The Chicago Mercantile Exchange (CME) has moved to tighten risk controls in the precious metals market. On Tuesday, January 13, the exchange shifted a margin requirement from fixed dollar amounts to a percentage of contract value as prices accelerated to record levels.
Under the old framework, CME charged a flat margin per futures contract and adjusted requirements only during periods of extreme market stress. The new system automatically links margin requirements to the metal's price. As prices rise, the amount of cash traders must post increases in tandem, reducing effective leverage and forcing market participants to hold more collateral just to maintain existing positions. It is a self-adjusting risk mechanism designed to keep pace with fast-moving markets.
The Unstoppable Rally
The main culprit for the move is silver. In the first fourteen days of 2026, spot silver surged by more than 24%, rising above $90/oz and building upon a 148% gain in 2025.
Geopolitical tensions and tightening inventories drove fresh inflows toward precious metals, while the latest soft inflation data reinforced expectations of the Fed's cuts.
The fundamental driver is a combination of persistent structural deficit and unusually inelastic supply. Roughly 70% to 80% of global silver output is produced as a byproduct of mining other metals such as copper, lead, zinc, and gold, limiting the ability of supply to respond quickly to higher prices.
The consultancy firm BMI reported it expects the global deficit to persist throughout 2026, driven primarily by higher investment demand and constrained physical availability.
"As non-yielding assets, silver and platinum have both benefited from interest rate cuts; but they have also indirectly benefited from the elevated gold price, which has made both metals cheap relative to gold," BMI wrote, according to Mining.com. The firm also pointed to Beijing's export restrictions on physical silver since January 1 as a further squeeze on inventories in London and Zurich, briefly pushing lease rates above 8%.
Far From Real All-Time High
Silver's long-term price history adds further perspective. If silver's 1980 peak of $50/oz were adjusted for official inflation, the metal would trade at least at $150/oz today. This number shows that, despite a superb rally in nominal terms, prices are still far below the real-term record prices.
That tension between paper prices and physical availability is already visible on the ground. Spot silver broke through $90/oz for the first time on Wednesday morning, but bullion dealers in hubs such as Dubai are reportedly selling physical coins for no less than $120/oz.
Such a disconnect best highlights the real-time price discovery in a market with increasingly dominant supply constraints.
Price Watch: Sprott Silver Miners & Physical Silver ETF (NASDAQ:SLVR) is up 11.47% year-to-date.
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