shut down the paper market and go completely to spot, the way it used to be. Let's see what the true price is, not some jacked up nonsense caused by speculative frenzy.

I think these people shouting conspiracy would be in for a real shock if they did that. Take away the leverage and the only market left is the real one - people who want the physical - either for investment or manufacture. Ah, but then you might have lower prices, and that wouldn't sit well with people who measure their wealth in dollars, even though they talk a good gold-backed line.

I've said this before: If you believe the age of fiat is drawing to a close, and that gold and silver will once again be money, then what's the big deal? Would you rather pay higher or lower prices for your PM's? These guys are doing you a favor knocking down the price and yet all I hear is outrage. It make no sense. Well, I suppose it does if you're simply speculating on the price, but then what did you expect?

Some history: Prior to 1971 there was no futures market in gold or silver. How could there be? The price was fixed. It's only since then that you've had futures, and that market exists for one purpose only: to manage the price as part of a larger program of managing fiat currency.

Howling at the moon because the market is doing exactly what it was designed to do is just nuts. Take delivery and stash your PM's if you think we're heading off a cliff, otherwise recognize that you're playing in a market that is rigged by definition.

Don't get me wrong - I'm long silver as well. But I'm long as an industrial commodity and I get irritated when the producers I own get knocked about because of these wild swings. I'd much rather see a slow steady rise than this parabolic set-up. Oh yeah, it's a set up. Get everyone on the long side then pull the rug. Well that wreaks havoc with industrial users as well, which brings up another point.

Silver's getting hard to find, or so they say. China's taking up a lot of it, so we're told. OK, ask yourself this: if you were an industrial user, what would you do? Buy more than you need before the price goes up even more, right? Well, that sort of response feeds on itself. So then, what do you do with your surplus when the price eventually turns?

I don't know when, but I'm absolutely certain silver investors are in for one hell of a shock when that finally happens. At that point the true position of all players will be known and you won't be able to get out in anything like an orderly fashion, because, as in all other markets, people are only in it for the money. Fiat money.

ebear