Gold and Silver Price Manipulation – Part 5 of 11 – by illuminati Silver

Video transcript:

Today is Thursday 21st January 2016 and we are addressing the issue of Gold and Silver price manipulation. In parts 1 -3 we highlighted the main advocates who have accused Governments and Central Banks of such manipulation. In video 4 we highlighted one of the ways in which this manipulation is alleged to take place.

In this video we shall mention another route which is via the LBMA or the London Bullion Market Association.

Once again, Dr. Paul Craig Roberts and David Kranzler have a theory on how this occurs. This is how they describe it:

“In addition to the Comex, the Fed also engages in manipulating the price of gold on the far bigger–in terms of total dollar value of trading–London Gold Market. This market is called the LBMA (London Bullion Marketing Association) market. Whereas the Comex is a “paper gold” exchange, the LBMA is the nexus of global physical gold trading and has been for centuries. When large buyers like Central Banks, big investment funds or wealthy private investors want to buy or sell a large amount of physical gold, they do this on the LBMA market.

The Fed’s gold manipulation operation involves exerting forceful downward pressure on the price of gold by selling a massive amount of Comex gold futures, which are dropped like bombs either on the Comex floor during NY trading hours or via the Globex system”. Then the physical gold is bought via the LBMA originally using the London Gold Fix mechanism.

This mechanism was certainly singled out for criticism. Here’s a little background to it:

The London Gold Fix was first held on 12th Sept. 1919 to kick-start London's gold market after the end of the First World War. For 85 years until 2004, the five member banks of the London Gold Fix would meet face-to-face at the offices of N.M.Rothschild, the Chairman of the Gold Fix, on St. Swithins Lane in the City of London.

Rothschild's Bank chose to quit the gold market in 2004, explaining that "our income from commodities trading in London has fallen as a percentage of our total income in each of the past five years”.
The London Gold Fix (which was changed in 2015) involved gold dealers from London's five biggest bullion banks establishing a common transaction price for a large pool of purchase and sale orders. They did this twice each business day - first at 10:30am (known as the Morning Fix) and then again at 3pm (known as the Afternoon Fix).

The participating bullion banks acted both on their own behalf and for those customers of theirs who had issued limit orders for them to trade at the London Gold Fix Price. No-one knew what the Gold Fix would be before it was declared.

The Gold Fix established the price at which the gross amount of gold on buy orders matched the gross amount of gold on sell orders - across all the participating banks.

The Gold Fix Chairman started the fixing process by declaring a price - usually very near the ongoing spot market gold price.

Assuming this price the participant banks aggregate all the limit orders they have received - both buys and sells - and declared to the Chairman the net quantity of gold they would buy, or sell, at the proposed price.
However this system had its critics:
On February 28th 2014, Bloomberg reported on a study co-authored by New York University Stern School of Business, Professor Rosa Abrantes-Metz and Albert Metz, a managing director at the rating agency Moody’s Investors Service. In their not then published draft research paper, the two authors claimed that “The structure of the benchmark is certainly conducive to collusion and manipulation, and the empirical data are consistent with price artificiality” and that “It is likely that co-operation between participants may be occurring”.

The authors of the study refer to unusual price activity around 3:00 pm in London when the afternoon setting of the gold price is taking place. They have not observed these trading patterns during the morning fixing.

Furthermore, large price moves during the afternoon fixing were ‘overwhelmingly to the downside’. Screening intraday data from 2001 to 2013, they found those patterns from 2004 until the end of the data sample. In a telephone interview, Professor Abrantes Metz said: “There’s no obvious explanation as to why the patterns began in 2004, why they were more prevalent in the afternoon fixing and why price moves tended to be downwards.” Thus, the two authors concluded in their research paper that unexplained moves may indicate illegal behaviour by the five banks involved in the gold fixing, working actively together to manipulate the benchmark.

Also in Feb 2014, an analysis conducted by a specialist consultancy called Fideres claimed that Global gold prices may have been manipulated on 50 per cent of occasions between January 2010 and December 2013.
Fideres’ research found the gold price frequently climbs (or falls) once the conference call between the five banks begins, and peaks (or troughs) almost exactly as the call ends and then experiences a sharp reversal, a pattern it alleged may be evidence of “collusive behaviour”.

“[This] is indicative of panel banks pushing the gold price upwards on the basis of a strategy that was likely predetermined before the start of the call in order to benefit their existing positions or pending orders,” Fideres concluded.

A new system was launched on 20th March 2015 called The LBMA Gold Price - to replace the historic London Gold Fix. ICE Benchmark Administration (IBA) provides the auction platform, the methodology as well as overall independent administration and governance of the LBMA Gold Price, with the LBMA itself holding the intellectual property rights.

The price continues to be set twice daily (at 10:30 and 15:00 London GMT) in US dollars. Sterling and Euro prices are available but they are indicative prices for settlement only. The IBA's platform provides an electronic, auction-based, tradeable, auditable and fully IOSCO-compliant solution for the London Bullion market.

There are twelve price participants who have been accredited to contribute to the LBMA Gold Price: Barclays Bank, Bank of China, China Construction Bank, Goldman Sachs International, HSBC Bank USA NA, JP Morgan, Morgan Stanley, Societe Generale, Standard Chartered, The Bank of Nova Scotia - ScotiaMocatta, The Toronto Dominion Bank and UBS.

On the 1st October, 2015 the IBA introduced a new commercial model for the LBMA Gold Price.

In the next video we shall highlight a third method of alleged gold and silver price manipulation.

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Disclaimer:

Illuminati Silver owners come from a background of Banking, International Wealth Management and Economics. Having now retired from these worlds we are not qualified to give investment advice. Therefore, this and other productions must not be deemed to be giving such advice and merely represent the personal views of its owners.