US regulator considering an inquiry into London's gold and silver markets to check if prices are open to manipulation ( IMHO BLOODY OATH THEY ARE!!! ) The fixing of the gold price in London dates back to September 1919. Photograph: Grant Smith/Alamy London's financial sector was last night bracing itself for another official investigation into alleged price-fixing following reports that a US regulator is considering launching an inquiry into the City's gold and silver markets. The Commodity Futures Trading Commission is discussing whether the daily setting of gold and silver prices in London is open to manipulation, according to the Wall Street Journal, which stated that the CFTC is examining whether prices are derived sufficiently transparently. The system of setting gold prices in London is unusual and involves a twice-daily teleconference involving five banks Barclays, Deutsche Bank, HSBC, Bank of Nova Scotia and Socit Gnrale while silver is set by the latter three. The price fixings are then used to determine prices worldwide. The news of the potential investigation comes after analysis of a similarly unusual system - the process used to determine the London interbank offered rate, known as Libor uncovered manipulation and triggered multi-billion dollar fines against a group of banks. Barclays was hit with a 290m fine last year, which resulted in the departure of its chief executive Bob Diamond and chairman Marcus Agius. Royal Bank of Scotland is paying fines of 390m for its role in Libor-rigging. The fixing of the gold price in London dates back to September 1919, when the process involved NM Rothschild & Sons, Mocatta & Goldsmid, Samuel Montagu & Co, Pixley & Abell and Sharps & Wilkins. At the start of each gold price-fixing, the chairman announces an opening price to the other four members who relay this price to their customers. Based on orders received from them, the banks declare themselves as buyers or sellers at that price. Provided there are both buyers and sellers at that price, members are then asked to state the number of bars they wish to trade. Spokespeople for all five banks involved did not comment when contacted last night. If at the opening price there are only buyers or only sellers, or if the numbers of bars to be bought or sold does not balance, the price is moved and the same procedure is followed until a balance is achieved. The silver fix dates back to 1897. Link here http://www.guardian.co.uk/business/2013/mar/13/london-financial-sector-gold-market Also http://www.gata.org/ Gold Anti-Trust Action Committee, have some interesting articles on the subject
Not sure how to take this. First thoughts are that it's strange that the US regulator would investigate anything at all, let alone PM price manipulation. Perhaps it's another dig at Europe, the pot calling the kettle black and all. Or fund raising to pick up some money from fines. The Libor scandal was almost ignored by the world, at least in the MSM, so what does this investigation actually seek to achieve? GATA will be wetting their pants over it though.
Aren't they looking in the wrong place? I thought the 'manipulations' were supposedly happening during trading, particularly at the NYMEX open
To me it seems like a fund-raiser - reach a conclusion in the US judicial system, levy multi-billion dollar fines on UK banks and run away giggling. However, it does invite a further and more detailed review of JP Morgan et al's role prior to the US market open in 'hedging' its assets...
