Will increasing margin/capital requirements in commodity investing hurt the "Average Joe investor"?

Question

With the increases in gas prices, I've tried coping with such by buying an ETF that invests in oil futures (ticker: OIL.) When OIL spikes in price, I sell some shares and uses the profits to pay for the higher gas at the pump. It's not a perfect solution but I've been managing to hedge the increases in gas prices for quite some time this way.

Now, if the gov't wants to increase the margin or capital requirements to invest in commodities, will this affect me in any way? Will I still have access to these investment vehicles such as ETFs that invest in commodities? It seems that institutional investors can easily meet the new margin requirements while barring the Average Joe from profitting from the commodities bubble; the Average Joe will still be paying higher prices AND yet, he cannot take advantage of the commodities bubble any longer.

I'm concerned about the situation but my knowledge is limited.. please offer a rebuttal.

Answer 1

Margin requirements would shake out a lot of speculators that is for sure, but whether or not ETF's would be affected is something that will have to be addressed in any discussions on how to implement that sort of regulation. The problem is with Endowments and Pension funds that sink their billions into such funds. Not the little guy.

Answer 2

It could and will effect every commodity investor/trader

If that's the rules of the game, and you want to play the game you abide by the rules.

The "average Joe' shouldn't be trading commodities, it has been my experience (15 years in commodities) that Joe should not be trading since most do not have sufficient capital and/or lack the knowledge to trade properly.

If you don't have the money to play - don't play

Sorry, this is probably not the answered you wanted, but I believe it's reality

Answer 3

Margin requirements are the same thing as a gas tax holiday...its a whimsical attempt by law-makers to address an issue without really addressing the issue.  Margin requirements merely would keep small players out of the game, yes...however, this would in no way, shape or form affect the impact (bear in mind, its a very marginal impact since most of the commodities trading is done in the spot market) speculators have on commodities prices.

If the government truly gave a d**n about commodity prices, they would raise taxes, cut spending and pay off the debt...which would increase the value of the USD.  But that's just pushing things just a little too far when you are a Congress of Paris Hiltons with Daddy Hilton's charge card.