Margins for silver speculators are being reduced for the second time this year. Silver futures margins for some COMEX-monitored silver sellers were raised more than five times in 2011. Those rate hikes nearly doubled COMEX silver positions between March and June of last year. A thirty percent silver price decline was then blamed on the drastic margin requirement changes.
The declining margins for 2012 are seen by many as a way to reverse silver price trends by decreasing trading expense, although companies trading on the COMEX maintain margin changes are a protective mechanism for both participants and the market. Others speculate that lower trading volumes in the first half of 2012 have created a need to attract market liquidity. Lower risk in the silver market following increased market stability is the most logical explanation. Silver demand has seen a slowdown in the first quarter of 2012, bringing COMEX stockpiles to their highest level since 2002.
