Silver dropped, heading for the biggest three-day fall since October 2008, as increases in Comex margin requirements drove investors away. Gold declined after a report that Soros Fund Management LLC may have cut holdings.
Silver dropped, heading for the biggest three-day fall since October 2008, as increases in Comex margin requirements drove investors away. Gold declined after a report that Soros Fund Management LLC may have cut holdings.
CME Group Ltd., Comex's owner, this week raised the minimum amount of cash that must be deposited when borrowing from brokers to trade silver futures to $16,200 per contract from $14,513, effective at the close of business yesterday, the second increase in less than a week. A year ago, the margin was $4,250. Silver futures rallied 57 this year through April.
“Silver shot way above its fundamentals,” said Adam Klopfenstein, a senior strategist at Lind-Waldock, a broker in Chicago. “Unless you are a well-heeled investor, it now takes a lot more capital to participate in trading. Speculative fever has been taken out of the market.”
Silver futures for July delivery slumped $1.365, or 3.2 percent, to $41.22 an ounce at 9:49 a.m. on the Comex in New York. A close at that price would take losses over three days to 15 percent. Yesterday's decline was 7.6 percent, while a day earlier it was 5.2 percent.
The price touched $49.845 on April 25. Silver reached a record $50.35 in January 1980 as the Hunt Brothers tried to corner the market.
Gold futures for June delivery fell 90 cents, or 0.1 percent, to $1,539.50 an ounce. On May 2, the metal rose to a record $1,577.40. Before today, the price gained 30 percent in the past year.
Soros Fund Management, the $28 billion hedge fund run by Keith Anderson, has sold much of its gold and silver holdings, the Wall Street Journal reported today, citing unidentified people. Many of the sales took place over the past month as there was a reduced risk of deflation, according to the report.
Palladium futures for June delivery lost $20.40, or 2.6 percent, to $762 an ounce on the New York Mercantile Exchange.
Platinum futures for July delivery fell $20.50, or 1.1 percent, to $1,840 an ounce.
--Bloomberg News--
