Posted on 07/04/2011 11:40:44 AM PDT by Kaslin
In just a few days some fairly big changes in the commodities and currency trading markets are expected to land with a thud. The changes stem from the Dodd-Frank Wall Street Reform and Consumer Protection Act aimed primarily at consumer lending, but is also having a wide ranging impact on securities trading.
Some of the changes are fairly straightforward and are intended to curb speculation that comes at the expense of consumers. Others are aimed at curbing the excesses of the largely unregulated derivatives market. Most of those changes will generally be good for consumers, all were well-intended but, like anything the government does, the implementation is liable to be rocky.
For precious metals traders the changes are fairly clear. As of July 15, clients will no longer be able to trade precious metals on margin accounts. Well, you can, but only on a 1:1 non-leveraged basis. There are exceptions if you can prove you’re fabulously wealthy or otherwise able to cover all your open positions within 28 days. Otherwise you will have to maintain sufficient margin to cover all of your open metals positions at all times or be subject to margin calls.
The new rules will in no way impact your ability to buy and own gold, so the upshot will likely be many investors will do what they really should have been doing all along and take delivery of physical gold. Options and derivatives in precious metals added volatility to the market price without adding value and, for most serious gold buyers, this will be a positive change. The advantage to owning gold is the physical possession.
Crude oil prices will also benefit, but like any time you kick over the trough, the hogs are going start complaining. Derivatives traders and oil speculators are already crying foul but, since it’s a somewhat exclusive and unregulated market, there’s not a lot of complaining outside that small group. Even at that, the government is looking at exemptions for companies that make less than 30 percent of their revenue from derivatives, so it’s not going to end the business by any stretch.
What concerns me is the vitriol and push back any time the government tries to give consumers a break or add transparency to the derivatives market. Enough already. As long as you’re buying physical gold the new rules won’t effect you at all, except you may notice less price volatility.
Next week I’m going to go through a refresher on options for buying physical gold and silver and how to shop for the best deals so you don’t get ripped off.
I will be happy when Barney Frank is no longer a public official...Everything he touches is dishonest
Bawney Fwank is a PUBIC official.
Anything Dodd and Frank do is useless but to themselves.
That’s funny, I didn’t see anything about curbing the excesses of Fanny Mae. I guess there’s no such thing as too much Fanny as far as Barney’s concerned.
And if you think you have seen excessive volatility in oil prices, just wait until these guys get around to curbing the “speculators”.
Offshore trading in these things will increase to compensate for the American regulations. I don’t think our regulations have a whole lot of standing in Dubai or London.
They cannot curb the speculators. They can only move their operations outside of American jurisdiction.
One of my credit unions just started $5.00 per month on all checking accounts because of this bill. They say they are not getting the fees they used to on ATM transactions.
And if you think you have seen excessive volatility in oil prices, just wait until these guys get around to curbing the “speculators”.
Like there was no insider trading that took place before Barry opened up the Strategic Petroleum Reserve. The futures prices were falling days before the announcement. Apparently, only Party Members and their Contributors are allowed to manipulate markets and act on advance information "speculate" on consumer goods.
Aren’t these the guys who played a part in the Fannie Mae/Freddie Mac mess? You know, the ones brought the economy to its knees.
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