Following is my latest post....I hope everybody finds time this weekend to contact the CFTC and request an investigation into the CME Group's behavior.

In finance, volatility is a measure for variation of price of a financial instrument over time.

Silver hit a 40 day closing low of $26.81 on January 25, 2011. From that closing low, silver commenced an orderly move up to close at $46.57 on April 21, 2011, the last close before Easter.
The Daily Range, defined as the difference between the high price of the day and the low price of the day, is a very reasonable method of measuring volatility. The Daily Range for silver’s continuous contract, averaged $1.046 during the 62 day period from January 25, 2011 to April 21, 2011.

During that 62 day period the largest Daily Range for Silver was $2.34 on March 15, 2011, a day in which silver ranged between a high of $35.92 and a low of $33.58.

On April 25, 2011, the CME group announced the first of 5 margin increases that would become effective between April 26, 2011 and May 9, 2011. CME Clearing President Kim Taylor has represented that they did so to adjust to volatility in the marketplace. My opinion is that the evidence suggests that the CME was reacting to Silver’s price level rather than to volatility in the marketplace. Supporting my opinion is the fact that the CME group’s margin adjustments have greatly accelerated volatility in the marketplace.

Immediately after CME’s April 25, 2011 announcement, silver’s price volatility intensified dramatically. The Daily Range for silver’s continuous contract, averaged $3.67 during the 9 day period from April 25, 2011 to May 5, 2011, over 3.5 times the average daily range during the 62 day period from January 25, 2011 to April 21, 2011.

During that 9 day period the largest Daily Range for Silver was an astonishing $5.66 on May 2, 2011, a day in which silver ranged between a high of $48.11 and a low of $42.45. The Daily Range for Silver was $5.29 on May 5, 2011 and $4.93 on May 3, 2011. As a long time silver investor, I remember days as recently as 2002 and 2003 when silver’s total price was less than $4.93!

The following questions must be answered. Why did the CME group raise margins 5 times in a very short period of time when Silver’s price appreciation had been very orderly? Why is the CME group planning to raise margin requirements again on May 9, 2011 when they can clearly see that their first four margin increases have caused a massive sell off in silver as well as the associated volatility?