Trading in OTC precious metals - illegal for US residents from 15 July

Discussion in 'Stocks & Derivatives' started by Ag47, Jun 18, 2011.

  1. Ag47

    Ag47 New Member

    Joined:
    Apr 10, 2011
    Messages:
    158
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Sydney
    http://www.lewrockwell.com/blog/lewrw/archives/89868.html


    Meant to apply to trading on margin on products without physical delivery.

    Presumably bullish for US mining shares and physical metals.
     
  2. goldpelican

    goldpelican Administrator Staff Member

    Joined:
    Jun 29, 2009
    Messages:
    17,918
    Likes Received:
    379
    Trophy Points:
    83
    This is the key - basically from a quick skim it appears that it's going to be illegal to trade paper where there's no possibility of actually taking delivery within 28 days. So all of those online forex dealers that allow gold trading on margin won't be able to take on US customers.

    A lot of noise about this last August... but now it seems to have crept up on everyone again.
     
  3. hiho

    hiho Active Member Silver Stacker

    Joined:
    Apr 4, 2011
    Messages:
    7,955
    Likes Received:
    4
    Trophy Points:
    38
    Location:
    South Brisbane
    highly interesting
     
  4. goldpelican

    goldpelican Administrator Staff Member

    Joined:
    Jun 29, 2009
    Messages:
    17,918
    Likes Received:
    379
    Trophy Points:
    83
    Now here's where it gets interesting.

    Definition from Wikipedia:

    Did Perth Mint Certificates just get outlawed in the US? Is the Perth Mint Certificate considered an "over the counter" instrument?
     
  5. errol43

    errol43 New Member Silver Stacker

    Joined:
    Apr 13, 2010
    Messages:
    6,203
    Likes Received:
    9
    Trophy Points:
    3
    Location:
    Bundaberg
    This could be bad news for Silver Stackers.....Who knows where this road will lead....When governments change the rules.....beware!

    Regards Errol43
     
  6. Ag47

    Ag47 New Member

    Joined:
    Apr 10, 2011
    Messages:
    158
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Sydney

    Will lead to less liquidity and likely a lower paper price. All positions would have to be liquidated by 15 July.


    Not sure if the following is correct, but larger players (and banksters) might be excluded from these rules:

     
  7. rbaggio

    rbaggio Active Member Silver Stacker

    Joined:
    Aug 5, 2010
    Messages:
    4,390
    Likes Received:
    5
    Trophy Points:
    38
    Location:
    Australia
  8. Roswell Crash Survivor

    Roswell Crash Survivor Well-Known Member Silver Stacker

    Joined:
    Apr 11, 2011
    Messages:
    2,508
    Likes Received:
    318
    Trophy Points:
    83
    Location:
    Zeta Reticuli
    What does this mean for NYSE:GLD and other forms of exchange traded instruments based around gold futures?
     
  9. jnkmbx

    jnkmbx Well-Known Member

    Joined:
    Apr 8, 2011
    Messages:
    1,745
    Likes Received:
    63
    Trophy Points:
    48
    Location:
    Sydney, Australia
    That should get rid of the pesky traitors... I mean traders :p

    Amusingly, that's the last trading day before GFC2 hits according to my tin foil hat, or bust! :D
     
  10. perthsilver

    perthsilver Member Silver Stacker

    Joined:
    Aug 20, 2010
    Messages:
    620
    Likes Received:
    0
    Trophy Points:
    16
    Location:
    Adelaide
    I would think that this would be bearish for gold and silver leading up to the 15 July as traders are made to close their position. Or did they all see this coming and liquidated their position weeks ago.
     
  11. tch

    tch New Member

    Joined:
    Apr 10, 2011
    Messages:
    19
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Australia
    I came to this post based on a Zero Hedge comment link (read it if you haven't already - could have a huge bearing on the short-term price): http://www.zerohedge.com/article/trading-over-counter-gold-and-silver-be-illegal-beginning-july-15

    This Forex email was one of the first to come out I believe (after Friday close time) as Zero Hedge and the comments below the link seem to see it as a major, last minute change.

    perthsilver,
    I guess we all want to know if there is a risk of a gold/silver dropping like a stone tmrw morning. I'm tempted to take my profits and wait it out as nobody seems to know how they're going to open tmrw. Other than a SeekingAlpha link discussing this in mid-2010, ZeroHedge seems to be the first to pick up on gold/silver specific stories/news like this.

    Yes, I know there are many here who don't trade paper (FYI I also hold physical). I knew there would be a point where the physical price would diverge vastly from the paper price - I just didn't think it would come this soon with such a desperate change from the US to push people into the COMEX and physical . This act was talked about last year but these OTC dealers are acting now.
     
  12. hiho

    hiho Active Member Silver Stacker

    Joined:
    Apr 4, 2011
    Messages:
    7,955
    Likes Received:
    4
    Trophy Points:
    38
    Location:
    South Brisbane
  13. tch

    tch New Member

    Joined:
    Apr 10, 2011
    Messages:
    19
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Australia
  14. grinners

    grinners Active Member Silver Stacker

    Joined:
    Mar 19, 2011
    Messages:
    1,197
    Likes Received:
    3
    Trophy Points:
    38
    Location:
    Australia

    I must be misunderstanding it, Won't this reduce the 'manipulation' that people have argued is keeping the price surpressed? When paper is harder to trade, won't physical go up in value?
     
  15. Ag47

    Ag47 New Member

    Joined:
    Apr 10, 2011
    Messages:
    158
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Sydney
    Possibly unrelated, but CMC has just sent an email saying all gold and silver futures positions must be liquidated by 29 July.

    Spot gold and silver will still be available.
     
  16. bron suchecki

    bron suchecki Active Member Silver Stacker

    Joined:
    Jul 10, 2009
    Messages:
    1,269
    Likes Received:
    2
    Trophy Points:
    36
    Location:
    Perth, Western Australia
    We have had nothing from our Approved Dealers that this affect them. I think the focus of the laws is leveraged transactions and requiring minimum deposits. I can't find any specific mention about precious metals in the act (only regarding swaps).

    The CMC Markets decision is I think based on a commercial decision that the legal costs involved in assessing whether they can continue to allow Aussies to trade US futures is not worth it. Note that they will still do spot trading as that is most likely settled with bullion banks in London.

    I think all this will do is pull trading volumes away from the US to other markets. For US residents of firms who could not be bothered complying, they will either have to close out or go onto COMEX. How this affects the price depends on whether those retail investors closing out are net short or long. Who knows?
     
  17. tch

    tch New Member

    Joined:
    Apr 10, 2011
    Messages:
    19
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Australia
    Are they like the OTC derivatives where you can roll them over or are they CFD products only (which require interest to be paid daily)? If so, that really sucks...
     
  18. goldpelican

    goldpelican Administrator Staff Member

    Joined:
    Jun 29, 2009
    Messages:
    17,918
    Likes Received:
    379
    Trophy Points:
    83
    This could be a prick for people trying to hedge using these instruments...
     
  19. tch

    tch New Member

    Joined:
    Apr 10, 2011
    Messages:
    19
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Australia
    goldpelican, after reading some ZH comments and enquiring with some other Australian suppliers I suspect there are a few avenues for it and going to proper futures isn't much different from what I can see. However, who knows how much they'll increase the margins on those for gold and silver when they REALLY go parabolic.
     
  20. Ag47

    Ag47 New Member

    Joined:
    Apr 10, 2011
    Messages:
    158
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Sydney
    They are CFD only, however you can use them to hedge.

    If you go short, you actually receive interest though not much if you trade in USD.
     

Share This Page