COMEX Rule Change May Indicate Frothiness

As reported in Citizen Economists, COMEX has raised the margin requirement for gold and silver contracts. The rest of the post points out that the gold-futures matrix is showing mild "backwardization," meaning that the price for more distant contracts is slightly lower than for the front-end contract. Backwardization pops up when it looks like gold's going to fall. This take is consistent with the author's take on the margin upping:

The result of these increases in the margin requirements will likely be somewhat bearish for the metals in three to six months. This is because it will require more capital to control the same amount of the commodity and will serve to dampen some of the speculative hot money which has been flowing into the metals lately.

Of course, the same argument applies to hot money that seeks to short gold.