CME Raises Silver and Gold Margins – What to Expect from the Market Tomorrow?

[Igor Pereira]

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Dear traders and investors,

We have a critical update coming directly from CME Group (Chicago Mercantile Exchange) that will impact the liquidity and movement of precious metals from tomorrow. If you are positioned in Silver (XAG/USD), Silver Futures (SI) or Gold (XAU/USD), attention redoubled now.

By Igor Pereira, Financial Market Analyst & Junior Member WallStreet NYSE

CME Clearing today announced a revision of the margin requirements ("Performance Bond Requirements"). The most significant change affects future contracts of Silver (Silver Futures - SI).

• What changed: The initial margin was high in 10%.

• Duration: From the closing of tomorrow's business, Friday, 12 December 2025.

• Number: The maintenance margin jumps from USD 20,000 to USD 22,000, and the initial margin for new positions rises to around USD 24,200 per contract.

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Historically, when exchange increases margins, the goal is to reduce excessive leverage at times of high volatility. For the trader, this means that "costs more" keep the same position open.

What to expect for Friday:

1. Forced Settlement: Smaller or overgrown traders can be forced to close positions to meet the new requirements, which can generate a momentary selling pressure in futures.

2. Volatility: The market may face difficulties to break previous tops in the very short term due to this liquidity restriction.

Deep Analysis: The VET and the Physical Flow

Despite the technical pressure of the margins, the foundations shout another story. O EFP (Exchange for Physical) Silver is in free fall, leaving from approximately 75 cents to about 32 cent Now.

The EFP measures the price difference between Comex's future contract (paper) and physical metal in London. This fall indicates that the metal in London is getting relatively more expensive. This usually triggers a physical metal output flow from COMEX to London for arbitration.

In the past, this movement of drainage of COMEX stocks coincided with robust high pressure in the price of silver. We are seeing a scenario where the paper tries to hold the price (via margins), but the "physical" demands appreciation.

We can't ignore the calendar. We are approaching the end of the year, when institutions make the de-risking of their balance sheets. Liquidity will become scarcer.

But the long-term vision is clear: Capital Rotation. If we price the S&P(SPX/XAGUSD) into ounces of silver, we see that the stock market has already lost 50% of its real value since March 2024. We are possibly at the end of a dead-cat boom that lasted 14 years, powered by cheap money and inflation.

The projection is that, by 2028, SPX(SPX/XAGUSD) loses even more value compared to real silver. Smart money is coming from overrated paper assets (actions) to real assets (Gold and Silver).

For the short term (tomorrow and next week), care with "violinates" caused by margin adjustment. The future market can suffer initial sales pressure.

However, for those who operate the macro tendency or accumulate physical, the foundations have never been stronger. The attempt at margin control is often a sign that physical demand is beginning to bother the big players.

Stay tuned for risk management.