Can anyone clarify this for me? http://www.zerohedge.com/article/do...tion-could-make-hedge-fund-fx-trading-illegal Is it going to become illegal for US citizens to trade spot gold and silver as well as foreign currencies? What are the implications for trading something like XAGUSD or XAUUSD? Thanks.
the link doesn't work. I think below is the right link: http://www.zerohedge.com/article/do...tion-could-make-hedge-fund-fx-trading-illegal
No, it will only be illegal to trade metals via a bucket shop. Tradings spot forex or metal futures or forex futures is stil completely legal. Also it is going to be still completely legal to buy, hold and sell gold bullions or gold coins or silver coins.
Here is a link from MarketWatch: http://www.marketwatch.com/story/dodd-frank-claims-niche-form-of-gold-trading-2011-06-22 This link goes into a bit more detail: http://articlesofinterest-kelley.blogspot.com/2011/06/july-15th-trading-of-over-counter-gold.html
As a result of the recently enacted DoddâFrank Wall Street Reform and Consumer Protection Act, U.S.-based retail forex dealers such as OANDA are prohibited from offering leveraged trading in precious metals to retail clients after Friday, July 15, 2011. As a client based in the U.S., you will not be able to trade our four precious metal pairs (XAU/USD, XAG/USD, XAU/JPY, XAG/JPY) on a leveraged basis, effective end of day July 15. Leveraged trading in other currency pairs will remain unaffected, with the same margin requirements. You will still be able to trade precious metals, but only on a 1:1 non-leveraged basis (requiring substantially more margin). If you do not have sufficient margin to cover your open metal positions in full, you need to reduce your exposure to gold and silver pairs before end of day July 15, or risk a margin call of all your open positions when this change is implemented. We sincerely regret any inconvenience caused by this change in legal requirements. If you have any questions, please do not hesitate to contact our Customer Service Team at We appreciate your business with OANDA. - The OANDA fxTrade Team Why is this change required? Effective the end of Friday, July 15, 2011, Retail Foreign Exchange Dealers (RFEDs) registered with the Commodity Futures Trading Commission (CFTC) will be prohibited from offering leveraged retail trading in commodities, including precious metals such as gold and silver. This change in the U.S. law is being enforced by the CFTC as an outcome of The DoddâFrank Wall Street Reform and Consumer Protection Act.
Would someone please explain what is the point of this Act and the intentions behind it? Why would the government restrict OTC leveraged precious metals trading?
Because it can. Trading gold in an OTC leveraged forex account is no more dangerous than trading the Brazilian real in such an account, but the pinheads in government make these arbitrary distinctions because they always feel they must *do* something, anything, to justify their existence. You can trade gold and silver futures, or buy puts and calls on the GLD or SLV ETFs, so there are still ways to do leveraged trades on precious metals. You just can't do the trades with forex firms like Oanda. The law is arbitrary, like so many other laws.
It also seems that the big exchanges are influencing US lawmakers and are trying to eliminate their competition- which is the OTC market.