New CFTC Gold Regulations Will Not Affect Retail Physical Bullion Trading

by | Jun 23, 2011 | Precious Metals | 26 comments

We’ve received numerous user comments and emails concerning the new Dodd-Frank Wall Street Reform and Consumer Protection Act regulations that are scheduled to take effect on July 15, 2011.

Several investment and brokerage firms have alerted their customers that they will no longer be offering certain precious metals products, and all positions in those products will be liquidated at the close of business on July 15:

From Zero Hedge via The Daily Crux:

We wanted to make you aware of some upcoming changes to’s product offering. As a result of the Dodd-Frank Act enacted by US Congress, a new regulation prohibiting US residents from trading over the counter precious metals, including gold and silver, will go into effect on Friday, July 15, 2011.

In conjunction with this new regulation, must discontinue metals trading for US residents on Friday, July 15, 2011 at the close of trading at 5pm ET. As a result, all open metals positions must be closed by July 15, 2011 at 5pm ET.

While the legislation aims to make it more difficult for certain types of precious metals products to be traded, physical exchanges of bullion, coins and other physical gold/silver products will not be affected.

If, for example, you purchase your precious metals from an online retailer or brick & mortar dealer, you will still be able to do so after July 15, 2011.

From what we gather, the legislation restricts products that utilize leverage and do not deliver said precious metal within a 28 day time frame:

The prohibition of Section 742(a) does not apply, however, if such a transaction results in actual delivery within 28 days, or creates an enforceable obligation to deliver between a seller and a buyer that have the ability to deliver, and accept delivery of, the commodity in connection with their lines of business.

Source: ZH

The rule changes are designed to only regulate futures markets, where delivery issues may arise. And, since this is the dominion of the CFTC, which is responsible for implementing and regulating these rules, it makes sense that there will very little, if any, effect on the actual physical market. Numismaster provides some additional  information on this:

The report is not exactly accurate when it comes to gold, silver or platinum purchases in small or non-regulated sizes (such as 1 ounce bars, U.S. Mint bullion coins in any quantity, or any contract that is not approved by the Commodity Futures Trading Commission), and just plain wrong if the metals (or coins containing them) do not have their delivery deferred.

Deferred delivery generally means that the coins (or metal) is not delivered to a buyer within 28 days; or as Section 742 of the Dodd-Frank law provides, exempted is any “contract of sale that – ‘‘(aa) results in actual delivery within 28 days or such other longer period as the Commission may determine by rule or regulation based upon the typical commercial practice in cash or spot markets.”

As to the amount of precious metal that can be regulated by the CFTC, the general rule is that only bulk silver and gold coins under a standard contract are covered.

So coin shops, most dealers and nearly all collectors simply aren’t affected – nor were they intended to be. The CFTC, after all, regulates “Futures Trading,” and so long as there is reasonably prompt delivery, consumers appear to be protected. There may be regulation if delivery is deferred.

How these rule changes will affect gold commodity exchange traded funds (ETFs) and pool accounts (e.g. Kitco silver/gold pool) remains to be seen.

ETFs, since they trade on stock market exchanges, should be fine, though it is unclear exactly what, if any, changes may need to be made to these types of products.

An email from to, one of the largest precious metals pool account managers, which requested information on how these regulations would affect US based customers was not answered.

Since most of our readers deal directly with physical precious metals for the purpose of wealth preservation and emergency preparedness, as opposed to paper trading of PM’s, you should see no negative impact on your ability to accumulate or liquidate your gold or silver.

The long-term implications of these rules and how they affect the trading and price of precious metals instruments remains to be seen.


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    1. Magnix

      What about buying silver/gold on ebay?

      • admin

        eBay should be good to go..these rules affect leveraged CFTC regulated products (for now)

      • Mr. Blutarsky

        Make sure you have a scale to weigh all ebay purchases. Lots of scammers out there right now.

        • admin

          Good advice Mr. B.

          The only thing I will buy on eBay is pre-65 quarters and dimes, or pre-70 halves. These are much harder to counterfeit.

      • Lightknight

        If you can touch it or feel it, it is worth something.

    2. Anonymous

      Don’t tell me paper gold/silver is a PONZI!!!!! Say it ain’t so…

    3. MadMarkie

      Who gives a ‘diddle’ about paper assets anyway? Everyone that I know who has half a brain is trying to get out of their IRAs & 401k plans and into physical assets. Most of my family members have stripped their bank accounts down to the bare minimum required to keep them open. They write checks to cover their monthly bills, deposit the cash to cover the checks and then drop the checks in the mail. They do this to limit their exposure to the financial mess we call a banking system.

      If you can’t hold it in your hand …… it may not securely belong to you.

      Good luck with your stock portfolio. Let us know how it works out for you in the long run.

      • Ben Dover

        This rule does not affect physical metals purches…for now.

    4. JJ

      MadMarkie–we don’t even do that–for those local, it is cash, mortgage gets paid at BOFA…and everything else is cash…I need something online for prepping??? Deposit amt. in bank and order immediately using debit…

      I have .57 cents in my account at this moment.

      • Anonymous

        You’re my hero JJ! I have you beat < than .57 in my account. I make them send me a paper statement every month too…

        I once received a gov check for .03 cents. I should have framed it.

        Something big is about to happen Griz. Get ready to back up truck or sit back and admire.

    5. greaseman

      I have been trying to limit my participation in the banking system. it’s cash payments for as much as possible. I still use the banks online payment system to pay bills. The more cash payments you use, the less the “man” knows what you’re doing, and where you spend your money. I’ve been slowly drawing down cash asssets, and making them dissapear. I wish to appear as poor as the rest of the out of work population.

    6. Griz

      Same here all cash unless no other way. I don’t even use cash only on monthly bills. Not quite broke just badly bent. Do ya’ll think silver will hit 25 to 30$ maybe next to months before taking off again?

    7. Griz

      Mac, how long do you moderate someone?

      • admin

        the system auto-moderates. After we approve a comment or two it should automatically start publishing them (unless you include outgoing links, in which case moderation is required).

    8. PO'dpatriot

      This is good news then. Been buying my silver locally, pay cash and walk out the door leaning slightly.

      • Ben Dover

        Suggest you use both pockets.

    9. Anonymous

      You should get balanced while buying insurance.

    10. NetRanger

      Hmmm. I have a few shares of IShares Silver (SLV). I wonder if it will be affected? Its an ETF that mimics the price of silver minus the cost of the fund. I’m betting it won’t since you never really trade in physical silver. Its just gambling, pure and simple. Anybody have any other information about the SLV ETF?

      • Jim

        SLV is in the to big to F with dept. I know a lot of preppers dismiss it, but I have some IRA money in it. Yes you can buy real coin with an IRA if you don’t mind paying hundreds to have someone store it for you…..SLV is much more realistic

    11. GuitarMan

      Is there a way at all to hide away a 401K or an IRA account from being confiscated by the government if it came to that?

    12. Preston Scott

      @ Griz: I think the Spot price will go much lower than that. but physical will stay around $30+ until it really takes off. (probably by the third week

    13. OKPrepper

      Just continue to buy physical and buy on the dips. I realized what was coming our way about 3 years ago and started buying PM 2 years ago. I bought my bullets first, then my bullion, now I am good on both of those and buying my beans these days. I would never own anything but physical metals. My wife and I have a small Roth IRA that we have talked about moving into gold, but have decided to just pay the tax and cash it in and buy physical instead. I have zero confidence in the system anymore, but to each his own. Good luck trying to barter that piece of paper for anything but a match.

    14. overtheedge

      “quote” The prohibition of Section 742(a) does not apply, however, if such a transaction results in actual delivery within 28 days, or creates an enforceable obligation to deliver between a seller and a buyer that have the ability to deliver, and accept delivery of, the commodity in connection with their lines of business.

      Source: ZH


      This might be just the thing to solve the gambling on commodity futures. Inability to accept delivery is the key. Where you want us to dump this 5000 bushels of soybeans? Will your basement hold 1000 barrels of crude? Inquiring minds want to know.

      • Jim

        So much for being free to speculate…

    15. Mick

      Dodd-Frank… you mean the clowns that were the top recipients of campaign cash from Fannie-Mae and Freddie-Mac, despite their oversight role? Obviously they are looking out for our best interests, so I guess I ought to comply with Mushroom’s eternal suggestion to abandon physical wealth in exchange for a shoebox full of crisp uncirculated 10 dollar Federal Reserve notes.

      APMEX delivers within 28 days so I guess I’ll keep doing business with them. Any tips, Mac, on which dealers to avoid due to this regulation?

    16. dan

      Truth is it very well might effect physical sales of pm’s, how are the big institutions and etf’s going to take a position without the futures market or leverage. The only alternative will be to actually take physical delivery. Get ready for major shortages of physical pm’s, no more paper gold or paper silver gonna leave a big vacuum. When supply runs out prices shoot to moon.

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