Turd Confused

Sat, Jun 18, 2011 - 3:16pm

When I first read this last evening, I was confused by its meaning. After thinking about it all day while working outside, I still have no idea. It would seem to be a possible first step toward a crackdown on PM trading and speculation. Banning OTC PM trading would also serve to drive more business toward the crooked Comex. I don't know maybe I'm reading too much into this. Since one of the original purposes of Dodd-Frank was to regulate OTC derivatives, perhaps this is nothing sinister at all. Again, I don't know. I do know, however, that no action taken by the Fed/TBTF/Govt Complex is ever coincidental.

Help a Turd. Please provide your thoughts below.


About the Author

turd [at] tfmetalsreport [dot] com ()


Jun 18, 2011 - 3:24pm


This is a "can kick" and bullish for physical PMs.

Jun 18, 2011 - 3:26pm


hard to tell. however, the OTC is more of a dark market with lack of disclosure. the prices are set on the CRIMEX and not the OTC, so...perhaps it is better that those trading on the OTC are forced to be subject to some kind of disclosure and true price discovery...hopefully it becomes less relevant as the HKMex starts to offer a silver contract.

Jun 18, 2011 - 3:27pm


"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"

Where does this come from in the bill? No options? Come on... Sounds like BS. I hope is BS

Jun 18, 2011 - 3:28pm

When an expert like the Turd

When an expert like the Turd is confused, you know that things are reaching a chaotic stage. The time is here (and has been for a while) to move to all physical, and ignore all this overly complex crap.

Systems add complexity in order to confuse users. Generally, the reason for this is either to create a class of bureaucrat to "handle" this type of business (think "tax code"), or to restrict the entry of laymen into the field in order to artificially prop up wages for those already in the field (think legal and medical professions). Another reason is to obfuscate some fundamental truth. That is the case here.

The truth they are trying to hide is that the COMEX is about to go bankrupt.

Get that physical while you still can!

Captain Silver
Jun 18, 2011 - 3:29pm


Been watching the boards and haven't seen any convincing analysis yet, some keen insights, but even if it's not sinister it has certainly led to a lot of uncertainty amongst posters today. So I ask:

Is this likely to raise/lower small investor physical demand going forward due to uncertainty?

Will it raise/lower industrial user demand due to potential price/supply uncertainty? I've wondered for a while why there hasn't been silver hedging by large users as there has been in the energy sector with all of the volatility.

Does it open the door for easier manipulation as they lose leverage with margin hikes?

I'm less concerned about the actual impact of the OTC ban as I am about the precedent set moving forward.

I don't trust em! They're not doing this for our health.

Jun 18, 2011 - 3:32pm


I'm confused, too.

Here is an article from seeking alpha from August of 2010


and here's a thread on this from kitco:


Jun 18, 2011 - 3:34pm

Hey TF, reposting my recent

Hey TF, reposting my recent relevant post from the last thread:

Hey guys, I know alot of us are quizzical/puzzled/concerned by the Forex announcement of July 15th actions regarding OTC trading of precious metals. This morning I ran across this piece from Jesse, and it helped put my mind at ease a bit. Hope it helps you too!


Jun 18, 2011 - 3:34pm

Completely sinister?

If you read the text of the law in that seeking alpha article, it actually bans all margined trading of commodities (extension of farm bill) w/out intent to take delivery of underlying goods. Ergo, AGQ, ZSL, DAG, UCO, etc. should all be banned. But they won't be. This is just an attempt to get us to buy into wall street products that we don't have control over 24/7 and have serious slippage issues.

This is perhaps complete selective enforcement of dodd frank provisions?

Or it could be that only forex, saxobank etc. have decided to follow the law, and proshares is taking the wait and see approach, or not announcing until july 15 that their products have been discontinued.

Notice that silver and gold didn't get flushed in this recent takedown? Bankers want your money.

This may be a good thing in that it will help the mining shares in the long run.

I have posted my predictions for the week in pailin and silvernomics corner. I'm short term bullish, intermediate term bearish, long term bullish on metals.

Jun 18, 2011 - 3:34pm

Don't think too much...

I know pointing out the obvious may seem dense... but sometimes it helps. Let's start with what we know.

> FOREX.com must discontinue metals trading for US residents on Friday, July 15, 2011


  • No USA citizen can trade gold/silver in FOREX after the 15th.

  • I expect... no USA brokerages can trade gold/silver in FOREX; overseas investors must stick with overseas brokers.

  • Visibility into the price of gold/silver will not go down because USA citizens can watch the price as traded by those outside the USA.

  • The ability for USA citizens to quickly move their money into PM will be hampered. COMEX futures are not the same as FOREX (I'm guessing, since I trade neither). SLV/GLD are not the same as FOREX.
  • (a possible aside... BitCoin was slandered by claiming it is used to buy drugs... which is a small step from claiming it funds terrorism)
  • The pressure on FOREX entities offering gold accounts will go down; money will drain from the fractional-reserve FOREX gold market.
  • Physical demand will go up
  • COMEX demand will go up
  • GLD/SLV demand may go up
  • Gold stock demand may go up.
Jun 18, 2011 - 3:35pm

Doesn't this really just take

Doesn't this really just take more paper gold and silver off the market? And how many people actually trade gold and silver on forex? Not a rhetorical question - I seriously don't know.

Robert LeRoy Parker
Jun 18, 2011 - 3:37pm

Protecting the LBMA

The LBMA is where the otc market is. Look at the clearing volume:


This is where the fractional reserve bullion banking takes place, and where the paper gold is. Imo, this move to eliminate other avenues such as forex indicates the problems at the LBMA must be heating up. But this is such a shady market though that its really difficult to interpret.


I would very much like your opinion on this action.

Jun 18, 2011 - 3:40pm

Interesting.. Careful EE...Your Desperation Is Showing..

I agree with Captain Silver: "I don't trust em! They're not doing this for our health."

I don't understand all of the ramifications of this but the above is pretty much the bottom line. .....I see a HUGE potential for this to backfire on them however as I see it creating an increased demand for the physical metal.

Jun 18, 2011 - 3:45pm

The Mother of All Margin Calls?

So if the May 1 silver massacre was caused by margin calls on poorly capitalized small and retail speculators, if this interpretation of Frank-Dodd becomes operative for all brokers, doesn't it play out basically the same way? Maybe in slower motion because it was telegraphed. At the time a lot of people joked about, "they're going to raise the margin requirement to 100% before you know it!" Ha, ha?

Anyway, this is not a prediction, just trying to see if my understanding is plausible or half baked.

Jun 18, 2011 - 3:48pm

was there a mention about currencies too?

Didn't give it a deep and thorough read, seem to recall something about currencies


Jun 18, 2011 - 3:54pm

price decline coming?

Thanks for the post Turd.

Maybe again a good "motivation" for a huge price drop.
Simple thinking: the goal of this action is most probably not to increase the price.
And if the banskters are negatively impacted then they will roll out a workaround for sure (that's why they are banksters).
They are already shorting the price pretty intense during/in the LBMA right?

Maybe leveraged USA silverbugs will move even more to phyz.
I can't find any good reason right now why the price manipulation actions will reduce due to this.

Maybe it makes sence to foresee some put an call positions to take one way or the other some benefit from the coming price swing?

Let's see what James T, Santa, Ted, Sprott, ... will say about this.

Looking forward to read all the comments about this topic.
Cheers, M.
And now I'm going to place a new maple order;)

American Oligarch
Jun 18, 2011 - 4:00pm

Weapons of Gold destruction.

New to buying PM's having discovered this fantastic blog.

This has reminded me of a thought I had the other day. What is to stop Global Governments just agreeing to pass laws to tax people who buy and sell physical gold or silver. In the UK we already have to pay VAT on silver at 20%, which is a massive disincentive to any investor.

If it appears that the cartel, as I often read in this blog, are all powerful, surely they have a number of weapons at their disposal handed to them by their political pals.

All they have to do is pass emergency laws and like a puff of smoke our profits are gone.

Captain Silver Mario
Jun 18, 2011 - 4:03pm


The short players lose traction with the recent margin hikes. If they can drop the volume, shake out some players, they could regain leverage on the market. Lining up for a massive shorting fest? Suspect just forex won't have much effect, but further announcements may be coming.

CookieMonster Captain Silver
Jun 18, 2011 - 4:03pm

@ Cptn Silver, re: previous thread

I don't know where the hell that previous thread w/ silvernomics went. But I really enjoy TSI trader and he is agreeing w/ you and Spinner. Do you know where that thread was?

Anyway, maybe you are not a gambler but a good way to hedge physical is to buy ZSL.


Prize Fighter
Jun 18, 2011 - 4:07pm

Not an educated trader, but

Not an educated trader, but how might gold's lowered margin on Thursday tie into this? Maybe they are different systems but they are on the same team.

Like others said, I don't know but I'm sure it's not in the name of justice or free market capitalism. One thing to be sure of, if this effects PM prices dramatically the MSM will only mention it in terms of "those maniacal metal speculators are at it again" with no mention to the rules or details. Soundbitten slaves.

Jun 18, 2011 - 4:08pm

I agree with Jesse

My reaction when I read this story was the same as Jesse's -- this is just a paternalistic effort to stop retail investors from gambling with high leverage. It won't have any effect on prices.

Jun 18, 2011 - 4:10pm

Don't get sucked into the bull trap this week.

I've been saying this for too long. I haven't posted it on the general blog. But there ya go!

bobby ouchtouch
Jun 18, 2011 - 4:12pm

everything 'they' do affects prices

maybe, maybe not

we'll soon see

bobby ouchtouch
Jun 18, 2011 - 4:14pm
Jun 18, 2011 - 4:15pm

This is the end of paper PMs

First time poster. I just got into this PM game about four months ago. If it had not been for some dumb ass 12hr day job, I would have been in back in Nov 2010. Ah well...

This to me... on first read.. looks like the planned way of effectively stopping all paper futures trading. Note the recommendation from FOREX...

"As a result, all open metals positions must be closed by July 15, 2011 at 5pm ET. "

What does that mean? It sounds like the principal announcing over the intercom GET THE F$$K OUT OF THE ETF PAPER GAME!

I for one am no day trader... I have only bought physical. I understand the $$ that can be made from playing the paper game if you can do it... but I don't have the money nor the time and it looks like the big boys are about to shut the whole game down for everyone but them... from one comment on the Zero Hedge post...

----------------- by EscapeKey
on Sat, 06/18/2011 - 13:58

Big players are exempt (surprise!):

Section 413(a) of the Act alters the financial qualifications of who can be considered an accredited investor, and 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.

----------------- The reason I say this is planned is because the banksters got caught with their pants down by the Hunt Brothers in the 80s. It is my opinion that we are now at the same stage as when they SHUT DOWN ALL TRADING in the silver futures market. Which quickly killed the Hunts and ushered in the manipulation to follow for the next 20 years. I could be wrong on some timing... but the action is the same. By telling people to "unwind" their open metal positions... they are saying... GET OUT OF THE PAPER METALS MARKET! OF course, this shot across the bow is only for the masses as EscapeKey noted in the actual wording of the bill... the big boys will be able to play in paper and supress the price to where they want it... or at least they HOPE this will be the result. If I am correct... and I hope others here will refute, counter claim or support my theory... then what the "price" discovery is going to be in the future is hard to tell. Will paper spot still be the price one pays as I am through ScotiaMocatta? Or will the various other non-bank players in the purely physical market begin to see the predicted divergence of price between paper and physical (with paper now being effectively controlled by the banksters). I am just beginning to wake my boomer parents up. They have a lot of retirement left and I am hoping they will get some gold. Silver is too speculative and volatile for their nest egg despite the potential massive upside as silver shoots to 20 to 1, 10 to 1. They are of course worried about price drops... but in the end game... when all paper is revalued and debts wiped off the monopoly board and the banks given new money to distribute in $500 allotments... it will only be to those that have gold. It would be curious to know how one would play monopoly if GOLD was involved and not just paper money as my memory tells me that at some point.. the bank ALWAYS has to go to players for money as the board gets bought out and the crushing of opponents begins. I think we are at that stage now and this is why this Dodd-Frank bill has been passed... it is a planned shut down of the paper market and not a sudden call issued in reaction as they had to do with the Hunt Brothers. They are trying to manage what is clearly a failing paper game and, with great hubris, trying to take back control of an already cresting PM tsunami. I am of two minds as to the future. If they let QE end... stocks will tank and with this bill so will PMs so it should be time for patience and HOPE to still buy what physical is left. Or... go all in right now because unlike 2008... Greece was not publically insolvent yet... now it is and another kick of the can gets Greece to Sept... not next year. Should Greece default... and take the banking system with it as Max Kesier warns about with American CDS in money market funds insuring those debts... liquidity is about to not just dry up, but vaporize completely. In that case... with mass psychological panic... PMs will take off and the parabolic move to who knows what $$ for gold and silver begins. Or... they could manage to kick the can again... and start a slow burn war in Libya/Syria (as per Alex Jones and the militarty insider info he has received citing Oct/Nov as d-day for boots on the ground) hoping to contain Iran and Russia/China and we will see only a steady climb in metals from the current bottom. The key I think to the end game.. is mass psychology. If TPTB cannot manage this crisis and keep a major "event" from going public (wiener's weiner and the Canadian kissing riot couple are all front page news)... then when paper/banks finally fail AND the public wakes up... OR they print to infinity to keep them from doing so AND prices cannot be kept from multiples the public will be FORCED to see as "something is wrong"... PMs take off and with the paper game now limited to the big boys... the physical market will take over and you can bet that while paper "spot" will be one price (for those on the inside who will get to buy cheap as per the bill), the ask price for you and me will be multiples of spot as the banks will make their money when the sheep come crashing in to buy and FORCED to buy physical. And I count myself as a sheep. I SHOULD have been awake in 2007/8... but I dumped $12,000 on one year of university instead. Hindsight alas is always 20/20. That said... when I bought by first oz of silver... at near the top 49.50... there was an Indian fellow in my local small city in Canada that was adament about getting physical... and the Scotia people at the counter said it was NUTS with people calling and asking. That was the Friday before the Monday massacre. When the sheep wake up... it will be epic. I think this bill is literally an attempt to keep the mass medai reported price of silver.. the paper price... low, as will now be in full control by ONLY the big players with us small fry and "evil" speculators out of the market. What will happen is we in the know will start to see the spot/phyz spread rise and psychological awakening will once again be slow... as more guys like me start to get on board. I don't know. Maybe that is now as clear as mud and I can see why Turd is asking for advice. It is all fog right now but in the end... phyzz is all that will matter. What we are all trying to do here is maximize our paper $$ to get into phyzz... but maybe we should stop worrying about how many oz we get/$ and just be glad we can get phyzz at all!!! My two cents.
Jun 18, 2011 - 4:21pm

Not all powerful


Comex is there to continue the illusion of a sound fiat policy by keeping the true value of gold /silver at bay. If they could I'm sure silver would still be in the teens.

great-khan ouchtouch
Jun 18, 2011 - 4:25pm

One would hope so...


I agree with Jesse

Submitted by ouchtouch on June 18, 2011 - 4:08pm. 0

My reaction when I read this story was the same as Jesse's -- this is just a paternalistic effort to stop retail investors from gambling with high leverage. It won't have any effect on prices.


but the very act of closing out metal positions for effectively anyone on margin WILL affect prices. As Turd noted... the cartel LET the price rise on the backs of those very same margin specs... then they CRUSHED the price with their paper. Now? They want to crush the price WITHOUT INTERFERENCE from the silver liberation army specing on paper and converting to phzzz. THAT is the game this bill is designed to shut down... with ALL commodities. Except... the big boys will still be able to play and with their MASSIVE leverage and volumes... the price will be under their control once again.

Only as long as all the people left buying paper take CASH for their ETF when they close... if they request phyzz.... game over.

I don't know... I am only trying to think like a Giant (as per FOFOA's debters vs savers)... but I can't see how this will not affect the price since EVERYTHING the cartel does is to affect and suppress the price.

Lord Koos
Jun 18, 2011 - 4:43pm

Buy physical and

Buy physical and fergetaboudit.

L13 CookieMonster
Jun 18, 2011 - 4:48pm

Cookie I Hear Ya

Its difficult not to get sucked in. So far I have refrained from getting back in even though I am some what under water (just a little).

If this PM Bull carries on much beyond next week resistance may be futile.

bobby L13
Jun 18, 2011 - 4:50pm

If this PM Bull carries on

If this PM Bull carries on much beyond next week resistance may be futile.

or feudal as in medieval

Jun 18, 2011 - 4:51pm

This will defintely affect the price of silver

Come Sunday night/Monday trading, expect short term pressure on the price of PMs.

I wish I could kill these Mother F*****s


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