Manipulation with the London gold fix

[benjamen]

http://finance.yahoo.com/news/gold-fix-study-shows-signs-090756962.html

It took them how long to figure this out? One of the first things I noticed when I got into gold was the predictable down swing associated with London's afternoon price fix.
:rotflmbo:

 

[pmbug]

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]

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.
...
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/

 

[swissaustrian]

This has been statistically proven by Dimitri Speck years ago, see here: http://www.pmbug.com/forum/f2/intraday-gold-price-manipulation-10-am-et-269/

 

[rblong2us]

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 ?

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

perhaps not ......

 

[pmbug]

... how can they do this so openly and for so long with impunity ?
...

Apparently, everyone at the big boy's table is in on the scam.

 

[pmbug]

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]

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.
...

http://gata.org/node/15304

 

[pmbug]

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.
...
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.
...
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]

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]

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]

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.

 

[pmbug]

Bron Suchecki from the Perth Mint analyzes the new London fix process. It's an interesting read:

http://research.perthmint.com.au/20...er-is-at-the-london-auction-youre-the-sucker/

 

[coarsequarterly]

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]

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

 

[coarsequarterly]

There were 5 most reputed banks accused of gold fix manipulation which is very strange. http://www.reuters.com/article/2014/03/05/us-gold-fix-idUSBREA240R620140305

 

[pmbug]

Anyone think that suit will last through the discovery phase?

 

[11C1P]

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

 

[pmbug]

* necro bump *

Ronan Manly doing his thing:

In a brazen development reminiscent of a culprit returning to a crime scene, news has emerged that Germany’s infamous Deutsche Bank is planning to re-join the London Bullion Market Association (LBMA), exactly 9 year after having fled the London gold and silver markets.
...
For those who don’t know the background or have forgotten, recall that it was Deutsche Bank’s abrupt and suspicious departure from the London precious metals markets 9 years ago in January 2014 that actually led to the collapse of the old London Gold and Silver Fixings, as well as the sleight of hand switcheroo replacement of these Fixings with the ‘same old wine in a new bottle’ in the guise of the current LBMA Gold Price and LBMA Silver Price auctions.

This unraveling of the old Fixings then triggered the rest of the bullion banks to flee the sinking Fixings ship, which subsequently precipitated class action suits against Deutsche and its bullion bank peers, as well as US Department of Justice prosecution against Deutsche and other bullion bank traders for precious metals price manipulation.
...

More (long - as usual for Mr. Manly):

Deutsche Bank Returning to LBMA After Nine Years

Deutsche Bank fled the London gold & silver markets in 2014 after investigations, but now wants back in at the LBMA.

www.bullionstar.com

 

[pmbug]

...
When the twice daily LBMA Gold Price auction was launched on 20 March 2015 to replace the infamous and London Gold Fixing, one of the mantras from the ‘Fox Guarding the Henhouse’ at that time was that the new improved auction would include an expanded list of participants beyond the old ‘Gang of 5’ cartel of Fixers which had been Barclays, HSBC, Société Générale Scotia and Deutsche Bank.
...
When it came to the crunch, only cartel insiders such as Goldman Sachs and JPMorgan became additional direct participants in the auction from ‘day one’, as no Chinese banks were allowed to join the LBMA Gold Price auctions from ‘day one’ even though Bank of China, the Industrial and Commercial Bank of China (ICBC), and China Construction Bank (CCB) were fully eligible. See BullionStar article from 13 March 2015 “Chinese Banks as direct participants in the new LBMA Gold and Silver Price auctions? Not so fast!”.

However, these three massive Chinese banks did join the daily ‘unallocated gold’ LBMA Gold Price auctions in piecemeal fashion over the next 15 months during 2015 and 2016.
...
So far so good. This addition of four of China’s largest banks, all of which are heavily involved in the Chinese gold market, to the daily LBMA Gold Price auctions over 2015-2016, was a major shift in the gold benchmark price setting process, and signalled that the Chinese banks had arrived on the global stage.
...
At one stage in 2017, there were 4 Chinese banks in the LBMA Gold Price auction, as the LBMA stated:

“The direct participants who have been accredited to contribute to the LBMA Gold Price are: Bank of China, Bank of Communications, China Construction Bank*, Goldman Sachs International, HSBC Bank USA NA, Industrial and Commercial Bank of China (ICBC), INTL FCStone, JP Morgan, Jane Street Global Trading LLC, Morgan Stanley, Societe Generale*, Standard Chartered*, The Bank of Nova Scotia – ScotiaMocatta, The Toronto Dominion Bank and UBS*. (*Date of participating in the cleared auction to be determined)."

Given the above, I think you’ll agree that its rather odd and suspicious then that all of these Chinese banks have recently disappeared from the LBMA Gold Price again. Yes, that’s correct. They have all disappeared.

At the current time, there is not even one Chinese bank left in the London gold auction. The most recent to leave was Bank of China, where ICE Benchmark Administration (IBA) bizarrely claims that Bank of China itself requested that it be temporarily suspended from the LBMA Gold Price auctions.
...

More:

Why Have Chinese Banks Disappeared From LBMA Gold Auctions?

ICBC, Bank of Communications & Bank of China have all mysteriously gone...

www.bullionstar.com

 

[searcher]

LBMA faces challenges as it looks to establish gold as a High Quality Liquid Asset​

(Kitco News) - Gold has established itself as a store of value for thousands of years; however, the London Bullion Market Association says it faces further work to establish it as an important financial asset within the larger global marketplace.

After helping bullion banks avoid a funding crisis because of Basel III regulation, the LBMA said they are now focused on getting physical gold recognized as a High-Quality Liquid Asset (HQLA).

According to the Basel Framework, laid out by the Bank of International Settlements (BIS), financial institutions must hold HQLA to cover their total net cash outflows over a 30-day period under the stress scenario.

More:

LBMA faces challenges as it looks to establish gold as a High Quality Liquid Asset

Kitco News' general-interest stories takes a look at what is making headlines in the marketplace and how that is impacting precious metals prices

www.kitco.com

 

[Voodoo]

More:

Why Have Chinese Banks Disappeared From LBMA Gold Auctions?

ICBC, Bank of Communications & Bank of China have all mysteriously gone...

www.bullionstar.com

Ahhh that's no mystery. They created a new exchange that actually has metal.