Gold for June delivery closed down $16.70 to $1,540.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,551.40 and as low as $1,516.20, but was tanking almost $30 in after-hours trading. The spot gold price was down more than $15, according to Kitco' gold index.
Silver prices fell another $3.49 to $42.58 an ounce and almost breached the $40 level in after-hours trading. The CME has raised margin requirements again for silver by another 11.6%, the third time in a week. It will now cost a trader $16,200 to buy a 5,000 ounce contract, the move will go into effect Tuesday after market close and leveraged traders were dumping positions to avoid having to pay more for silver. If there is more leverage to shake out of the market then silver prices could continue to slide looking at $38 as the ultimate support level.
In contrast, it only costs $6,751 to buy a 100 ounce gold contract, which at current prices is worth $154,300 while silver's 5,000 ounce contract is worth $222,350.
"Gold will do better," says Johnson, who thinks that recent silver mines will ramp up supply so fast that it will overtake demand. "We view volatility [in gold] as an opportunity ... [during] significant downward moves we are in there buying"
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