U.S. debt problem plagues precious metals volatility intensifies, banks cut 96.7% of single customer gold positions

21st Century Business Herald reporter Ye Wheat Ear reported from Guangzhou

On the first day after the long holiday, the Shanghai Gold Institute announced the adjustment of the margin ratio of gold and silver extension contracts and the rise and fall stop board. The specific content is: from the close of liquidation on October 8, 2021, the margin ratio of Au(T+D), mAu (T+D), Au (T+N1), Au (T+N2), NYAuTN06, NYAuTN12 and other contracts will be adjusted from 10% to 8%, the limit of the increase or decrease of the next trading day will be adjusted from 9% to 7%, the margin ratio of Ag(T+D) contracts will be adjusted from 14% to 12%, and the limit of the increase or decrease of the next trading day will be adjusted from 13% to 11%.

As the U.S. debt ceiling problem plagues the market, U.S. Treasury Secretary Janet Yellen warned on October 5 that if the U.S. Congress fails to resolve the debt ceiling problem within two weeks, the U.S. economy will fall into recession and various asset turbulence will intensify. In order to avoid risks in advance, more than 20 banks have restricted the trading of precious metals this year, and the gold holding limit of individual banks for a single customer has dropped from 15,000 grams to 500 grams, a decrease of 96.7%.

<h4>Adjusted gold trading limits three times over 2 months</h4>

The day before the National Day holiday (September 30), the official website of the Bank of China released the "Announcement on the Upgrading of The Relevant Systems of Account Precious Metals, Agent Individual Depository Business and Other Related Systems from October 16 to 17". According to the announcement, due to the recent increase in uncertainty in the international financial market, in order to better meet the real needs of customers and reduce investment risks, Bank of China will upgrade relevant systems such as account precious metals, two-way account precious metals, two-way foreign exchange treasures, and agent individual customers Shanghai Gold Exchange auction trading business (referred to as: agent personal depository business) from October 16 to October 17.

After the system upgrade is completed, the bank will adjust the relevant product trading parameters and trading services. Specifically, Bank of China will adjust the product trading parameters and reduce the single customer position limit for account precious metals, two-way account precious metals and two-way foreign exchange treasures from October 18, and at the same time reduce the single customer position limit limit for the business of the agent personal depository.

Among them, the account precious metal single customer position limit is RMB account gold 500 grams, USD account gold 20 ounces, RMB account silver 50000 grams, US dollar account silver 1000 ounces; two-way account precious metals single customer position limit is RMB account gold 500 grams, USD account gold 20 ounces, RMB account silver 50000 grams, US dollar account silver 1000 ounces; two-way foreign exchange treasure single customer position limit, The limit for a single client position for each symbol is $120,000.

In terms of the quota of single-customer position limits for the agency's personal depository business, Au (T+D), mAu (T+D), Au (T+N1), Au (T+N2), NYAuTN06, NYAuTN12 are 5 lots, Ag (T+D) is 100 lots, Au99.99, Au99.95, Au100g, PGC30g are 10 kg. The adjustment time of the single customer position limit limit of the agent personal depository business shall be subject to the trading day of the above gold firm.

Bank of China said that it will no longer provide account precious metals, two-way account precious metals, two-way foreign exchange treasures, and agent personal depository business 2021 version of the product sales document signing service from October 18; for customers who have no positions under the above products, if they do not sign the 2021 version of the product sales documents on October 23, they will no longer provide services for the products; for customers of various account products who have no positions under the original comprehensive margin account, they will no longer provide the services of the products from October 23.

For the reasons for the adjustment, the Bank of China said that considering the greater risk of the international foreign exchange and precious metals markets, the above business will be further strictly restricted in the future (including but not limited to adjusting the unilateral total position limit of the product, the single customer position limit, the transaction spread, the suspension of business, etc.), for customers who still have positions, it is recommended to trade cautiously, and control the risk by choosing the opportunity to sell or close the position, and the Bank of China will continue to provide liquidation services.

This is already the third adjustment of the Bank of China since July 30, and on August 27, the Bank of China said it would reduce the single customer position limit of account precious metals, two-way account precious metals and two-way foreign exchange treasures. At the same time, the quota of the single customer position limit for the deferred settlement contract of the agent's personal depository business is lowered.

The adjustment part is as follows, first, the account precious metals. Single client position limit: RMB account gold 1500 grams, USD account gold 50 ounces, RMB account silver 100000 grams, USD account silver 2500 ounces. 2. Two-way account precious metals. Single client position limit: RMB account gold 1500 grams, USD account gold 50 ounces, RMB account silver 100000 grams, USD account silver 2500 ounces. Third, two-way foreign exchange treasure. Single client position limit: The single client position limit for each trading instrument is 150,000 US dollars. 4. Acting as an agent for the business of individual gold depository. Single-passenger position limit: Au (T+D) is 15 lots, mAu (T+D), Au (T+N1), Au (T+N2), NYAuTN06, NYAuTN12 is 15 lots, Ag (T+D) is 200 lots. The adjustment time of the single customer position limit limit of the agent personal depository business shall be subject to the trading day of the above gold firm.

Previously (July 30), the Bank of China's position limit on precious metals in the account was 15,000 grams, 300 ounces of gold in the US dollar account, 1,000,000 grams of silver in the RMB account, and 10,000 ounces of silver in the US dollar account. The bidirectional account precious metals single customer position limit is the same, RMB account gold 15000 grams, USD account gold 300 ounces, RMB account silver 1000000 grams, USD account silver 100000 ounces. That is to say, in two months, the Bank of China's position limit for a single customer has dropped from 15,000 grams to 500 grams, a decrease of 96.7%.

<h4>More than 20 banks restrict gold trading</h4>

Since the beginning of this year, more than 20 banks such as China Construction Bank, China Merchants Bank, Postal Savings Bank, Industrial and Commercial Bank of China, Agricultural Bank of China, Pudong Development Bank, Industrial bank and so on have successively announced restriction measures for precious metals and foreign exchange business, and some banks have even announced more than once, including adjusting the risk level, trading starting point, position limit, suspension of open position transactions, centralized termination and so on.

Dong Ximiao, chief researcher of CmLCC Finance, said that high-risk investments such as foreign exchange products, commodity futures, and financial derivatives have high requirements on investment experience and risk tolerance, and are not suitable for ordinary investors. For ordinary investors, if there is no rich investment experience and strong risk tolerance, it is not recommended to participate in high-risk investment activities such as foreign exchange transactions. Financial management departments should urge commercial banks to implement the appropriateness management of investors and better protect the legitimate rights and interests of investors.

Last year's crude oil treasure incident gave banks a better understanding of the risks of such products. As global liquidity enters a contraction phase, precious metals have also entered a large fluctuation range, and the current gold short-term line is hovering at $1750 / ounce, whether it is time to bottom out or stop loss. "It can only be said that the short-term can rebound, and in the medium and long term, gold still has room to fall." Lin Rong, a senior investor, told the 21st Century Business Herald that Lin Rong began to invest in gold professionally in 2008.

The current holdings of the world's largest gold-backed ETF, SPDR, have broken through 1,000 tons, and have been showing a unilateral downward trend this year, which has now dropped to 986.54 tons.

Meanwhile, the U.S. Commodity Exchange Commission (CFTC) announced that as of the week ended September 21, the New York Commodity Futures Exchange (COMEX) gold long positions reduced by 12,130 or 2.64% to 447129; short positions reduced by 13,624 or 2.8% to 472126. Total positions were 492765, down 13,591 or 2.68% from the previous week, with a total number of 302 traders. Silver long positions increased by 5077 or 4.41% to 120114; short positions increased by 4017 or 3.13% to 132534. The total position was 145537, an increase of 4997 or 3.56% from the previous week, and the total number of traders was 209.

Zhao Qing, a researcher at Lu securities futures research, believes that gold and silver are still suppressed by the Marginal Tightening of the Fed's monetary policy, and the September non-farm payrolls report released on October 8 is the last official employment report received by the Fed before the November meeting. Overall, we need to keep the bearish thinking unchanged: if the data is not good, gold will have a short respite and rebound, and if the data is better than expected, gold may fall below the support and then go to the next city.

The current background of gold trading is that people are worried that the delta mutation of the new crown virus has supported the price trend, on the other hand, because the labor market recovery looks unbalanced, and there is uncertainty about the Fed's monetary policy plan, the trend of gold is more in a state of stalemate.

For more information, please download the 21 Finance APP