Should I be worried about the 2010 Dodd-Frank Act?on July 8, 2011 at 21:17
The true silver investor, the investor that acquires or buys physical silver and holds it for the long-term, has nothing to fear when the 2010 Dodd-Frank Act and corresponding legislation come into effect or come into law on the 15th of July 2011. In fact, all holders or owners of physical silver, silver coins and silver bullion bars (silver bars) included, have nothing to fear.
U.S. retail investors, specifically in reference to U.S. residents, who trade paper silver products such as silver derivatives, silver spread betting and more will be prohibited from doing so when the 2010 Dodd-Frank Act come into law later this month. The same applies to all U.S. residents that wish to trade gold paper equivalents. The different retail providers of over-the-counter (OTC) paper silver products are set to discontinue the relevant products before the 2010 Dodd-Frank Act comes into law. This will effectively close the door to all U.S. retail investors wishing to take leveraged positions in OTC products. However, silver contracts delivered within 28 days or fully paid will not be affected when the 2010 Dodd-Frank Act comes into law. Silver futures contracts trading on international exchanges such as the CME Group CME will also not be affected or the 2010 Dodd-Frank Act will not apply to it.
The 2010 Dodd-Frank Act is not expected to lead to a fall in silver prices as far as the physical silver and international silver futures market are of a concern. Silver investors can however expect to see a lot of silver price volatility before the 15th of July or before the 2010 Dodd-Frank Act comes into law. The silver price volatility will be a direct result of U.S. residents unwinding their OTC positions. The reason we don’t expect to see silver price drops, at least not any substantial silver price drops, is the fact that the over-the-counter (OTC) silver derivatives market is tiny when compared to the global physical silver market as well as the silver futures market. In fact, it is no secret that OTC silver derivatives are not very important when it comes to determining the silver price. Furthermore, it is also no secret that there is a relative balance between the shorts and longs (sellers and buyers) when it comes to OTC silver derivatives. This means the hedging of over-the-counter (OTC) suppliers is most likely relatively neutral, having little if any effect on silver prices.
Silver Bullion welcomes the 2010 Dodd-Frank Act, because we feel that most retail silver investors will be better off by avoiding OTC silver derivatives and rather getting into physical silver. In addition, we would like to see an update of the relevant act to include non-retail (wholesale) investors as well, the segment of the market that does the most damage to silver prices and to silver’s reputation as something of intrinsic value. It is after all no secret that there is a deliberate attempt to keep silver prices down through paper silver trading and other devious practices. This creates the false perception in the public domain that silver is something of little value if any value. Nothing could be further from the truth, especially given the fact that silver is money and will be used as money again. The days of the “paper gimmick” are numbered after all. Those who don’t get into physical silver in time will mostly definitely suffer the most when fiat currencies start to collapse on a global scale, especially the U.S. Dollar.