Dodd-Frank Precious Metal Trading Prohibition Could Make Hedge Fund FX Trading Illegal

Tyler Durden's picture

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swissaustrian's picture

Reducing liquidity - the answer to everything

come on: are politicians able to learn?

Oh regional Indian's picture

Why Swiss, it's such a picture perfect playbook play, yes? History rhyming, only now they have a much more informed public and far more way to play the game. In fact, the liquidity withdrawl is not even a rhyme, it's a straight out copycat move. 

See on the Macro side, Basel III is all about "liquidity" management, on the downside, no liquidity Fo U!

Flood followed by drought. Liquidity, whether in the form of rain or money, is a beast, best managed in reasonable portions.

Doddering around, trying to find ways.....


Bindar Dundat's picture

What about Sprott Silver and Gold Physical?  Where does it stand?

sitenine's picture

Thanks for the link.  Good writeup.

I was thinking - been thinking since last night when the SHTF - perhaps this is some sort of tit-for-tat against Geithner's position of not exempting some Forex Options?

Just speculating at this point.  I don't think we know the extent of the repercussions as of yet.

Lionhead's picture

Thanks for your link to Reuters; this fits into my thoughts about a collapse & the use of the ESF to counter it. The ESF is one story all the media seems to be ignoring, but in a nutshell it gives the Sec. of the Treasury unlimited powers with no oversight in using it. Geithner then is only accountable to the president. He would need it in the same way Paulson drafted his three page unlimited powers TARP plan.

"The Dodd-Frank Act appears vague as far as the Secretary of the Treasury's ability to exempt options on foreign exchange forwards and foreign exchange swaps," Peter Malyshev, an attorney with Winston & Strawn, said in an interview this week."

Yes, no doubt as Congress has willingly abdicated their power to the Secretary on use of the ESF. All these little rumblings may be the prelude to a collapse in that TPTB are lining up & tying up the loose ends in case the worst happens.

SilverIsKing's picture

What's most humorous about this entire bill is that if you asked either Dodd or Frank what this all means, they'd have absolutely no clue.

TheFourthStooge-ing's picture

I thought hedge funds were exempt from all laws.


swissaustrian's picture

They´ll just move out of the usa...

wisfool's picture

Does it matter? 

A way around this (maybe??):  even if there is a 'single' US resident that falls below the threshold... this gives other non-US residents an advantage to create intermediaries that take US residents funds and trade on their behalf?  US residents no longer participate 'directly' but through another middle man

in4mayshun's picture

Mmmmm. I love you physical silver, you look so pretty sitting in my safe.

Cognitive Dissonance's picture

You have a safe? Really?

What's wrong with the tree house out back?

Hulk's picture

Doesn't hold 4 tons of Ag CD. Gotta think BIG dude!

Cognitive Dissonance's picture


4 tons you say? Well then his safe ain't gonna work either unless it is the walk-in variety.

But I like your thinking. For once bigger IS better. :>)

sitenine's picture

Any analysis on what this might do to short term valuations?

Will Forex PM positions try to swap their paper for physical?  Doesn't this somehow create a disconnect between ETFs and physical?  What does this mean for contango - or do we care anymore?  FFS, I need help understanding all this.  As stated above, I'm more interested in the short term (prior to July 15), but long term views also welcome.

scratch_and_sniff's picture

At the most, it will mean a lot of retail positions being squared, longs and shorts, cant see it having a huge impact on the actual market. If you still want to trade PM's online, open a UK account.

SilverIsKing's picture

No UK account if you live in the US.

scratch_and_sniff's picture

You can open one legally, there is no comeback as long as you declare it. FXCM customers were opening new UK accounts to get over FIFO and new margin requirement rules some time ago. Some traders thought it was unfair that they could no longer use 400:1 leverage...So, yes you can have an account anywhere in the world, Aisa Pacific, Canada, Middle east, UK, Europe etc there is nothing stopping you.

scratch_and_sniff's picture

Its a bit of a push getting through that, but it seems to me that retail FX will come out with its head still on. Since most of the BD's these days use "NO Dealing Desk" execution, or DMA, the regulated banks are holding the risk. I think spread betting FX and other kinds of binary derivatives would be wiped out though, but the US didn’t have those to begin with.

Oracle of Kypseli's picture

Those who need to do these trades, can do very easily with a foreign address. Piece of cake. All they ask is a faxed copy of a utility bill, passport (US is okay) and an address. Since no mail is ever sent, or it can be diverted, go for it.

Maybe Banzai7 can work out fake utility bills in the Marshall Islands. Frank and Dodd will rot in Hell. The collective hate and contempt for these half-of-men is being transmitted by wi-fi nowadays.  

The Fonz's picture

And so the market lives! Though now a black market. I for one will look into doing this. Its time to take my trading account out of US control I think.

Oracle of Kypseli's picture

These trades have been helpful if you hold gold or silver calls and the gold or silver price pops high before opening of options trading, you can short on forex trading and sell at the opening. thus, if the price goes down again before opening, you missed the opportunity to sell the calls for profit but you made some on the FX.

If the price stays relatively close, you are even on the FX and you secure the profits on the calls

Nine out of ten times that has been the patern.   

SilverIsKing's picture

I thought about what you are suggesting but in the US, you are required to file this form:

Now you can choose not to file the form and keep the account hidden but you'd be taking a giant risk if the govt somehow finds out about the account.

Id fight Gandhi's picture

Why are they doing this -- straight up?

Azannoth's picture

Capital contols, the Ponzi can't stand on it's own anylonger, it needs to be fully backed by law

Lord Koos's picture

I kinda like it... get physical, or get out.

nope-1004's picture

I agree.  No where in nature are there conditional laws.  No where can we change natures conditions as we see fit:  No where is the sun rising "conditional" upon something else we want to introduce tomorrow.  Nor are thunderstorms, rain, night, wind, snow.....  Natural laws always prevail.  Paper schemes are doomed.

This talk about manipulating paper even more than it is now affects me ZERO.  I hold natural physical.  I will keep buying natures' physical.  The ponzi is falling apart, and if the 2 year rate is capped as rumors suggest, then this action is another reason to force big players to play by the big bankers rules in an effort to maintain price fixing going forward.  They bought themselves another few months.

This will be a wonderful thing to watch.  They are losing control, so do what comes natural to a desperate party:  act desperate.

I never thought I'd see fascism in the US, but even a broken clock is correct twice a day.


Papasmurf's picture

If you don't hold it, you don't own it.

rsi1's picture

I think nothing will happen. This will be changed if it is as the text says, because it is stupid and does not make sense.. Written by lawyers.. mmm. trying to suck more fees as usual for doing nothing useful?

matthylland's picture

Section 413(a) of the Act alters the financial qualifications of who can be considered an accredited investor, and thus a qualified as eligible participant (“QEP”). Specifically, the revised accredited investor standard includes only the following types of individuals:

1) A natural person whose individual net worth, or joint net worth with spouse, is at least $1,000,000, excluding the value of such investor's primary residence;

2) A natural person who had individual income in excess of $200,000 in each of the two most recent years or joint income with spouse in excess of $300,000 in each of those years and a reasonable expectation of reaching the same income level in the current year; or

3) A director, executive officer, or general partner of the issuer of the securities being offered or sold, or a director, executive officer, or general partner of a general partner of that issuer.

SilverIsKing's picture

Does this read as:

1 plus either 2 or 3?


1,2, or 3?

ONEPurpose's picture

@The Aviator


HA! That's too funny, I just signed up for it b4 coming here. Sweet. Looks like it's catching on proper quick.


I've been following them a lot lately. The Silver Docs are just in time for the rally, huh? Wonder if they did that on purpose, releasing it the day this news went public.....strange.  

The Aviator's picture

yeah, what better time to convince people to dump their paper than the day its announced paper gold and silver OTC trading will be outlawed!

ONEPurpose's picture

Crazy insight.... The Guidebook is nuts, too. This thing might get huge. Glad to see you're on board friend. See ya' at SilverDoctors! 


Make Silver Viral! 

Gringo Viejo's picture

Extend & Pretend will be taken to the "Nth" to maintain the status quo. No matter. That which Westerners don't buy & bury will end up in Asia. So when all is said done, "The Empire Strikes Back II" doesn't change jack shit. In truth, I'm kind of enjoying the show.


Freddie's picture

Mugabe and the Democrats.

Dapper Dan's picture

Lets send Ron Paul after them, we can help.

Tar and feather,  the new campaign slogan. 

updated 3:58 p.m. Eastern Time

NEW ORLEANS - Ron Paul won the presidential straw poll at the Republican Leadership Conference in New Orleans Saturday, easily beating out his rivals for the GOP nomination. Second place went to Jon Huntsman, the little-known former Utah governor who missed the conference with a cold.

With the Libertarian-leaning Paul seen as unlikely to win the party's nomination, the second-place finish will be seen as a victory for Huntsman, the former ambassador to China who is announcing his presidential campaign next week. Huntsman's wife and daughter traveled to the conference in his place, though they did not speak.

Paul finished with 612 votes, followed by Huntsman with 382. Michele Bachmann took third with 191 votes, followed by Herman Cain with 104 votes. No other candidate got more than 100.

Mitt Romney took 74 votes, Newt Gingrich 69, Sarah Palin 41, Rick Santorum 30 and Tim Palwenty 18.

Read more:

JW n FL's picture

what are you a paid fucking repugnant plant? who cares about the wigger and who cares about you and your repugnants.. no one.. a Lobby Whore is a Lobby Whore is a Lobby Whore.


Whether your dumbass likes the name plate given the Lobby Whore or not is fucking beyond irrelevant!


Go get some more koolaide, go listen to them tell you what they know you will LOVE to Listen too! hurry get your tested and committee fucking approved branded koolaide you Moe-Ron!



Dapper Dan's picture

To your first question, NO! I just like Ron Paul. allthough I liked him more as a Libertarian.

Second point, I am not a dumb ass but I do sometimes type like one.(I use spell check more than I would like to admit) you..not so much. 

Third point,  I have not drunk kool-aid since the summer of 2002.

Final point, we are going to have to vote for someone,  do you have anyone in mind? 

O.T.  Do you surf JW?


JW n FL's picture

yes.. pro surfing! anti voting.. two party system is a control.


and if Ronnie boy got in.. and rocked the boat.. he would be dead in seconds.. not months like Kennedy.


Kennedy was the last President to end the FED and put America back on real money.

Jack Napier's picture

I used to like RP until I found out half his family are in the masonic order. He talks a good game, but I have my doubts. HR1207 was gutted at the last second.. a 180 day buffer before releasing selective data is not what I call transparency. Though I like what he's doing on the House Financial Services Subcommittee, it seems too little too late to me. Funny how when he asked the Fed about their gold certificiates they said that the US Treasury has all the gold. Mike Maloney says the other way around. I think we have bigger problems than where the gold is. It's probably full of tungsten anyway. Chuck Baldwin FTW.

bigmikeO's picture

Can someone answer these questions for a newbie?

In your opinion, will the new Frank-Dodd July 15 OTC ban on gold/silver cause the price to go up, or go down?

Does this mean that I won't be able to purchase gold/silver from my local coin store or Gainesville Coins? Or does this effect some other form of PM purchases? (Ex: paper)

Sorry to ask such fundamental questions. I lurk here all the time, enjoying the conversation, but it looks like I still have a lot to learn.

Rynak's picture

I am not certain about this, but from how i understand this so far, this has nothing to with taking physical delivery - just paper stuff.

JW n FL's picture
by bigmikeO
on Sat, 06/18/2011 - 16:52


Can someone answer these questions for a newbie?


In your opinion, will the new Frank-Dodd July 15 OTC ban on gold/silver cause the price to go up, or go down?




1. Dont ever buy anything from Gainesville Coin... dont believe me? ask the others that have been fucked over by Gainesville Coin.


2. If you are worried.. since you are new.. I am willing to buy all of your Gold and Silver at the same discount you are worried that it will fall too!


Below is a Gainesville Coin demand letter! They fucked over my mother! My MOM?!?!?!?!?!?!?!?


Dear Mr. Castellano,


As you know from the below email, our office has the honor and responsibility of representing XXX. XXXXXXXXXXX.  We would appreciate confirmation as soon as refunded our client in full.  I am at a loss to understand why you required wire instructions when a credit will suffice.


In any regard, please refund the amount in full promptly and be sure to reply to me that same has been completed.


Thank you for your assistance.


Rusty Huseman


William R. Huseman, P.A.

3733 University Blvd. West, Suite 305A

Jacksonville, Florida 32217

(904) 448-5552

Fax (904) 448-5653


SilverIsKing's picture

I normally buy from Tulving and was considering Gainesville for a change but I'll now scratch them off my list.  Thanks.