Loading ...Is this how they slow down gold? (+case building)
I was thinking.. how the hell could CME or who ever establishes margin requirements for gold futures could stifle speculation? Well, what about could be the equivalent of the fed controlling liquidity via interest rates? Margin rates! Especially when everybody is leveraged to da hilt! Wouldn’t take much have a cascade of stop hunts.
CME Group To Change Gold Futures Contracts, Increases Margin Requirements
Here are two print screens.. I had to go to way way back machine to get margin requirements from a previous date… VERY hard to find.. unless we have someone here at goldtent that is a paying member of goldchartsrus ?
In May 2019… super low margin requirements…
Look where they are now!!!
This is major head wind for gold price action.
Edit: adding this article from 2012… ishh.. I hope we are not at top of ladder…
http://www.321gold.com/editorials/sirchartsalot/dorsch010512.html
Not necessarily a conspiracy.. but just a side effect of reduced liquidity. Can some abuse of this situation to their advantage, to reposition themselves? Of corse. Just like super low margin rates can permit speculators to push and ballon the price upwards.. which would normally not be possible.
Good sleuthing Patrick
Yes when things heat up they increase margin and force many small specs out or to reduce position size.
I understand commercials don’t have to play by the same rules ( ie no margin requirements apply)
Perhaps the new kid jonny21 could comment.
Check out the 2 screens I added.. almost up 8x since May 2019.
SO.. is rising margin req. a symptom of increasing prices OR the cause of it’s downfall? How much does price have to go down before margin req. are lowered? I NEED more margin requirement data! I can’t find it. Help me goldtent!
So.. how much do small specs have an impact on price? Like you said Fully.. maybe large players don’t really see these increases as an issue. How much does a stop hunt affect gold price?.. How much of the volume is small specs with tight stop losses?
No doubt this reduces small specs ability to play IMO
Hopefully Jonny21 will join the discussion
I wonder if the COTs include the micro contracts ???
God morning – The CME margin rate for gold has been raised to $9,185. Individual firms are free to charge higher rates if they choose to do so. I am surprised to see IB raise margins so much higher than Exchange minimums. I checked the rates at TD Ameritarade just now and it is showing $10,065 for margin. Also, that $2,975 intraday rate above is what IB charges customers who day trade a contract and are out of it by the end of the day.
Also, the overnight rate on that day was $4,250. It doesn’t seem unreasonable to me to raise margins in this environment. Whenever I have a position on in gold lately, it feels like I am on a bucking bronco. The margins apply to short positions as well. Short hedgers do pay a somewhat lower rate, or can have gold on deposit or other proof of ability to deliver.
Here is a link to CME historical data where you can see the margin requirements for every day back to 2008 (or even earlier for some contracts)
https://www.cmegroup.com/clearing/risk-management/historical-margins.html
Wow thanks Jonny21
Sir Patrick’s head will explode with this new information
He can chart anything that moves
🙂
The Commitment of Traders report for gold includes accounts that have positions of 200 or more contracts long or short. The 200 contract level is “futures equivalents” and would include options(based on their delta) and any micro contracts. For instance if a trader was long 190 of the 100 oz futures and long 21 at the money calls with a delta of .50, he would have 200.50 futures equivalents long and would be reportable and included in the COT data.
A couple other useful links…
You can get current margins on any contract at this site
https://www.cmegroup.com/clearing/margins/outright-vol-scans.html#sortField=exchange&sortAsc=true&exchange=CMX§or=METALS&clearingCode=GC&pageNumber=1
here is a link to CFTC reportable positions for COT data. The COT attempts to cover about 80% of the open interest in each contract.
https://www.govinfo.gov/content/pkg/CFR-2012-title17-vol1/pdf/CFR-2012-title17-vol1-sec15-03.pdf
and a description of the large trader reporting program
https://www.cftc.gov/IndustryOversight/MarketSurveillance/LargeTraderReportingProgram/index.htm
Hi Jonny! Thanks for all that info. I see my print grab for May 2019.. I highlighted wrong cell. I’m crunching now the pdf files with all the margin req historic data from CME! Gonna be fun.
Go get em Sir Patrick
You are welcome Patrick, enjoy !