The metals markets, particularly gold and silver, have recently undergone significant corrections and sharp fluctuations. This pattern was not limited to them but also extended to other investment assets such as Bitcoin and other instruments traded in global markets. Excessive reliance on leverage inflates investment positions beyond the actual capacity of investors, making markets more susceptible to sharp fluctuations and rapid crashes at the first sign of correction. In my view, one of the most prominent factors contributing to deepening or accelerating these crashes, regardless of the financial asset, is margin financing. At first glance, margin trading appears to be a financial tool.
Metals and Crypto Markets: The Role of Margin Trading
Gold, silver, and Bitcoin markets are experiencing sharp fluctuations due to excessive leverage use. Margin financing makes markets vulnerable to crashes. Analysis of causes and consequences.