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Chicago Mercantile Exchange, suspecting a bubble, had raised margin requirements for silver-futures traders three times in a week. Poor man's gold, which was trading at

Chicago Mercantile Exchange, suspecting a bubble, had raised margin requirements for silver-futures traders three times in a week. Poor man's gold, which was trading at close to $50 an ounce, double its price six months ago, rapidly fell to just over $30.

Explain why increasing the margin may discourage speculation in a volatile market.

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