But the exchange and its dealers don't play the game that way. Instead, they apply these changes to everyone, even people who may have bought when silver was down near $18 per ounce, even though these older position holders pose no greater risk of defaulting than before. The exchange committee members are quite expert at all this, and are well aware that the net effect of what they were doing would be to throw people involuntarily out of positions. The effect is carefully calculated and thought out, and is part of the overall process used to artificially control silver prices.

As usual, we only get half the story. We're supposed to weep for these guys on maximum leverage that can't post margin? What are they doing there in the first place? Who held a gun to their head?

There's a simple way to avoid a margin call: don't use maximum leverage.

If I have half the value of a contract in my account, I'll never see a margin call unless that market crashes through the floor and continues right on through the earth's crust on it's way to China. Even at 25% my risk is manageable, but at 10%, I should ALWAYS have enough cash at hand to meet a call, otherwise I deserve to be closed out.

Ah, but if it weren't for all that leverage we'd never have gotten this close to 50 in the first place, would we?

Isn't it odd how we tut-tut the over leveraged home buyer, and yet cry foul when the exact same thing happens in the futures market? At least the Comex has some instinct for self preservation and hasn't run off a cliff the way the investment banks did just 3 short years ago.

How quickly we forget when it's OUR book taking the hit.

ebear