How the New CFTC Chair is Helping to Improve the Commodities Markets

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Mike Hammer | August 6, 2019 11:22am NYSE:GLD

NYSE:GLD | News, Ratings, and Charts

From Mike Hammer: A little over two weeks ago the CFTC installed a new chair.  Not the kind you sit in, but the person who runs the place.  Dr Heath Tarbert comes to the CFTC with a strong background in finance and regulation. His previous post was the Acting Under Secretary of the Treasury for International Affairs (take a breath now…), which basically means he has experience in the world financial realm. (He may still be in this role; info sources vary on whether he is doing both at once, we suspect not.)

Perhaps more importantly for his current office, he was previously (take a DEEP breath!) Chairman of the American Bar Association Subcommittee on Systemically Important Financial Institutions.  In such a role you would expect he was dealing with exactly the kinds of issues the CFTC works with. He was also a member of the Bretton Woods Committee, and many more industry groups.  So your friendly Gold Enthusiast is well satisfied with his qualifications.

On to the point of this article.  In his first press release Dr Tarbert stated “[T]he CFTC must issue long-awaited rules to limit derivatives positions that help unscrupulous traders corner commodity markets.”

This is music to these old and weathered ears.  Too often we see sudden large transactions from unknown sources that throw the price of silver or gold one way or the other.  Rumors of this- or that-trading house swinging the market abound. Only a very few traders are convicted of market manipulation, but strange market actions seem to continue . While small retail investors struggle with their broker’s requirements, it seems there are some traders who somehow throw around tens or even hundreds of millions of dollars at a time.  Under current regulations and reporting rules it is difficult for the average Mom & Pop to have faith in the markets.

Dr Tarbert seems to understand this. In the very next sentence he states “The trick will be making sure these rules do not strip those markets of the flexibility needed to perform their fundamental risk-management functions …”.

Then toward the end of the press release he states “”In leading the CFTC, I will not lose sight of the underlying purpose of our derivatives markets: to serve the needs of everyday Americans … In regulating these financial instruments, the CFTC serves as a guardian of our free-enterprise system.”

Couldn’t have said it better myself.  Good luck Dr Tarbert!  It’s nice to know someone has our backs.  We’ll be watching for rule change proposals from the CFTC, and of course we’ll keep our readers informed.

Signed, The Gold Enthusiast

DISCLAIMER: The author is long the silver sector via small positions in PAAS and SVBL. He has no intentions of trading these positions in the next 72 hours. The author is long the gold sector via small positions in NUGT, JNUG, a few junior miners, and covered calls on part of the NUGT position. He may roll some of the NUGT options forward and up if a profitable roll scenario emerges in the next 48 hours, but as no plans to trade the other positions in that timeframe.

The SPDR Gold Shares (GLD) was trading at $138.89 per share on Tuesday morning, up $1.10 (+0.80%). Year-to-date, GLD has gained 12.33%, versus a 7.35% rise in the benchmark S&P 500 index during the same period.

GLD currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #1 of 33 ETFs in the Precious Metals ETFs category.

This article is brought to you courtesy of ETF Daily News.

About the Author: Mike Hammer

Mike HammerFor 30-plus years, Mike Hammer has been an ardent follower, and often-times trader, of gold and silver. With his own money, he began trading in ‘86 and has seen the market at its highest highs and lowest lows, which includes the Black Monday Crash in ‘87, the Crash of ‘08, and the Flash Crash of 2010. Throughout all of this, he’s been on the great side of winning, and sometimes, the hard side of losing. For the past eight years, he’s mentored others about the fine art of trading stocks and ETFs at the Adam Mesh Trading Group.

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