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Author Topic: Silver and Gold Illegal?  (Read 948 times)
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tamo42
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« on: 2011 Jun 18, 03:09:01 pm »



You might have seen the posts flying about the alternative investment scene on the interwebs over the past few days that come July 15, it will be illegal to buy gold or silver. This all got rolling after forex.com emailed its clients telling them that they would no longer be able to buy silver and gold futures. Let's walk through the actual news and see what this means for our precious metals.

This all comes from the Dodd-Frank Act. Buried in the millions of words of text is section 742(a). Basically it states that people or companies that are not "eligible contract participants" cannot use leverage or margin to buy any over the counter commodity or currency in which the delivery date is more than 28 days away.

In normal language, it means if you aren't a big guy, you can't buy futures. This includes futures on gold and silver.

So if retail buyers (normal people) are shut out from the futures markets, what does this mean? It means that a significant leg of support has been knocked out from under the silver and gold prices.

Under normal circumstances, this wouldn't matter at all. But the markets for gold and silver both look at futures as an indicator of what the real market values of gold and silver are. I expect that what we will see in the coming months is that the disconnect between futures prices you hear on CNBC and the price of gold or silver on the street. I expect that many vendors will not recognize this change until they've been sold out of inventory more and more as their prices will be based in part on the futures market.

So get ready for a dive in the paper prices. It'll be a great time to buy.
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Neal McSpadden
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« Reply #1 on: 2011 Jun 18, 03:30:46 pm »

I agree, this is both good news and bad news for the precious metals market. The law seems to be trying to eliminate gold and silver futures as a safe haven from the collapsing dollar, while still allowing wealthy people to have access. It's interesting to note that it doesn't seem to affect you if you plan on taking delivery.

So, the bad news is that you can't gamble on the market if you don't have a lot of money, and that market manipulation by the usual suspects will go unopposed by the masses of people who would bet against them.

The good news is that while reported prices will drop, it will be an artificial undervaluing that won't last. So, if you can take physical delivery of real precious metal hard assets at the prices quoted on the criminal controlled futures markets, then you will be scoring a bargain.

This is the strategy that Kitco used when it hired Jon Nadler as an "analyst" to lie in a seemingly-credible way about the precious metals market. Nadler would ALWAYS say that it's time to sell, and Nadler's employer, Kitco, would ALWAYS be ready to buy from you at discount prices. Kitco's widely-used charts price quotes were almost always lower, or had a greater spread, than the quotes from more reputable dealers.

Same trick, different venue.

In the end, the manipulation will either make people rich because they bought anyway, or it will cause people to turn to market that aren't criminal controlled commodities, like coins.

This will probably deepen the slowdown at its normal peaking time in July. Everything adds up just perfect to make things go the way they're supposed to go.
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« Reply #2 on: 2011 Jun 18, 03:52:05 pm »

I agree, aslong as bullion dealers will follow the paper-price, this is a good opportunity to keep buying. In the end the only things that matters is how much gold you have in ounces. I would love to see gold drop off 20%, I will be buying.

As the US looses its economic and political influence over the world and finds a more "natural" position taking its population and net-worth into account, commodities and gold/silver will be priced in another currency and US legislation/market manipulation will lose effect.

Noone in Asia will care what corrupt congressmen in a small US will legislate, the US is 5% of the population and have since the second world war been very succesfull in leveraging its influence by means of military and economic powerplay. This era gradually comes to an end and we will see other regions take its place. I am not going to sell my gold in the US, nor in the next decade, so if the idiots on capitol hill can discount gold to try to postpone the death of their crony capitalism, I say: Thank you Sam. I'm quite sure that 10 kgs of gold will get me a nice home somewhere safe to live my life.

(together with my coming pack of vicious (hungry) dogs and a shot gun, and a vegetable garden, and I'll be pouching game in the night with a sniper rifle and have some bees to produce honey, maybe some cows for milk and some local farmers that can live on the land and help out... hmmm future looks bright)

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« Reply #3 on: 2011 Jun 18, 03:58:18 pm »

That's a good point about the global perspective. The Chinese are now the largest gold buyers and there are other markets to buy and sell your bullion. Really this is an attempt to put the screws to those Americans awake enough to be interested in commodities in the first place.
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« Reply #4 on: 2011 Jun 18, 04:21:33 pm »

Gold is a stateless currency and will be an effective vehicle for transactions for as long as we all breath on this deteriating planet of ours. People with demand for storage of wealth will be willing to exchange land, houses, crops, animals, labor etc thay can spare to obtain it somewhere at all times. The drawback is that economies that functions in this way have few working institutions to ensure property righs and generally low degree of safety (in Sudan I am sure you can use gold as currency with few transaction costs, but who wants to live THERE?)

I guess there is quite a good negative correlation between transaction costs for gold as currency and democracy/civil rights/liberty. Take Norway, we are a safe country, low corruption, working institutions, sound fiscal situation and currency, but if you mention gold people laugh at you. Now compare with China or Thailand, or Vietnam.... their currencies are all either manipulated, volatile (as having a history of devaluation etc), they are highly corrupt, offer limited security for property rights. Although some are able to find a good life in Chang Mai it takes investments in community and most often strong relationships in society, as through marriage, or other means of social capital.-
 
So one would have to constantly analyze a mix of political, societal and economical factors when one decides where to transform accumulated gold into land to settle down and enjoy a simpler, peacefull and meaningfull life, free from idiots on bloomberg and too high political intervention in one's existence. The best option might be to aim lower, not stand out, make sure one have a safe house (preferably rented in order to increase mobility), something meaningfull to spend one days with, make friends and contacts for mutual benefits and strive for a relative high degree of selfsuffiency. A small Island in the Phillipines and a PADI scubadiver Instructor status might be a good option too... 
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« Reply #5 on: 2011 Jun 18, 09:52:34 pm »

Hah, now you're starting to sound like an advanced LBC member Wink.
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Neal McSpadden
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« Reply #6 on: 2011 Jun 18, 10:48:28 pm »

Welcome to the dark side, young apprentice Smiley
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If families are a problem for the system, then we must reject the system, not the families.
Founder of the Coin Compendium (forum, blogs, calendar, images, donate, contribute).
LBC makes you rich, with a free ebay gift certificate awarded every month!
The Coin Compendium and the china-mint.info forum, censure, disclosure.
Do not PM questions. Answers should be publicly available.
Backup is not enough. Protect your data with MultiPar.
Writer of LBC Chinese coin investment articles (list).
About me: User:Badon - MediaWiki.org
Badon effect: type 1 to 8, type 9.
I type faster on a TypeMatrix.
Use my work. Give credit.
Coin, medal, whatever!
Coin storage advice.
FreeArc is amazing.
User contributions for Badon - Coin Compendium
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