By now, most investors have seen the ugly numbers that belong to both spot silver and July futures silver; however, the down day Monday, has several explanations that ease the pain: first is that May futures rolled forward into July futures. What that means is that those traders still holding short positions in May silver had to either roll those short positions forward into the July futures; buy them back and walk away flat; or buy the physical silver and make delivery to close out the short position. Even some analysts believed that many of the short positions were only "paper shorts" transactions and not actual demands for physical metals.
Second: CME Group raised the amount of cash that traders must deposit for speculative positions. (Initial Margin Requirements) This is the third time since LAST Monday that the limits have been raised. CME, the parent company of COMEX, raised initial margins to $14,513 per contract vs $12,825. Maintenance margins were also raised again by 11.6% to $12,500 a contract from $10,750 per contract.
Much blame has also been placed on the short term speculators who watched silver gain more than 30% last month so they decided to take their profits and run, not likeing the continuous margin requirements increasing and wondering when the other shoe would drop and the margin requirements would again be raised.
