In the US, in compliance to the new law, the Dodd-Frank Act, Over The Counter (OTC) trades will be prohibited beginning next month.
Lew Rockwell quotes the Forex.com
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, FOREX.com 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.
Next, an initiative to standardized screening of sourcing of gold via certification to prevent so called ‘financing of war or insurgency’ has taken shape.
Diamonds have already been subject to this measure and this has widely been known as Blood Diamond.
From Tyler Durden of Zero Hedge,
In what could be the oddest development in the precious metals market in a long time, the World Gold Council has just unveiled an initiative whose sole purpose if to combat "conflict gold." From the just released notice: "The World Gold Council today announces that, working together with its member companies and the leading gold refiners, it has produced a draft framework of standards designed to combat gold that enables, fuels or finances armed conflict. The draft standards represent a significant, industry-led response to this challenge and are designed to enable miners to produce a stream of newly-mined gold which is certified as ‘conflict free’ on a global basis."
While we are confused what exactly is being pursued with this action, aside from the creation of a black market for gold of course, it does seem that the logical end result will be a decline in the total supply of "certified" gold.
On the other hand, it will also afford the WGC or any prevailing authority the ability to brand any country it so chooses (Indonesia?) a sourcer of "conflict gold" and effectively clamp down on the production of the yellow metal. Additionally, what better way to deprive a gold sourcing country of massive export revenues than to effectively make their product unsellable in the "legitimate" market. Which then would lead to a surge in fair market value due to supply considerations.
While the pretext is to prevent financing illegitimate activities, the ulterior objective is to exert wider swath of control over the gold and commodity markets.
Apparently, all these looks like more signs of desperation as cracks on the US dollar standard widens.
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