Thoughts on Silver

With silver dropping over 10% in the past 2 days after the margins were raised by almost $2,000 (minimum amount of cash that has to be given to a broker to trade silver futures went from $14,513 to $16,200).  This is concerning in two parts: First that the margins were increased, an open attempt to make leveraged speculation of silver less of a driving force in the market; and that the price reacted so negatively to the news, showing that there is a lot of fickle money in the sector right now.  If the metal was truly being bought for investment away from currency debasement over the long term, I believe there wouldn’t be as much of a run when the margin requirements increase 5%.  Raising interest rates will also prove a headwind to silver and commodities as a whole when the return on cash starts to look more attractive.  In short, the case for silver is in need of much more negative news, all I see in the near term would be the debate over the debt ceiling in the US, but much of that could already be priced in.