Gold and Silver Prices Did Not Rise on the Back of the Coronavirus Threat (and the Quiet Act of Raising Margins on Gold and Silver Futures)

coronavirus is not responsible for rising gold and silver prices

There has been a lot of misinformation circulated in the mass financial media as always, this time regarding the reasons why gold and silver prices have spiked recently. Almost all mass media financial outlets have posed the question, “How long the ‘coronavirus-based’ gold and silver price spike can last?” Asking this question is conflating correlation and causation, a mistake frequently made by the mass financial media. For weeks, I have been stating that gold and silver prices were basing for a significant price spike higher on my skwealthacademy news site, even writing two months ago that gold and silver prices were readying to bounce higher soon. So the fact that gold and silver prices spike higher during recent growing concerns of the coronavirus spreading outside of China does not make it the primary reason why gold and silver prices have indeed spike. This would be like stating that, because a migration of thousands of geese took place over Seattle during a large 8.0 magnitude earthquake, that the correlated event of migrating geese was responsible, and not shifting tectonic plates, for creating the earthquake. Can you imagine the ridicule such “news” establishments would receive if they ran headlines stating “How many aftershocks will continue based upon the continuing geese migration?” Yet, the mass media always receives a pass for horrible journalism. As my skwealthacademy patrons know, I have been recommending them to buy gold and silver since gold was $1,180 an ounce and silver slipped below $14 an ounce in Q4 2018. Did the yet unknown coronavirus cause gold and silver prices to rise since these prices all the way up to the end of this month?

In fact, I published a couple of articles warning that coronavirus was very likely to trigger higher gold prices and also likely to pop the Bubble of Everything, a month ago, well before both of these events actually happened at the skwealthacademy news site, so anyone that follows me should not have been surprised when these events actually happened a few weeks later. Though one can never predict the exact nature of a drop when it happens, since the US stock market bubble has basically been building since the last global financial crisis in 2008, I cannot say that the rapidity of the drops in the US stock markets over the last few trading days has surprised me, nor should they have surprised you, as I extensively discussed the likelihood of these events for the past several weeks.  I also was very careful to state that both of these events were poised to happen, coronavirus or not, and that if they happened while fears of coronavirus elevated, that the media would falsely scapegoat coronavirus for the world’s crumbling economic problems that were created by poor Central Banker monetary policies for the duration of the last decade. Even US President Trump jumped on the ignorance bandwagon and displayed his complete ignorance of how global markets operate by blaming the coronavirus for recent US stock market woes.

After gold reached $1,690 an ounce and silver reached $18.90 an ounce, both precious metal prices have pulled back, as expected at the end of the month, as the pro-US dollar, anti-gold banking cartel almost always pushes back gold and silver prices at the end of the month options and futures expiration dates, as everyone already knows. However, what I found to be very curious was that the Google search engine algorithms returned no mention of the Chicago Mercantile Exchange (CME) raising margins on gold and silver futures. Recently, the CME raised initial/maintenance margins on COMEX gold futures (100 ozs) by a considerable 11.11% from $4,950/ $4,500 to $5,500/$5,000 and on COMEX silver futures (5,000 ozs) by 4.55% from $5,720/$5,200 to $6,050/ $5,500 within the last month.

Now here is the interesting thing about this event. This event was nowhere to be reported in the mass media. Try Googling, “CME raises margins on gold futures, silver futures”, searching both the web and the “news” categories. The top search results, returned by Google algorithms, at the top of its first page of results are articles about raising margins on gold and silver futures from many years ago. There is nothing returned in Google engine search engines about this important event, as if it never happened at all. Here’s where things become even more interesting. Once aware that these margin increases occurred, I searched the CME’s website, as I was certain that I would find news about their raises of gold and silver margins on their website.

Instead, in their “media room” section, there was no press release at all regarding their decision to increase gold and silver futures margin levels in the time period if happened, even though the margin increases undoubtedly contributed to margin calls and some of the downward selling pressure on gold and silver futures prices in recent days. This is a concern to me. Gold and silver margins were still at the lower levels on 13 January 2020 and then raised to the higher levels when I checked them again on 25 February 2020. The exact details of this gold and silver margin hike should be easy available online and also available at the CME’s website, but instead, opacity, not transparency, seems to be the rule of law when it comes to precious metal markets. As the CME raised margins on silver futures a ridiculous five times by a massive 68% in just nine trading days between April 26th and May 9th in 2011 to collapse silver prices during a raging silver bull that carried silver prices to $50 an ounce, we have to be wary of the CME utilizing this tool again, should gold and silver prices start rising significantly again in future months. And always know, that when gold and silver prices reverse and continue to rise in price, this rise will not be predicate upon coronavirus fears, but due to continuing Central Banker destruction of fiat currencies’ purchasing power all around the world. And if any further precipitous drop in gold and silver prices happen moving forward, check to see if the CME has raised margins on gold and silver futures significantly.

J. Kim

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