Wednesday, August 24, 2011
Gold Tanks Most Since March 2008 ... But Only Erases Two Weeks Worth of Gains
Gold tanked today, crashing $104 points.
Margin Requirements Hiked
Zero Hedge explains why gold tanked - margin requirements were hiked sky-high by two major exchanges:
Two weeks after the CME hiked gold margins by 22%, and two days after the Shanghai Gold Exchange sent them higher by 26%, here comes the CME, as we expected, with another 26% gold margin hike (previously: "Should we expect 3 more SGE margin hikes in the next 2 weeks? Or will the CME rightfully accept the baton and do everything in its power to dent the parabolic rise in the alternative reserve currency? We are cautiously looking at what the CME will do today and will advise readers."). And now we know that this particular margin hike was leaked well in advance, and explains the entire $100 plunge in gold today.
The New York Times has previously confirmed that increased margin requirements by CME can drive down precious metal prices.