What is happening with the margin requirements?
CaptHenway
Posts: 33,627 ✭✭✭✭✭
When was it announced that they were being raised?
Numismatist. 54 year member ANA. Former ANA Senior Authenticator. Winner of four ANA Heath Literary Awards; three Wayte and Olga Raymond Literary Awards; Numismatist of the Year Award 2009, and ANA Lifetime Achievement Award 2020. Author of "The Enigmatic Lincoln Cents of 1922," Available now from Whitman or Amazon.
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seems like saturday or sunday. both gold and silver, maybe others
https://www.reuters.com/world/india/gold-falls-15-firm-dollar-silver-recovers-over-three-week-low-2026-02-02/
this really only affects the tiny fish. major players have the cash to cope
Thank you.
This additional requirement goes into effect end of today. They are deliberately making it much harder to play the game.
"CME raised margin requirements on Comex gold and silver futures after prices saw their sharpest drops in decades. The decision landed after a violent selloff that wiped out leveraged positions across metals.
Gold and silver both collapsed on Friday as traders rushed to close positions, and margin calls spread fast. The change takes effect from Monday’s close and applies to gold, silver, platinum, and palladium futures.
For traders, the message from CME is blunt. If you want to trade metals in this market, you need more cash up front. Gold margins for non‑heightened risk profiles rise from 6% to 8% of contract value.
For heightened risk profiles, margins rise from 6.6% to 8.8%. Silver margins jump harder. Non‑heightened risk margins rise from 11% to 15%, while heightened risk margins increase from 12.1% to 16.5%. Platinum and palladium margins also go up.
Margin hikes raise collateral demands after extreme volatility
The margin increase follows what CME described as a normal review of market volatility to ensure enough collateral coverage. The exchange often raises margins when prices swing hard, whether up or down.
This time, the timing adds pressure. Smaller traders now face higher cash requirements just days after heavy losses."
My US Mint Commemorative Medal Set
Fixed it for ya
When gold and silver move together, it signals the coming end of fiat money.
Someone really, really, really wants to discourage trading in precious metals. Except for themselves.
I knew it would happen.
ShangBang. China reluctant to mirror US manipulation.
Loves me some shiny!
“Often wrong, but never in doubt.”
The online folks pumping this absolute BS narrative are either uneducated or liars. Any financial instrument that is violate will have high margin requirements. What could possibly go wrong if you allow a couple grand to control a $500,000+ Comex contract? Frankly, I can't believe that the requirements aren't much more with the volatility. A 10% move one way or the other is expected at this point.
And this goes for both going long or short the Comex. Claiming that raising the margin requirements is being done to suppress the price is utter nonsense. Folks who want a true picture of the market value for silver should be calling for the elimination of being able to purchase a contract with any margin.
The CME should make it harder to play the game. Futures margin is so low compared to equities. I image a lot of the small time players got burned on Friday who had no business trading futures. If someone bought even 1 contract for $100 hoping silver spot went to $120 and higher, they only needed I believe $25K margin, which was even a lower fixed $ in Dec. This is on a buy contract for $500,000. On Friday, after a 20% drop, the trader lost $100,000.
Now going to a % based margin requirement, should eliminate the small fish from playing the game they shouldn't be in the first place. JMHO.
This is the wrong room to post reasonable, factual posts.
All comments reflect the opinion of the author, even when irrefutably accurate.
As someone who has been burned on futures contracts a time or two, I agree. They are heavily leveraged and can easily wipe out all the equity in the position.
All comments reflect the opinion of the author, even when irrefutably accurate.
The online folks pumping this absolute BS narrative are either uneducated or liars. Any financial instrument that is violate will have high margin requirements. What could possibly go wrong if you allow a couple grand to control a $500,000+ Comex contract? Frankly, I can't believe that the requirements aren't much more with the volatility. A 10% move one way or the other is expected at this point.
Exactly! So, why do the exchanges allow low margin requirements in the first place? Certainly they know that when more people are suckered into their game that they can change the margin requirements at will to help out their friends and/or owners.
I knew it would happen.
That is not at all how it works. The margin requirement is low in securities with low volatility for obvious reasons. The reason is no different from why a bank loans money with a small down payment to purchase a house. It's all about evaluating the risk and a financial institution wanting to make $ on loans and at the same time be adequately secured.
This in no conspiracy. The margin requirements go both ways, long and short.
Evidently, too many market participants buy futures contracts on margin. The banks and larger participants have no trouble meeting higher margin requirements. Tell me again how they don't plan in advance to shake out the weak hands from the get-go.
I knew it would happen.
Yes, the precious metals forum has always been filled with conspiracy after conspiracy. It's never manipulated when it goes up only when it goes down. Anyone who actually believes all this BS wouldn't touch the gutter with a 10 ft pole. Gutter stackers are a crazy bunch. Looney Tunes. RGDS!
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
Wooooha! Did someone just say it's officially "TACO™" Tuesday????
Retiring at 55, what day is today?
You are a silver stacker with an uncanny ability to HAVE NO CLUE HOW TO UNLOAD IT after eighteen hundred million times saying that's what you are doing.
What not to do #101 ..... Waltz into a coin shop with a monster box of ASE's with no appointment and expect them to liquidate that for you at all time highs. (As described by you) hahahaha
COPPER is gutter !
https://www.msn.com/en-us/money/markets/gold-silver-extend-free-fall-as-cme-margin-hike-fuels-selling-pressure/ar-AA1VtEoi
>
Well, there's always rhodium.
And tulips are at the bottom of their 389-year cycle.
I think it’s remarkable that a margin requirement change can impact the price of PMs by 10-30%. That tells me that there are two markets: physical and paper. And even physical is driven by refinery capacity - when dealers are buying 90% only to send to the refiners, and stop buying when the refiners slow down - I get it, but something smells fishy.
There's not only margin calls, but also a cascading effect from stop losses that are triggered as the price falls.
With HFT the larger trading houses can spoof the futures market by probing the order book to find out where the stop losses are, entering a large number of sell orders for a short position just below the stop losses, and then pulling their sell orders before they are executed. This drives the price down below the stop loss limits and then the shorts come into the market and buy up the stop loss positions that were just liquidated, at a much lower price. Wash, Rinse, Repeat.
This is why short term traders get massacred.
I knew it would happen.
Here is the direct link: https://www.cmegroup.com/content/dam/cmegroup/notices/clearing/2026/01/chadv26-041.pdf
Some brokers also charge a multiplier on top of this.
This latest one goes into affect Monday evening.
Is raising the margin requirement simply a method to squeeze out the smaller investors or dissuade them from trading ? Seems to me “money” should not be a commodity we bet on. After all, silver & gold is real money.
``https://ebay.us/m/KxolR5
It's to reduce risk and have traders provide more capital for trading so if the market goers against the bet, there are funds to cover losses. And yes, it limits the small players from trading which is fine. As noted, 1 futures silver contract has the potential today to involve $400-500,000 in value.
Nailed it.
People saying banks are controlling the price even though they aren't allowed to speculate on PMs....sell-side analyst predictions being taken as the way a bank or brokerage firm's capital is deployed...and not able to tell the difference between CUSTODIAN holdings and TRADING CAPITAL holdings.
We have people who believe made-up-nonsense from sites that promote Ponzi Schemes and other scam outfits. Like Alex Jones saying Sandy Hook didn't happen and hey....buy my vitamins !!
I'm OK with any prediction, long or short, whether I agree with it or not. Just make sense....and don't post obvious boiler room nonsense from scam websites.
It wasn’t just one margin increase but 3 over ~ one week.
Did you see the movie "Trading Places" ?
Because they were late to understand the price and column increase impacts. When silver hit $50, then other big movements they should have increased then. As usual, too little and too late.
didn't the conspiracy theory on PM manipulation become conspiracy fact when JPM was fined almost $1 billion dollars for spoofing the markets? The answer is Yes.
When gold and silver move together, it signals the coming end of fiat money.
any margin at all in the futures market allows buyer to pay less than the full price. margin simply dictates how much free leverage they can have. the problem is that AFTER they buy they can be forced, on prior purchases, to come up with more cash or liquidate their position.
Those that can't see this as a tool to manipulate have been drinking the wrong flavor of koolaid.
When gold and silver move together, it signals the coming end of fiat money.
Actually, I disagree. No casualties so far...no bodybags here or in China. Very orderly and well-contained.
The exchanges are doing a GREAT job considering there are thousands of reckless wildcatters who are speculating recklessley and/or with OPM (Other People's Monies).
Brokerage firms usually require hedgers and speculators to deposit funds in addition to the initial margin requirement. These funds are invested in T-Bills which earn interest. These T-Bills can be liquidated to cover maintenance calls.
Don't forget silver buyers who sell to refiners have a substantial built in spread.
All security trades have initial and then maintenance margin to come up with more cash or securities if the trade (long or short) falls below regulatory levels. If you bet wrong and don't pay 100% upfront, that is the way it always worked.
But that is why they increased the margin 3 times in a short period, to start removing the over-leveraged traders. And this is when the price was still going up. Now after some losses, they are going % based instead of a fixed dollar initial margin. No casualties maybe, but wouldn't want to be on the other side of that Chinese $140MM USD/$1B yuan loss.
Also depends on your definition of casualties/bodybags. I agree, no systemic casualties but don't doubt there are many small fish who lost their savings and more. Plus those that got 'margined' out at $110 are probably thanking God they did before it hit $75.
no systemic casualties that we know of. The ones that were there got quietly taken care of. Unless of course you consider Fridays crash to be loud.
When gold and silver move together, it signals the coming end of fiat money.
Youtube claimed casualties but as per usual nothing was substantiated. Conspiracies-R-Us. THKS!
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
Wooooha! Did someone just say it's officially "TACO™" Tuesday????
Retiring at 55, what day is today?
I didn’t hear about major player casualties but no telling how many minor players were hurt badly. If I understand how this works, if the margin was 9% on a contract worth $200K (silver price at $40/oz) you would needed $18K to cover the contract. If the margin is increased to 15% and the price increased to $80/oz the contract value is now $400K and you would need $60K to cover the contract. That’s a big jump if it happens over a few weeks (assuming I’m understanding the mechanics of this).
No, but I did order a thousand more ounces of silver before COB today.
``https://ebay.us/m/KxolR5
(A little deeper, a little smeller)
Yep, but if you shorted the contract, your realized loss if the market doesn't turn your way before expiration is even larger, approx $200K. Why shouldn't the CME make the seller come up with $60K to stay in the game. If you add the $60K but it turns back to say $50, then the get partial back.
From $18k to $60k seems like a big jump. Hopefully whoever took out the contract has deep pockets.
The price has increased and so has volatility. Without a hike in margin requirements, you'd be risking a systemic problem if someone got wiped out owing $$$ to other firms.
COMEX and the exchanges do NOT want to be at risk.
“They” don’t need to “plan in advance to shake out the weak hands” any more than casinos need to plan in advance to wipe out low budget gamblers at a high stakes table. It’s just going to happen, sooner or later.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
The jump is irrelevant to your hypothetical trader if he’s just sitting on his position, because his equity has increased from 18K to 218K. It’s the guys who keep releveraging their position as their paper profits grow that can get into trouble quickly. As it should be.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Margins reduced. Any outrage?
Knowledge is the enemy of fear
Comex is losing business and wants you back, until the next time.
I knew it would happen.
Since the price has stayed within a reasonable range recently appears the FOMO speculators have left the building. Less risk in market.