Manipulation with the London gold fix

pmbug

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While it's nice that someone from Moody's wrote a paper and Bloomberg decided it was authoritative enough to report on it, this sentence:
...
The paper is the first to raise the possibility that the five banks overseeing the century-old rate -- Barclays Plc, Deutsche Bank AG, Bank of Nova Scotia, HSBC Holdings Plc and Societe Generale SA -- may have been actively working together to manipulate the benchmark. ...

... is not supportable. Pretty sure you can find a wealth of complaints about "the fix" on GATA and elsewhere.
 

pmbug

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The overhaul of the gold fixing benchmark formally known as the London Gold Fix is due to begin in March. Participants are hoping that there is less disorder than was seen for the messy launch of the London Silver Price (LSP) last August.
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The new system is set to replace the current one which is currently being run by just four western bullion banks, one of whom – Barclay’s – were fined for manipulation of the gold price last year. A second one, UBS, was found guilty by Switzerland’s financial regulator (FINMA) of “serious misconduct” and a “clear attempt to manipulate precious metals benchmarks,” particularly with silver.

The new system is set to expand participation to at least 11 members including some Chinese banks for the first time. Given that China is now the largest producer and buyer of gold in the world, it is significant that Chinese interests will have a say in determining the daily price fix along with the current British, Canadian and French banks.

The change in weighting at the London Gold Fix to give the Chinese representation of over 25% appears to be driven by fear that the Shanghai Gold Exchange (SGE) may soon supersede London as the hub of the global gold market and location where the daily gold price is determined.

This may explain the apparent rush by the LBMA to implement the new system instead of waiting an extra month to get the necessary guidelines from the FCA.

The current process, where the daily gold price is determined by telephone calls from the four participant banks has been in place since 1919. It is set to be replaced by an electronic system.

It appears that the same level of transparency, or lack thereof, will continue to prevail under the new system – as is the case with the LSP, established last year.
...

http://www.goldcore.com/us/gold-blog/new-gold-fix-run-western-chinese-banks-still-not-transparent/
 

rblong2us

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back in October 2011, Swissaustrian had only been with us for a few weeks and the price of gold fell from 1269 to 1240 in a day .........
We were all dutifully outraged and a bunch of graphs were able to indicate that the downward manipulation was pretty regular.

So whats new ? :flushed:

In retrospect, the real question must be how can they do this so openly and for so long with impunity ?

perhaps not ...... :flushed:
 

pmbug

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The U.S. Department of Justice (DoJ) and the Commodity Futures Trading Commission are investigating at least 10 major banks for possible rigging of precious-metals markets, the Wall Street Journal reported, citing people close to the inquiries.

DoJ prosecutors are scrutinizing the price-setting process for gold, silver, platinum and palladium in London, while the CFTC has opened a civil investigation, the newspaper said.

The banks are HSBC Holdings Plc, Bank of Nova Scotia, Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc, JPMorgan Chase & Co, Societe Generale, Standard Bank Group Ltd and UBS Group AG, the Journal said.
...

http://uk.reuters.com/article/2015/02/24/uk-usa-banks-probe-idUKKBN0LS07R20150224
 

pmbug

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This is "rich":
Central banks have expressed interest in joining the London Bullion Market Association, which pretty much runs the London gold market, according to a report by the LBMA's chief executive officer in the May edition of its newsletter, The Alchemist.
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http://gata.org/node/15304
 

pmbug

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China conducted trial runs for the planned launch of a yuan-denominated gold fix last month, three sources familiar with the matter said, in a sign the world's second-biggest bullion consumer was moving closer to creating a benchmark price.

The state-run Shanghai Gold Exchange (SGE), on whose international platform the fix will be launched, conducted the trial with major Chinese banks and a few foreign banks, the sources said this week.

The SGE could not be immediately reached for comment.

China, also the top gold producer, feels its market weight should entitle it to be a price-setter for bullion and it is asserting itself at a time when the established benchmark, the century-old London fix, is under scrutiny because of alleged price-manipulation.
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China plans to launch a yuan gold fix this year through trading of a 1 kg contract on the SGE, Reuters reported in February.

"The launch of the fix is towards the end of the year ... Banks were invited in April to test the fixing process," said one of the sources directly involved in the process.

The SGE will act as the central counterparty, unlike the London fix where the bullion banks settle trades amongst themselves, the source said.
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If the Chinese fix becomes a success, it could add to the pressure on the London benchmark, which is used worldwide by producers, refiners and central banks to price holdings and contracts, although the two could exist side-by-side.

http://www.reuters.com/article/2015/05/06/us-gold-china-fix-idUSKBN0NR06J20150506

If the NWO gold/SDR plan comes to fruition, this will further empower China's position.
 

ancona

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China holds all the cards here. If they work out an actual benchmark price based upon true price discovery without the influence of paper, I'm all for it. The Crimex and LBMA would be redundant overnight and cease to exist in a month.
 

rblong2us

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Why would China be any different ?

As long as it suits those who control, the POG will not be set by any markets.

When some kind of event occurs and paper burns, then the metals will shine.
 

pmbug

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I was thinking similarly. Right now it would seem there is collusion to keep the price low for the benefit of China (et. al.?). Once China has what they need and have a seat and voice at the big boy's table, why wouldn't they play ball as long as they are beneficiaries? I see this as leverage to ensure their voice is respected, not as a ploy to ensure market freedom. I suspect that the price of gold in the "NWO gold/SDR" system will be heavily manipulated just like it is now. Only a disorderly breakdown would unleash gold to find (or perhaps maintain is a better word) it's true market value. To be clear, I do expect some significant upward resetting of the gold price when the "NWO gold/SDR" system comes to fruition, but they are going to try and manage it.
 

coarsequarterly

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This is a national issue and I am sure that authorities are doing their best to deal with the situation and soon enough all the problems will be sorted.
 

rblong2us

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This is a national issue and I am sure that authorities are doing their best to deal with the situation and soon enough all the problems will be sorted.

heh

I feel most reassured coarsequarterly

As a first post you either have a sense of humour or you are a tad under informed
 

11C1P

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It will last as long as it takes to intimidate, pay-off or kill-off all the necessary people to make it go away.
 
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