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US regulators analyse potential gold price manipulation in London

by Dylan Lobo on Mar 14, 2013 at 09:45

US regulators analyse potential gold price manipulation in London

US regulators are trying to determine whether London-based traders manipulated the gold price.

According to the Wall Street Journal, the Commodity Futures Trading Commission (CFTC) is concerned about the level of transparency in the gold and silver markets.

Under the current set-up, five investment banks - Barclays, Deutsche Bank, HSBC, Bank of Novia Scotia and Société Générale meet twice a day in the UK capital to set the price for gold, while the latter three meet on silver.  

Gold has been seen as a safe haven in the turbulent market conditions, with its price breaking records and coming within touching distance of the $1,800 mark last October.  

While the CFTC has not launched a formal probe, the news bears striking hallmarks to the Libor investigation, which resulted in heavy fines for BarclaysRBS and UBS for rigging interest rates.

The CFTC is headed by former Goldman Sachs executive Gary Gensler, who according to the Wall Street, has 'called for reforms to Libor and other benchmarks that would require them to based on actual transactions, rather than estimates submitted by industry firms'.  

3 comments so far. Why not have your say?

CoeurDeLion87

Mar 14, 2013 at 11:18

The 5 you mention are in fact 'ring' members who are responsible for 'fixing' the precious metals prices twice daily.Traditionally NM Rothschild used to lead the 'ring' members made up of Sharps Pixley (recently resurfaced), Mocatta & Goldsmid (now Nova Scotia), Johnson Matthey & Samuel Montagu (now HSBC). It would seem that the 5 you mention now are continuing the tradition set by the old LGBM. It would seem that this is just yet another example of a US driven and led 'SHAKEDOWN' designed to break a supposed monopoly that London has had for generations. Let's not forget that GMT is London's main asset and in this regard London has a clear advantage in any market especially for bullion. The charge of manipulation appears to be unfounded and is it hardly surprising that the claims are coming from an ex-GS partner?

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Alan Selwood

Mar 14, 2013 at 17:53

Better to ban all derivative trading in precious metals.

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Philip Bailey

Mar 15, 2013 at 09:17

Will the CFTC be investigating the Fed and BoE for inflating the price of real assets?

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