Buying Gold and Silver Illegal???

[hejira11]

I saw this Email on another site. I don't know the full ramifications of this "Act." I am hoping it is an overreaction on someone's part.


From: FOREX.com
Date: Fri, Jun 17, 2011 at 6:11 PM
Subject: Important Account Notice Re: Metals Trading
To: ***

Important Account Notice Re: Metals Trading

We wanted to make you aware of some upcoming changes to FOREX.com’s product offering. As a result of the Dodd-Frank Act enacted by US Congress, a new regulation prohibiting US residents from trading over the counter precious metals, including gold and silver, will go into effect on Friday, July 15, 2011.

In conjunction with this new regulation, FOREX.com must discontinue metals trading for US residents on Friday, July 15, 2011 at the close of trading at 5pm ET. As a result, all open metals positions must be closed by July 15, 2011 at 5pm ET.

We encourage you to wind down your trading activity in these products over the next month in anticipation of the new rule, as any open XAU or XAG positions that remain open prior to July 15, 2011 at approximately 5:00 pm ET will be automatically liquidated.

We sincerely regret any inconvenience complying with the new U.S. regulation may cause you. Should you have any questions, please feel free to contact our customer service team.

Sincerely,
The Team at FOREX.com

[68Camaro]

I can't process it, but here is a description of the impact, which doesn't seem to come near me, but maybe someone else can clarify

http://www.zerohedge.com/article/dodd-f ... ng-illegal

[hejira11]

I went to Zerohedge (thanks for the hyperlink)and read a little more. At first blush it appears that this is another way to control the speculative involvement in the PM' market by limiting our access to the Exchanges...but international traders can't be controlled. So, not really sure I have a clear answer. I also saw a comment about this being a reaction to preparing for our Reserve Currency Status being taken away and a possible return to a gold standard... speculation abounds...

[neilgin1]

not yet, but have a hidey hole prepped, and when in doubt, deny.

let other folks play the victim, adopt the mindset of a coyote, or a wolverine.

they play their games, we'll play ours, "shrewd as a snake, innocent as a dove". n

[whatsnext]

So they are throwing investors out, and making industry the main buyer. Seems the way it should be b/c silver is a commodity for industry. If people are going out of their way to boost silver for a profit I could see myself thinking this would be the thing to do.
Is this what is happening? Why is this the first anyone has heard if the bill past something like half a year ago?

Will this not push people into the physical market, there is no guarantee that physical will go up though. This is a brazen act to keep the price flat.

[68Camaro]

Ultimately the price of silver, long-term, has to be determined by physical supply and physical demand. In the short-term, and given the invention of "fiat silver" (paper silver that lacks physical backing - and how ironically humorous is that!), prices can do weird things. Long-term, one mostly needs to look to how much silver is being produced, versus how much is being consumed, and as part of consumption consider how it is valued. Will it be valued mostly as an industrial metal, as value protection to be held without use (as gold has been over history), or both.

[hejira11]

I think the peope in power in America are doing their best to keep silver an industrial metal in our minds. I see that China and India are likely the top two economies in the near future and they are already actively encouraging their populations to hold PM's. I feel like our leaders are trying to keep us clueless until the majority of our weath is gone.... not too much further to go IMHO.

[highroller4321]

http://news.coinupdate.com/you-will-sti ... r-july-15/

"The actual transactions that will be affected are those for “Over The Counter” (OTC) paper contracts for foreign exchange which may also involve taking a long or short paper position in precious metals—the kinds of metals that are not meant to be delivered within 28 days."

[TwoPenniesEarned]

This is what Ted Butler has to say on this:

A good number of subscribers have asked me about the retail gold and silver trading ban on many leveraged transactions, effective July 15. The ban was built into the Dodd-Frank Act, signed into law last year by President Obama. It seems some misperceptions about the intent and potential impact of the ban were spread by early Internet blog posts. Other commentators have attempted to set the record straight and are to be commended for their efforts. In terms of any harm to the public or negative impact on the silver market, this trading ban was all much ado about nothing.

Briefly described, these transactions are highly leveraged (as much as 100 to 1) and usually very short term bets on the direction of gold and silver by individuals operating through foreign exchange trading companies. They don’t involve the actual metal, but are quick bets in a trading environment separate from any exchange or wholesale OTC (Over the Counter) market. With such low margin requirements, this trading was almost exclusively reduced to day trading, where few overnight positions were held. These transactions are as far removed from long term investment as is possible. No one invests long term on a one percent deposit. About the closest example I can give you about this highly leveraged day trading is the infamous “bucket shops” that existed before the great stock market crash of 1929. These bucket shops involved stock market bets that never found their way to any stock exchange or actual security, but were strictly trading bets between customers or the house.

The early Internet reports on the retail OTC precious metals trading ban concluded, among other things, that the trading ban was an example of the government intruding on our basic rights or as a precursor to a ban on actual purchases of precious metals. I would disagree. Others suggested that the ban would result in a price smash for silver, as traders rushed to unload positions. That seems unlikely as little real metal was ever purchased. Instead, this was clearly an instance of the government doing the right thing. The only thing wrong was that it took so long for the ban to come into effect. This retail OTC gold and silver trading is strictly gambling; nothing more, nothing less. I am not opposed to it on moral grounds nor am I happy if some is deprived of trading income, but society has come to demand that any type of gambling be licensed and regulated (and taxed) by a government entity. You can’t open a casino or a horse track or a betting parlor in the US without some type of government approval and regulation, usually at the state level. There was no government approval process for these retail OTC precious metals trading arrangement; they just sprung up.

What about the CFTC regulating these modern day bucket shops? The problem here is that there is an underlying economic justification to commodities futures trading, namely, to allow real producers and consumers the opportunity to hedge price risk. Our commodity futures markets were not created so that speculators could gamble. Speculators are certainly needed for our futures markets to work, but it is the hedging function that gives our markets their legitimacy. To my knowledge, there was no real hedging that occurred in retail OTC gold and silver trading. That makes it pure gambling, no different than a sudden Three Card Monte game set up on a city street. I know those trading these markets successfully (including subscribers) will mourn the ban and I can empathize with them. But in the bigger picture, this was a market devoid of economic legitimacy.

[AGgressive Metal]

People who don't know anything about markets got their panties in a bunch because they don't know what OTC is and thought it meant over the counter at their local store lol. You have a lot of noobs writing about gold and silver these days passing themselves off as experienced pros. That is why you should stick to listening to people with ACTUAL market experience like Bob Chapman, Peter Schiff, Rick Santelli, Jim Sinclair, Jim Grant, Jim Rogers, Marc Faber, Jim Rickards, James Dines, etc.