I recently received an email that I have listed below from my FOREX broker, Oanda. I think this one slipped under the radar when our intrepid leaders were in a tizzy to pass some legislation so we could both appear to be doing something, and appear to know what to do during the recent economic crisis.  The futures exchanges recently raised margins for gold and silver , which some have blamed for the large correction that occurred in silver.  While it probably had something to do with it, as the email below shows, leveraged silver and gold trading from forex brokers is soon going to be a thing of the past.  I’m not certain how many people actually trade gold and silver in this way; it will be interesting to see how this impacts the markets.  I guess it could be part of the reason for the recent decline in both gold and silver, but it also could be an overdue correction.  I think the long-term outlook for both gold and silver is still good, but this government interference in the markets may have a short-term disruptive effect.  Luckily the consumer is being protected, right?  As long as both parties to a leveraged gold or silver trade complies with their agreements, there is no need for the government to protect us from risk.  Taking risk is part of being an American, but the nanny state is here to save your from yourself.

/sighs.

As a result of the recently enacted Dodd–Frank 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 frontdesk@oanda.com.

We appreciate your business with OANDA.

– The OANDA fxTrade Team

 

Disclaimer- The proprietor is long both silver and gold.