Gold/Silver OTC trading illegal for US residents after July 15, 2011?

By reading section 742 of the Dodd-Frank Act

SEC. 742. RETAIL COMMODITY TRANSACTIONS. (a) IN GENERAL.—Section 2(c) of the Commodity Exchange Act (7 U.S.C. 2(c)) is amended— (1) in paragraph (1), by striking ‘‘5a (to the extent provided in section 5a(g)), 5b, 5d, or 12(e)(2)(B))’’ and inserting ‘‘, 5b, or 12(e)(2)(B))’’; and (2) in paragraph (2), by adding at the end the following: ‘‘(D) RETAIL COMMODITY TRANSACTIONS.— ‘‘(i) APPLICABILITY.—Except as provided in clause (ii), this subparagraph shall apply to any agreement, contract, or transaction in any commodity that is— ‘‘(I) entered into with, or offered to (even if not entered into with), a person that is not an eligible contract participant or eligible commercial entity; and ‘‘(II) entered into, or offered (even if not entered into), on a leveraged or margined basis, or financed by the offeror, the counterparty, or a person acting in concert with the offeror or counterparty on a similar basis. ‘‘(ii) EXCEPTIONS.—This subparagraph shall not apply to— ‘‘(I) an agreement, contract, or transaction described in paragraph (1) or subparagraphs (A), (B), or (C), including any agreement, contract, or transaction specifically excluded from subparagraph (A), (B), or (C); ‘‘(II) any security; ‘‘(III) a contract of sale that— ‘‘(aa) results in actual delivery within 28 days or such other longer period as the Commission may determine by rule or regulation based upon the typical commercial practice in cash or spot markets for the commodity involved; or ‘‘(bb) creates an enforceable obligation to deliver between a seller and a buyer that have the ability to deliver and accept delivery, respectively, in connection with the line of business of the seller and buyer; or ‘‘(IV) an agreement, contract, or transaction that is listed on a national securities exchange registered under section 6(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78f(a)); or ‘‘(V) an identified banking product, as defined in section 402(b) of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C.27(b)). ‘‘(iii) ENFORCEMENT.—Sections 4(a), 4(b), and 4b apply to any agreement, contract, or transaction described in clause (i), as if the agreement, contract, or transaction was a contract of sale of a commodity for future delivery. ‘‘(iv) ELIGIBLE COMMERCIAL ENTITY.—For purposes of this subparagraph, an agricultural producer, packer, or handler shall be considered to be an eligible commercial entity for any agreement, contract, or transaction for a commodity in connection with the line of business of the agricultural producer, packer, or handler.’’.

www.sec.gov...

There does seem to be the 28 day exception there. It appears that it is primarily focused around electronic trading of OTC foreign currency and commodity transactions. But I don't care to go reading in depth into it because then there's the "conflict mineral" stuff, the Farm Act stuff, more Title 5 stuff, and there is always this verbiage;

www.law.cornell.edu...


But you can still buy it storefront OTC.

Yup. Wasn't it Ruppert who was saying that things would go down the commode when the second quart earnings reports hit at the end of this month? With Japan out of electronics (for all intents and purposes), this will hit many industries across the board.

Yeah... By July 15, We may have nothing to buy anything with.

Ok this is not good. However it is not clear what this actually means. I doubt is means you can't sell or buy your gold and silver from a metals dealer or pawn shop. However if they are this will crash the economy and could cause civil unrest as the next step would be confiscation and many of a folk will give them lead instead of gold or silver.

This may be to get people to cash in as much as they can before hand or to be able to track all transactions. regardless of what this actually does it is a clear sign they have thier sights on precious metals. We just defeated a local city ordinance to track all gold and silver transactions finder print you and put your name in a national data base run by a private company but gives access to law enforcement if you buy or sell any PMS. There is a concerted effort to know who has the gold and silver and we all know the next step.

Originally posted by hawkiye
Ok this is not good. However it is not clear what this actually means. I doubt is means you can't sell or buy your gold and silver from a metals dealer or pawn shop. However if they are this will crash the economy and could cause civil unrest as the next step would be confiscation and many of a folk will give them lead instead of gold or silver.

This may be to get people to cash in as much as they can before hand or to be able to track all transactions. regardless of what this actually does it is a clear sign they have thier sights on precious metals. We just defeated a local city ordinance to track all gold and silver transactions finder print you and put your name in a national data base run by a private company but gives access to law enforcement if you buy or sell any PMS. There is a concerted effort to know who has the gold and silver and we all know the next step.

I'm not sure about that. This is the statement that has me concerned:

"regulation prohibiting US residents from trading over the counter precious metals, including gold and silver"

Gotta wait for clarification on what is meant by 'over the counter'

how does this effect etfs like SLV or AGQ?

reply to post by emberscott


If it were me and I had holdings in Forex gold/silver or other metal like platinum, I would be calling them(FOREX) to get the scoop ASAP from the horses mouth. I would NOT want to ASSUME ANYTHING regarding this! Especially the assumption that I could understand the jibberish in the CFR. Also definitely find out about your MUTUAL FUNDS and retirement accounts like 401k's etc and how they will be affected by this! Better to be Safe on this one!
One other thought has anybody thought about the fact that the Federal New Year starts October 1st not Jan. 1st. Maybe 2012 will start October 1st. This is so sad!

Good Luck to ALL!!

reply to post by Ausar


I gotcha:

This does not curtail any on-exchange trading, such as the CME, or any ETFs, or any other product with a leverage of less than 10:1 or actually involving substantial physical backing or intended delivery of product within 28 days.

jessescrossroadscafe.blogspot.com...

The entire article is good, and he doesnt seem to be freaking out over it too much

Originally posted by jude11
And Also...Why is it only US Residents?

Because the main focus of this regulation appears to be levered, OTC, Forex traded paper Gold/Silver - trading symbols XAU - XAG respectively. Most Forex brokers offering these derivative products are located offshore, outside of US jurisdiction, ergo: the US gubmn't can only restrict US citizens from trading them. I have an account with Oanda and [used to] trade XAU/USD & XAG/USD using 50:1 leverage.

**XAU and XAG are not deliverable Gold/Silver products. They track, but do not influence the spot price of either metal**

Originally posted by jude11
Gotta wait for clarification on what is meant by 'over the counter'

Wiki - Over-the-counter

Over-the-counter (OTC) or off-exchange trading is to trade financial instruments such as stocks, bonds, commodities or derivatives directly between two parties. It is contrasted with exchange trading, which occurs via facilities constructed for the purpose of trading (i.e., exchanges), such as futures exchanges or stock exchanges. - Link

Here gentleman Jesse comments on this news with his typical calm, cool-headed analysis.

18 June 2011
US Seeks to Curtail OTC Highly Leveraged Retail Trading in Paper Commodities and Currencies

As part of the reform of derivatives, Dodd-Frank is seeking to prohibit Over the Counter (meaning non-exchange) trading of commodities at leverage of greater than 10:1.

The off exchange traders, particularly those trading in currencies, had expanded their markets into various commodities, offering non-product backed paper trading at very high rates of leverage.

The Congress and CFTC started taking a dim view of this sort of activity, and has tentative prohibited it as of July 15.

This does not curtail any on-exchange trading, such as the CME, or any ETFs, or any other product with a leverage of less than 10:1 or actually involving substantial physical backing or intended delivery of product within 28 days.....

For the most part it seems like much ado about nothing with regard to gold and silver and oil etc., but its good for clicks, and it helps to cheer up those sitting in depreciating paper on the sidelines who have missed the commodity bull markets......

This is the long and short of it. If you want to trade paper, there are still plenty of ways to do it. But you might not be able to do it in the US unless you are using an exchange with structured counter party risk and contracts, and regulated leverage. - Full Text

As much as I enjoy reading ZeroHedge, they do have a flair for the dramatic, and often seem to feed on ignorance and mass hysteria.

will this also eliminate you from buying
food or gas or supplies for your family
using gold coins when the dollar crashes ???

Sounds like a move to start the Amero
currency and prevent you from bypassing it
by making it illegal to use gold or silver as
a substitute.

Originally posted by OBE1

Originally posted by jude11
And Also...Why is it only US Residents?

Because the main focus of this regulation appears to be levered, OTC, Forex traded paper Gold/Silver - trading symbols XAG - XAU respectively. Most Forex brokers offering these derivative products are located offshore, outside of US jurisdiction, ergo: the US gubmn't can only restrict US citizens from trading them. I have an account with Oanda and [used to] trade XAG/USD & XAU/USD using 50:1 leverage.

**XAU and XAG are not deliverable Gold/Silver products. They track, but do not influence the spot price of either metal**

Originally posted by jude11
Gotta wait for clarification on what is meant by 'over the counter'

Wiki - Over-the-counter

Over-the-counter (OTC) or off-exchange trading is to trade financial instruments such as stocks, bonds, commodities or derivatives directly between two parties. It is contrasted with exchange trading, which occurs via facilities constructed for the purpose of trading (i.e., exchanges), such as futures exchanges or stock exchanges. - Link

Here gentleman Jesse comments on this news with his typical calm, cool-headed analysis.

18 June 2011
US Seeks to Curtail OTC Highly Leveraged Retail Trading in Paper Commodities and Currencies

As part of the reform of derivatives, Dodd-Frank is seeking to prohibit Over the Counter (meaning non-exchange) trading of commodities at leverage of greater than 10:1.

The off exchange traders, particularly those trading in currencies, had expanded their markets into various commodities, offering non-product backed paper trading at very high rates of leverage.

The Congress and CFTC started taking a dim view of this sort of activity, and has tentative prohibited it as of July 15.

This does not curtail any on-exchange trading, such as the CME, or any ETFs, or any other product with a leverage of less than 10:1 or actually involving substantial physical backing or intended delivery of product within 28 days.....

For the most part it seems like much ado about nothing with regard to gold and silver and oil etc., but its good for clicks, and it helps to cheer up those sitting in depreciating paper on the sidelines who have missed the commodity bull markets......

This is the long and short of it. If you want to trade paper, there are still plenty of ways to do it. But you might not be able to do it in the US unless you are using an exchange with structured counter party risk and contracts, and regulated leverage. - Full Text

As much as I enjoy reading ZeroHedge, they do have a flair for the dramatic, and often seem to feed on ignorance and mass hysteria.

Was waiting to hear from you on this OBE1. You seem to be one of the more knowledgeable members on the markets.

Someone stated earlier that their opinion was one of JP not being able to make delivery if called on and this might be the reason for this news. What's your take on this?

reply to post by jude11


I don't think anyone would stop taking gold for goods or services...no matter how worthless a monolithic government tells it's people it is. I think people would be highly resistant to another gold confiscation...kind of like another alcohol prohibition.

reply to post by kissitgoodbye







All in all, I hear what you are saying but I still play, minimally mind you, in silver and suppose I will up until 7.10.11. But then I use IG Markets Paris so I'm good either way because I still snipe London, New york, Sydney and Tokyo. And I still buy bullion so I'm good. I'm a strictly cash and carry need type person, so most of my hard is geo-cached. And If I die those who I wish to have my assets will know how to find them so. I had to learn the hard way back in '99,'00,'01 and '02

S+F

I take this pretty seriously.
TPTB are definitely up to something and once again the MSM doesn't say anything.

Thanks for letting us know.

I put together an email with this and sent it out to everyone in my contacts.

Originally posted by jude11
Someone stated earlier that their opinion was one of JP not being able to make delivery if called on and this might be the reason for this news. What's your take on this?

These new regulations specifically target the unregulated OTC market, and more specifically, the smaller players in this market. Regulated exchanges like the COMEX are excluded. The regs won't have any effect on large well capitalized bullion banks like JPM, and the big guys will still trade as market makers on the LBMA...the largest physical OTC market on the planet.

Originally posted by hawkiye
Ok this is not good. However it is not clear what this actually means. I doubt is means you can't sell or buy your gold and silver from a metals dealer or pawn shop. However if they are this will crash the economy and could cause civil unrest as the next step would be confiscation and many of a folk will give them lead instead of gold or silver.

This may be to get people to cash in as much as they can before hand or to be able to track all transactions. regardless of what this actually does it is a clear sign they have thier sights on precious metals. We just defeated a local city ordinance to track all gold and silver transactions finder print you and put your name in a national data base run by a private company but gives access to law enforcement if you buy or sell any PMS. There is a concerted effort to know who has the gold and silver and we all know the next step.

Well they can have my gold and silver over my cold dead body!!!! All of mine was gifts and means more to me than it's value so they better Puck off!!!!

Originally posted by boondock-saint
will this also eliminate you from buying
food or gas or supplies for your family
using gold coins when the dollar crashes ???

Sounds like a move to start the Amero
currency and prevent you from bypassing it
by making it illegal to use gold or silver as
a substitute.

edit on 6/18/2011 by boondock-saint because: (no reason given)

Its always so predictable how you choose to ignore all the reasoned, detailed explanations of what is ACTUALLY occurring in favor of an apocalyptic Red Dawn scenario.

I suggest you read these two posts:
www.abovetopsecret.com...

www.abovetopsecret.com...

Wanted to let you guys know that I just repaired the market makers link in my previous post. The LBMA OTC market trades more volume on a daily basis than any precious metals market in the world. Just click here to identify the movers and shakers. I'm sure the names will be familiar.

Rational or not, emotions move markets. With all the confusion and anxiety I'm reading out there over this Dodd Frank issue...who knows what happens Sunday evening Asia through Monday US. Maybe one of the heavyweights like Sinclair or Turk will issue some reassuring comments before Globex opens tomorrow. Like many of you I've been preparing for the possibility of lower lows...thanks to EU distress, that damn dollar rally just won't relent. Will this regulatory snafu serve as the catalyst for a deeper correction, or do we stuff the summer doldrums this year and break new highs ? What does it all mean Mr. Wizard ?

Guess we'll find out soon enough.

GL

For those of us owning phsical gold/silver this is a good thing. This will cut the overleveraged trading that helps cause violent price swings. I would love to see $50 silver...just not in one month only to drop like a stone. I want stability in my precious metals. The volitility should be in the currency (inflation) or supply/demand of the metal, not a JP morgan short squeeze.

Originally posted by QuantumDisciple
I would love to see $50 silver...

So would I, but I'd also like to be able to sell it....

Now I won't be able to without The Man knowing about it.

How would they be able to do that, would it push gold and silver to now value, if so, does that mean the feds gold is worthless as well? If its even there