Comex Institutes Trading Collars For Precious Metals

61
Thu, Dec 11, 2014 - 3:44pm

With little fanfare or notice, the CME Group has notified the CFTC that they plan to institute trading collars for Comex precious metals trading. At present, these collars are planned to go into effect on Monday, December 22.

Trading collars or "limits" are certainly not out of the ordinary. In the commodity markets, they have long been in place to limit the daily fluctuations of the grains. In S&P futures, collars have existed for years, brought about in large part by The Crash of 1987.

However, introducing these bands for the precious metals is completely new, as far as I can tell. And you'll note that these collars are only being implemented now, with prices at their bottoms. Wouldn't it have been nice to have trading collars in place back on May 1, 2011 or April 15, 2013?

I guess, ultimately, that leads us to the main question:

WHY NOW?

According to the documents embedded below, gold trading will now halt for five minutes after an intraday move of $100 from the previous close. The same for silver after a move of $3. At the current price levels, we're talking fluctuations of 8% and 17%, respectively. Those are tremendous price changes and they certainly would seem to be out-of-reach on an intraday basis anyway. So why the sudden rush by the CME to institute the collars? What do they know that we don't know? What are they afraid of?

Perhaps it's just as simple as this...We've all been waiting for the day when The Banks would be forced to exit the commodity business. By sheer size, The Banks dominate precious metal trading as they cap prices and act as de facto "market makers" in the sector. Without their influence, paper metal would be allowed to freely trade and float based purely upon the whims of the market. Is this day approaching more quickly than we thought? Just two weeks ago, executives from Goldman, MorganStanley and JPMorgan were hauled in front of a U.S. Senate committee and grilled about their "control of physical commodities and related businesses". https://www.zerohedge.com/news/2014-11-20/here-are-highlights-senates-fi...

Could this latest move by the CME Group be a signal that The Banks will soon be forced to exit ALL of the metals and commodities sectors that they currently control? Maybe. We can only hope.

TF

<Thanks to "infometron" for bringing this to our attention.>

CME letter to CFTC by Turd Ferguson

Comex Trading Collars for Precious Metals by Turd Ferguson

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  61 Comments

  Refresh
Dec 12, 2014 - 9:53am

And The Doc has a few specials today

I know he's particularly excited about becoming a dealer in this brand of safe. Click the banners to check them out.

Dec 12, 2014 - 9:50am

For everyone

This is really bad. The Long Bond is indicating that something quite wicked is coming over the horizon. This perfect cup-and-handle formation and breakout almost certainly indicates a panic into treasuries is brewing. What will that mean for all other "markets"?

SE
Dec 12, 2014 - 9:27am

8% and 17%

for Gold and Silver respectively. Does this mean that even if silver was at $200, and it went up to $203, is that a limit up, or is the percentage of 17% in one day limit up instead?

jwmkratz
Dec 12, 2014 - 8:50am

The Collars Might be Related to

The $75+ switch we had that produced the MOAORD's. I can just imagine a few goons sitting in front of a monitor with their hands on the "go short" keys. No sooner than when those buttons got pushed, the market went from red to green and the phones must have lit up with pissed off customers on the other end.

GOFO rising, oil falling, yen falling, $ rising, market euphoria, wtf more do they need to smash down the price down...unless they've lost control of the volatility. Here in Turdville, we've seen the $1130-50 level touched on, only to have waiting buyers willing to scoop up all they can get their hands on, at that level. Maybe they'll try to test those levels again...Let's see how far they'll get before the board lights up green.

Putin is getting his head handed to him with this oil shock event. So are the MidEast producers. I don't think for a moment that IF we are going to play economic war games, there will be retaliation and unintended consequences for those actions. You don't back an animal into a corner and expect it lie down and play dead. Something's going to come out the woodwork that will put the world on notice.

The CME set a date for their collars...there's an event on the way that will produce volatility that will activate those collars. The puzzle pieces are on the board and there are people on this site capable enough to piece them together. It's all about trying to control the volatility to the upside. The easy money that we've seen change hands over the last three years is gone. Now it's all about buying time to protect your ASSets.

TinHat
Dec 12, 2014 - 1:45am

Front runners

That is why i love this site, all of us crawling the web bringing back bits and chunks of the latest news and information, where Turd and all us Turdites can build a larger picture. CME + survival kits + Jim's rant (behind the wall) = crazy right? Where else can you glimpse into the future for fifty cents a day

SilveryBlueBollocks
Dec 12, 2014 - 1:23am

Alternative "out there" from a know nothing

What if they have just discovered that there are turncoat owners of the algos working for cash from the Chinese?

You trip the algos, I buy from you, you get commishkey. Maybe a nice apartment new city. OK?

If your own bag of tricks is used against you would you try to limit the effectiveness???

Also - from a systems perspective, because this mechanism is used in grains etc it does NOT need a large lead time to configure your trading platform to implement, therefore no long term plan necessary.

This could easily be reaction to something relatively recent - Russia going it alone on swaps as EU realises it has totally screwed itself and will not get anything but crumbs from the Russian table & US also seeing the splashback from the oil price war.

Flood oil onto the market in an attempt to bankrupt Russia. What a great idea!

Drinking water? - who cares! We are going to nail those Russian Bustrds.

Saudi relationship? It's over. I sent a text.

Mickey
Dec 12, 2014 - 12:32am

so let's get this straight

oil price plunging triggering a number of problems.

most stock markets plunging along with bond markets

currencies all over the place.

with gold at 1220---cme puts in trading curbs--which over a few minutes could expand to 400

it appears with gold at 1200--the 1000 level applies where there is only one trading range of 100. hard to totally figure out.

since we know they love to and can drive prices down, we do not think these lock limits are not important to them. Further, 100 of downside is huge compared to a 1200 price--400 of upside is huge. Day upon day of 400 would be massive. Would only take 12 days to get to zero with teh 100 limit--3 for the 400 limit.

means to me we are headed to physical driving price because if we get driven down physica buying stil comes out--if to teh upside whether 100 200 300 0r 400 nobody same is going to part with gold.

What about miners--they should be brought heavily if heading up as there are no controls . <Means miners could see massive moves,

caveat: there is a method to their madness--it appears something is anticipated. Could be any one of several things or in combo or chain reaction.

expect beatdown monday at latest before fed meeting. buy equity options, not futures or options on futures--buy individual stock options.

this is what happens in manipulated markets.

TaurusCanisTaurusCanis
Dec 11, 2014 - 10:38pm

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TaurusCanis
Dec 11, 2014 - 10:35pm

They know...

the lid is about to come off.

That's ok... the markets have breaker breathers too.... and they are ineffectual. They really serve as excellent great big waving flags shouting out "hear we are, get in line"....

Just imagine [insert your favorite talking head here] saying every 5 minutes - "Gold just tripped it's circuit breaker hitting new daily highs with 2 million contracts on the bid when it resumes."

That's a level of free press that one could never buy....

bd

TaurusCanis
Dec 11, 2014 - 10:35pm

They know...

the lid is about to come off.

That's ok... the markets have breaker breathers too.... and they are ineffectual. They really serve as excellent great big waving flags shouting out "hear we are, get in line"....

Just imagine [insert your favorite talking head here] saying every 5 minutes - "Gold just tripped it's circuit breaker hitting new daily highs with 2 million contracts on the bid when it resumes."

That's a level of free press that one could never buy....

bd

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