Monday 26th September 2016

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Biggest Plunge for Silver since 1975

Bloomberg reported May 6 that silver futures are headed for their biggest weekly drop since 1975. The week saw a 26% plunge in the price of silver from its April 25 high of $49.85. The event is attributed to CME Group Ltd’s increase of the amount of cash required for a speculative position in the commodity. By May 9 the minimum deposit amount will have increased 84% to $21,600 from what it was two weeks ago.

Lachlan Shaw, commodity analyst for the Commonwealth Bank of Australia commented, “The higher cash-margin requirements simply cannot be met by all participants, and when a trader can’t make margin, the underlying security is often liquidated. Further silver price falls are possible.”

Gold futures were also down 3.7% this week—the biggest loss since May 2010—but the slide halted at a low of $1,462.50.

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