So they just keep changing the rules as they go along...shessh...its all a set up



On August 11, 2011, the Chicago Mercantile Exchange (CME) raised the margins on gold futures by 22%, effectively reducing the demand for gold. CME group is the world’s largest gold futures market which takes measures to reduce certain risks associated with volatility. The organization can have an effect on the price of gold by making it harder or easier to trade futures contracts. This was not an isolated decision; Shanghai Gold exchange also raised its requirements to 11% from 10% earlier this week. (If you are a hedger or a speculator, gold and silver futures contracts offer a world of profit-making opportunities. Check out Trading Gold And Silver Futures Contracts.)

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How is This Regulation Going to Affect Traders and the Price of Gold?
In the short term, this increase in margin will reduce demand and ease the upward trend of the precious metal. The volatility should decrease as well because less traders will speculate on the price of gold. The change will not be drastic, but the intention is to increase predictability with lower swings in price.

In the long term, other factors contribute to the price of gold such as demand for industrial use, or in electronics. Also if individuals feel there might be an increase in inflation they might move to gold as a hedge to the loss in buying power of their currency.

Some traders use gold as an alternative to exposure to the stock market if they feel the markets are due for a tumble. With the new credit rating drop in the U.S., and other poor economic reports coming out such as smaller than expected rises in the retail sales numbers, gold might be used as an alternative "safe haven" for investors. In the long run, gold’s price is hardly affected by these margin increases or decreases. (There is a strong correlation between gold's value and the strength of currencies trading on foreign exchanges. See How Gold Affects Currencies.


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