Arizona Tribune - U.S. Senators File National Security Amendment Targeting Dangerous Gold Market Concentration

Supported by a broad industry coalition that includes mints, refineries, depositories, dealers, miners, banks, logistics companies, risk managers, and industry trade groups, the bipartisan and bicameral SILVER Act (SB 4621 and H.R. 8007)would enhance financial and national security resilience by ending the extraordinary concentration of exchange-approved depositories for gold, silver, platinum, and palladium in and around New York City.

The geographic concentration of America's publicly traded precious metals is viewed not only as anticompetitive but also highly dangerous since it creates a single point of failure for a market that plays a critical role in price discovery, physical settlement, and the functioning of U.S. and global markets.

Other Markets Evolved, But Gold Market Remains Mired in 1970s Thinking

The SILVER Act targets archaic policies that date back to the 1970s and that leave financial markets and defense supply chains severely vulnerable to disruptions such as natural disasters, infrastructure failures, cyberattacks, terrorist attacks, and other public emergency situations.

Even before Senators Jim Risch (R-ID) and Catherine Cortez Masto (D-NV) introduced their bipartisan legislation last month, concerns about the extreme concentration of exchange-approved precious metals depositories to only the New York area had already drawn scrutiny from federal regulators.

Earlier this year, Commodities Futures Trading Commission (CFTC) Chairman Michael Selig applauded the introduction of the SILVER Act by House sponsors and offered to work with Congress on the bill.

Government Privileges for SIFMUs Create Risk Mitigation Duties

Proponents note that the risks identified are particularly significant because the primary U.S. futures exchange is designated by the U.S. Treasury Department's Financial Stability Oversight Council (FSOC) as a Systemically Important Financial Market Utility (SIFMU).

Institutions receiving SIFMU designations are given special government privileges due to their importance to the stability of the U.S. financial system, including access to Federal Reserve services and emergency liquidity facilities. But with those benefits come heightened responsibilities.

Specifically, Title VIII of the Dodd-Frank Act created the SIFMU framework to mitigate concentration, operational, settlement, and liquidity risks - all of which are exacerbated by the archaic exchange policy that excludes all precious metals depositories located outside the New York region from serving publicly traded markets in any capacity. This policy also stands in sharp contrast to other commodity contracts that are geographically disbursed.

Financial Stability, Supply Chain Resilience Critical to National Security

The SILVER Act would not lead to the approval of any specific precious metals depository. Instead, it would establish an application process, greater transparency, and objective evaluation standards for depository approvals while ensuring that geographic concentration risks and other public-interest considerations (such as broader market access, greater competition, and cost savings) are addressed via the inclusion of several qualified depositories across the U.S.

Gold, silver, platinum, and palladium play an increasingly important role not only as financial assets but also as critical inputs for defense, aerospace, electronics, medical technology, and energy production.

The decision to advance the SILVER Act through the NDAA reflects a growing consensus that critical mineral supply chains, financial stability, and national security are deeply interconnected.

Industry Coalition Seeks Regional Diversification, Market Access, Competition

The Precious Metals Industry Coalition for Market Security & Access wrote in a letter to Congress this month that, "This problem extends beyond risk exposure. The lack of geographic diversity also undermines market liquidity, competition, and access. It also undermines the ability to build precious metals supply chain infrastructure in other regions of the country."

"Passage of this simple bipartisan bill would [also] modernize the nation's precious metals infrastructure by promoting regional diversification, reducing costs, strengthening domestic supply chains, enabling new innovative digital products, and expanding market liquidity and access - while better aligning the system with the realities of a national marketplace," the Coalition stated.

About the Coalition

The Precious Metals Industry Coalition for Market Security & Access represents a broad cross-section of the U.S. precious metals industry, including depositories, mints, dealers, refiners, miners, logistics providers, banks, insurers, investors, and metals financing businesses committed to strengthening the security, resilience, competitiveness, and accessibility of America's precious metals markets.

Media Contact:
[email protected]

SOURCE: Precious Metals Industry Coalition for Market Security & Access

View the original press release on ACCESS Newswire

A.Williams--AT