On December 29, CME Group announced a comprehensive increase in margin requirements for metal futures including gold, silver, palladium, and lithium, with the changes taking effect after the close of trading on Monday local time. Among them, the margin for gold futures was raised by 10%, silver futures by approximately 13.6%, and platinum by about 23%. This move triggered multiple rounds of declines in international metal futures prices. The international gold price fell below the key level of $4,500 per ounce, while domestic main contracts for palladium and platinum closed at their daily limit down.
Previously, domestic exchanges have also repeatedly increased the margins and the range of price limits for precious metals. This decision by exchanges both at home and abroad is not surprising. Because within just one month, the maximum increase in futures contracts such as silver and platinum has exceeded 40%. Under such a rise, a substantial increase in margins will significantly raise the cost of speculative transactions in the market.
Historically, exchanges have raised margin ratios multiple times, which has often driven sharp corrections in varieties that have seen huge gains in the early stage. The most recent case was during the surge in silver prices in 2011. The Chicago Mercantile Exchange raised silver margin requirements five times within nine days, forcing high-leverage funds to withdraw from the futures market, and the price of silver plummeted by nearly 30% within a few weeks.
Since 2018 to the present, as the inherent contradictions in the U.S. debt and dollar system have continued to accumulate, the world has been in a process of de-dollarization, with the accelerated structural restructuring of currencies. Holders of dollar-denominated debts are looking to sell their currency debts and convert them into other forms of wealth storage instruments. Today, the surge in the prices of precious metals, copper, and other non-ferrous metal products is essentially not only a scramble for upstream raw materials but also a competition for metal processing and smelting capabilities, as well as panic over the increasing lack of anchor for the U.S. dollar itself. From the gold exchange standard of the gold-dollar system, to the geopolitical and financial bundling of the petrodollar, then to the debt credit support of the U.S. debt-dollar system, and now expanding into the digital field, the future of the anchor is full of uncertainty, far less tangible than resource commodities.
From this perspective, the global monetary system is bound to move towards diversification in the future, and a new monetary order is also taking shape. However, a promising future is never achieved overnight. If expectations run too far ahead of reality, even if the "money" prospects are bright, one may inevitably fall into the investment trap of "back-and-forth swings".
In fact, in the investment world, there is never a lack of opportunities between reality and expectations; what is lacking is only the perseverance and the ability to control the rhythm. Investors do not need to worry about missing investment opportunities, but should be wary of the sudden reversal that may occur in the climax of pleasure. Only by adhering to a long-term mindset instead of adopting aggressive strategies such as leveraged bets can we move forward steadily and go further on the investment path.
