Over 40 years ago, a young reporter navigated the trading floors of the Chicago Mercantile Exchange and the Chicago Board of Trade, learning the trading lingo used by pit traders.

Electronic trading has replaced the open-outcry pits, but the arcane language of traders persists, impacting elements like short squeezes and margin calls in the silver futures market.

Recent volatility in silver futures prices led to traders receiving margin calls from brokers, prompting increased margin requirements from exchanges like the MCX in India.

Margin calls occur when a client’s leveraged silver positions drop significantly, requiring additional capital. The silver market’s extreme volatility has become a risky environment for individual traders, exposing them to sudden position closures.

A short squeeze in the silver market is unfolding due to declining physical supplies, strong demand, and geopolitical uncertainty. Short sellers are buying back silver to cover positions, amplifying price rallies and causing shortages, particularly in London.

High silver lease rates and price differences between London and New York markets have exacerbated the squeeze, with traders seeking arbitrage opportunities across the Atlantic. Demand for precious metals is also rising amid expectations of U.S. interest rate cuts.

Despite high volatility, long-term technicals suggest a bullish outlook for gold and silver markets. Silver prices are expected to reach $65.00 by year-end and $75.00 by 2026, but caution is advised for traders due to extreme daily price swings.

Email feedback to the author at [email protected]. The author has no positions in securities mentioned. Information in the article is for informational purposes only and was originally published on Barchart.com.

Read more at Yahoo Finance: The Massive Short Squeeze Underway in Silver and Margin Calls from Brokers