Morning Note: Silver Trade Over?
Is the silver trade over? That was a question for Fast Money Traders Tuesday morning as silver futures continued to weaken, falling below $44 per ounce intra day less than one week after hitting a 31-year high of $49.84 per ounce. Silver futures have fallen nearly 10% in the past couple days.
“The selling in silver has been relentless since Sunday evening,” wrote Fast Money Contributor Dennis Gartman in this morning’s Gartman Letter.
New margin requirements by the CME Group appeared to be fueling the selloff. CME raised initial margin requirement to $16,200 per futures contract from $14,513 this morning. It was the third increase in one week. The new margin requirements go into effect after the market close today.
Fast Money’s Guy Adami of Drakon Capital was betting that the long silver trade was done for the time being. “Volatility will not take over and you are just going to get chopped up,” said Adami. “A couple months from now, silver could be forgotten like it had been ten years prior.”
The sharp fall in silver comes at a time when some investors, such as Euro Pacific Capital’s Peter Schiff, were arguing that the metal would continue to rally due to demand for alternatives to the dollar.
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CNBC.com with wires.