Who Regulates Gold Trading?
Gold trading is an intricate activity involving numerous factors. Traders purchase and sell gold, anticipating whether its price will increase or decrease.
Investor demand is one of the primary drivers of gold prices, yet traders can become too emotionally invested when trading the yellow metal, leading to overtrading and increased risk exposure.
The Securities and Exchange Commission
In the United States, the Securities and Exchange Commission oversees securities exchanges, brokerage firms and dealers, investment advisers and mutual funds. It works to promote fair dealing practices such as disclosing relevant market information while also working against fraud.
The agency is administered by five commissioners appointed by the president for five-year terms and are not allowed to belong to one political party in order to create an open, multi-partisan commission. Furthermore, they publish investor education material as well as maintain the EDGAR database for public company disclosure documents.
Gold trading strategies offer traders many advantages, from protecting against inflation and currency devaluation to serving as a safe-haven during times of political or economic unrest, as well as diversification possibilities in their portfolios. Though highly volatile, trading strategies allow traders to profit from price movements by buying gold when prices are low and selling when prices rise again.
The Commodity Futures Trading Commission
The Commodity Futures Trading Commission is the federal agency charged with overseeing commodity markets, such as gold. This agency supervises futures and options trading on domestic commodity exchanges as well as investigating any violations of federal law pertaining to commodities trading.
Physical precious metals offer investors a secure investment option that may protect against currency devaluation and inflation, yet is far from foolproof; like all investments it could lose value over time so should only be undertaken with guidance from financial, tax, or legal advisors.
The London Bullion Market Association recently updated their code of conduct. Their revised Code outlines market conventions which must be observed by members. Designed to increase transparency within the market and bring it more closely in line with OECD due diligence guidelines, LBMA requires its members to abide by this new Code to reduce fraudulent schemes that manipulate prices or hide transactions.
State Attorney Generals
Precious metals, as commodities, are generally exempt from most securities regulation. Instead, state laws and the Commodity Futures Trading Commission – an emerging, less-budgeted regulator that oversees derivatives and futures trading – regulate physical gold sales. Furthermore, some state departments overseeing businesses have authority to seek restraining orders against fraudulent firms.
Investors interested in physical precious metals should be wary of high-pressure sales tactics from any investment professional. No reputable advisor should force you to act immediately or tell you the value will skyrocket soon; investors should instead compare the spot price against its premium (i.e. the markup on bullion or coins).
ACS is working to raise awareness among AGs about these issues and risks associated with purchasing physical precious metals, including by identifying champion AGs in Supreme Court cases that could affect their jurisdictions. We’re also collaborating with state attorneys general in proposing legislation and testifying at legislative committee hearings.
The London Bullion Market Association
LBMA was created by the Bank of England in 1987 to oversee and set standards for the gold market and ensure quality deliveries. Membership includes bullion banks, refiners, mints, assayers and transport and storage companies as well as transport and storage providers who must follow its Responsible Gold Guidance, updated in 2016 to take into account OECD due diligence framework for artisanal and small-scale mining operations.
The London Bullion Market Association is managed by an independent chairman and non-executive directors, to ensure it operates fairly. Committees and working groups provide a forum for market members to voice concerns or direct its work, with regular research commissions on relevant industry topics published every day as a measure of transparency; daily trading statistics help reduce volatility while improving liquidity of this world-class bullion exchange; this has contributed to its standing as one of the world’s most liquid bullion markets but new rules proposed by European Banking Authority could force some market participants out altogether thereby curtail liquidity further than it already is today – however this could occur due to market participants pulling back their participation thereby potentially decreasing liquidity significantly.