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Nichols had stressed time and again that the downward pressure on gold nad silver prices in the past year and half was the result of proprietary trading activities done by a handful of bullioin banks in both regulated..

12 Dec 2013

NEW YORK (Commodity Online): The Volcker Rule, a provision of the 2010 Dodd-Frank Act that prohibits banks from 'proprietary trading' will have far reaching impact on gold and silver futures, according to Jeff Nichols, renowned precious metals economist and Managing Director of American Precious Metals Advisors.

The new rule goes into effect from April 1, 2014 and full compiance will be effective from July 21, 2015. According to Jeff Nichols, the Volcker Rule would mean large US banks such as Goldman Sachs and JP Morgan will be prohibited from trading gold and silver, including forward, futures and options-except on behalf of customers and not for their own short-term speculative gains.

Nichols had stressed time and again that the downward pressure on gold nad silver prices in the past year and half was the result of proprietary trading activities done by a handful of bullioin banks in both regulated and futurs markets and un-regulated over-the-counter (inter-dealer) markets.

"When prices are trending lower, as they have during the past year and a half, this selling exaggerates the downward trend – and contributes to prices falling beneath their fundamental equilibrium level. And, when prices are in a rising phase, large-scale buying at key chart points, exaggerates the bullish trend as it did in the 2011 run up to gold’s all-time high near $1,924 an ounce."

The large banks have resorted to algorithmic, high frequency trading with the intention to manipulate the markets.

But with the Volcker Rule in place, investors can be more assured that gold, silver fundamentals will matter more. Presently, they are bullish, Jeff Nichols said.


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