Globex Silver Crash

Around 6:15 Sunday (EST), silver crashed on the Globex, the biggest intra day move since December 21, 2008 and reminiscent of a Globex crash I recall from September 2008. Silver lost over 10% down to $42.21 in under 50 minutes. Let's go over the possible reasoning behind the price movement.

• The CME increased margins for a second time $14,513 per contract from $12,825 and maintenance deposits rose to $10,750 from $9,500, both up over 13%. The increase went into effect after Friday's close and was announced Thursday. The CME is trying to flush speculators out of the market, this has a major effect.
• Often at key sell points orders may get backed up. This could have some effect going forward more than the 50 minute selling mania, but it is possible that had some effect.
• Bin Laden dies, the US dollar rallies (less than 1%), not a credible explanation.
• Large scale technical sell off in Asian markets not very likely considering markets in China, Hong Kong, Singapore, Vietnam, Malaysia, Taiwan, and Thailand were closed and South Korea and Japan likely did not create a mass sell off (also Philippine and Indonesian markets were relatively tame adding modest gains to stocks). This move seems more concentrated.
  
• China tightening monetary policy and the Fed's lack of policy shift, not likely to effect the price so greatly in such a short amount of time.

Just the reasons that came to mind first.

Not that it is vital importance, but it really does remind me of what initially looked like a data feed error. On September 14th, 2008 the Globex silver market crashed at essentially the exact same time of day as the current occurrence of free fall (it was also a Sunday). Silver actually ended that Monday up 4 cents after a 50% haircut, but was towards the end of a strong dying bear market for silver.


The last time we saw this was on the 21rst of December, similar crash, but this was quicker. Again despite the sharp Globex dip and instantaneous 100% retracement, silver closed up 36 cents that Monday. The difference being this recent crash in price did not retrace 100% following the 10% correction within 60 minutes or less. In the long run this will be a mere short term price aberration.