Gold price | <b>Gold Price</b> Manipulation Will Carry No Consequences |
- <b>Gold Price</b> Manipulation Will Carry No Consequences
- The Real <b>Gold Price</b> Fix Is Much Worse
- <b>Gold price</b> jumps after India eases import curbs | MINING.com
| <b>Gold Price</b> Manipulation Will Carry No Consequences Posted: 27 May 2014 09:36 AM PDT Whether it's by coincidence or not, we don't know, but gold has been very quiet ever since Deutsche Bank dumped its seat on the London gold fixing panel in late April. For some time before that regulators were sniffing around the London gold 'fix'…and something didn't smell quite right. The London gold fix is a process by which five investment banks set (errr…fix) the price of gold on a twice daily basis in London. It's been going on like that since 1919 when NM Rothschild controlled the process. But in January, Deutsche Bank announced that it would relinquish its gold fixing seat (under pressure from the German financial regulator). It hoped to sell its seat to another player, but curiously no one was interested. As a result, it resigned the seat in late April, giving two weeks' notice. At the same time, Deutsche resigned from the silver fix. Because the daily silver fix only had three participants, this move effectively killed the price setting process. The silver fix, which began in 1897, will cease in August this year. So here we have a major player getting out of a supposedly venerable position very quickly. Then, just a few weeks later, the UK's Financial Services Authority (FSA) fines Barclays Bank £26 million for manipulating the gold fixing process. Of course this was just an isolated incident, and the FSA also fined a Barclays 'rogue trader' £96,000 pounds for doing the manipulating. It's not as if it's systemic or anything… Maybe that's why the gold price has been remarkably quiet these past few weeks. The fixers know the regulators are watching. Everyone's behaving. But it's not going to stay like that for long. The fining of Barclay's… highlights what a degenerate racket the whole financial system has become. The fining of Barclay's for manipulating the gold fix highlights what a degenerate racket the whole financial system has become. It's a great business model for banks and governments. Here's how it works: Governments and central banks ensure a constant policy of inflationism and easy money…money that flows to the large banks before it gets to anyone else in the economy. This torrent of cash is sure to corrupt the most upstanding citizen, because when it comes to money, you can always have more, right? It goes without saying then that in such a system, you're going to have errors of judgment, oversight, and outright deception and corruption. But do the regulators actually try to stop it? No, they just impose fines to get their cut too. Fines don't discourage bad behaviour; they are just a cost of doing business. In 2013 the FSA brought in nearly £500 million…so far this year its take is £141 million. According to analysis by the Financial Times, global investment banks have paid $100 billion in US legal settlements since the financial crisis in 2008. Yet no senior executives of any bank have had criminal charges laid against them. Our high school economics teacher once said: 'Boys, if you're thinking of going into the crime business, stick to the white collar stuff. They go easy on you.' He was spot on…more so than he would've thought at the time.  The regulators are not interested in criminal charges. They are not interested in deterring such behaviour. They are interested in taking a cut and allowing the game to proceed. It's a dirty racket and you're paying for it. Take a look at Barclays' track record. The recent fine for gold fixing related to a period back in 2012, which came just days after the bank copped a record fine for manipulating the 'Libor' interest rate. Now, senior executives are under a probe by the UK's Serious Fraud Office for dodgy dealings in Qatar during 2008. How's the 'culture' at Barclays! Don't expect any of this to stop. It's what happens in the latter stages of degenerate capitalism. Critics are quick to point out that capitalism is the problem. It's not. The chief problem is the constant manipulation of the rate of interest. By holding rates for a prolonged period below the 'natural rate' (the free market rate where the needs of savers and investors are balanced out) you create distortions on such a grand scale there is practically no fix apart from a system bust up. In the meantime, bankers behaving badly, and regulators taxing this behaviour (but not discouraging it) will continue. It will lead to greater resentment and class warfare. The likes of Thomas Piketty and his Marxist schemes of wealth re-distribution will gain traction, and real wealth will diminish further as the genuine producers are taxed out of existence. Getting back to the gold fix, you could well be seeing the beginning of an end of an era in London. The Financial Review reports today that:
That's a big call, and it will take some time. But if China can demonstrate a more transparent pricing process than London, it's on its way to usurping it as a major gold trading hub. The other major challenge for China is protecting private property rights. Large holders of gold (think the Saudis) are happy leaving their gold in London because the UK is secure (it's an island and difficult to invade) and they know authorities won't confiscate their gold. It has a long history of protecting private property. Would the Saudis feel as safe leaving their gold on the Chinese mainland? Not right now. But China can chip away at the UK's competitive advantage by enacting property rights laws and upholding them in all circumstances. At the very least, China wants to develop an Asian trading hub for the precious metal as well as other commodities that it's a large consumer of. Wresting part of that role from London should improve pricing transparency and business. When it comes to trading hubs, liquidity begets liquidity and it could soon dominate the market, leaving London to become a deep storage unit for gold…not a very lucrative business. Regards, Greg Canavan Ed. Note: In today's email edition of the Daily Reckoning — a completely FREE publication — there were many other insights on the horribly corrupted state of the financial industry besides this essay. However, that material is only available to subscribers of the email edition. In fact, by not subscribing, you actually miss out on 50% of all the material we publish each day. But there's good news… You can sign up right now, for FREE, by clicking here. Don't miss another issue or any of the incredible, potentially fortune building analysis you'll only get with the Daily Reckoning email edition. Sign up for FREE, right here.  |
| The Real <b>Gold Price</b> Fix Is Much Worse Posted: 27 May 2014 11:33 AM PDT Home > The Real Gold Price Fix Is Much Worse  The Real Gold Price Fix Is Much Worse
In the Barclays incident, trader Daniel Plunkett was able to evade weak internal controls to fix the price of gold in order to avoid a big payout. If gold closed above $1,558.96 that day, Barclay's would have owed $3.9 million to one savvy customer who had bet gold prices would rise.  Plunkett was able to do this because Barclays is one of the world's banks involved in the twice-daily gold price fix exercise. Not all investors might be aware that the benchmark price for gold is determined not by market trading but by just four banks – HSBC Holdings Plc (NYSE ADR:HSBC), Societe Generale SA (OTCMKTS ADR: SCGLY), Bank of Nova Scotia (NYSE: BNS), and Barclays – in two conference calls at 10:30 a.m. and 3 p.m. London time. (Deutsche Bank AG (NYSE: DB) was also a member but resigned its seat in April and stopped participating as of May 14.) The "gold price fix" practice started in 1919 and serves the purpose of allowing gold to be bought and sold by miners, jewelers, and central and commercial banks at a single price. It also let Plunkett manipulate the price just below the level where he'd take the big hit. "A firm's lack of controls and a trader's disregard for a customer's interests have allowed the financial services industry's reputation to be sullied again," said Tracey McDermott, director of enforcement and financial crime for the Britain's Financial Conduct Authority (FCA), which imposed the fine. Here's how he almost got away with it… Tags: 2X gold ETFs, 3X gold etfs, 4X gold etfs, best gold etfs, best gold stocks, BNS, buy gold, buy gold today, David Zeiler, DB, etf, etf news, etf's, gold, gold and silver etf list, gold and silver ETF's, Gold ETF Analysis, gold etf list, gold etf prices, Gold ETF's, gold forecast, gold futures, gold price, gold price fix, gold price forecast, gold price forecast 2014, gold price manipulation, gold price news, gold price news today, Gold price trends, gold price trends 2014, gold prices, gold prices 2014, gold prices today, gold projections, gold stocks, gold stocks 2014, Gold stocks to buy, gold stocks to buy now, gold stocks today, How to Buy Gold, HSBC, inverse gold etfs, investing in gold, investing in gold 2014, INvesting in gold today, leveraged gold ETFs, list of gold etfs, low cost gold etfs, NYSEArca:GLD, NYSEARCA:IAU, NYSEARCA:SLV, physical gold etf list, Popular gold etfs, precious metals, price of gold, SCGLY, short gold etfs, stocks to buy, stocks to buy 2014, Stocks to buy now, Top gold etfs Comments |
| <b>Gold price</b> jumps after India eases import curbs | MINING.com Posted: 22 May 2014 12:51 PM PDT The gold price briefly scaled $1,300 an ounce on Thursday on news India's central bank had eased some curbs on imports of the precious metal in place for more than a year. On the Comex division of the New York Mercantile Exchange, gold futures for June delivery in afternoon trade exchanged hands for $1,295.20 an ounce, up $7.10 from Thursday's trading session but down from earlier highs of $1,304. Gold was helped by news that the Reserve Bank of India is relaxing a rule that called for the mandatory re-export of 20% of all gold cargoes and allowing trading houses and certain banks to boost imports. Other measures imposed by India's finance ministry, fighting a deep current account deficit and a weak currency, including import duties that have risen tenfold and transaction taxes remain in place, but with the change of leadership in the country those could go too. Government import restrictions have led to a scarcity of physical gold inside India which increased smuggling activity and sent premiums paid over the London price to rocket to as much as $170 an ounce during the gold festivals and wedding season. It has since come down but ahead of the announcement, premiums still hovered around $60 above the international ruling price. According to the Indian Express, the rupee price of gold tumbled to its lowest level in nine months after the RBI move and is expected to come in line with global prices over the next few months. The import restrictions saw gold demand on the subcontinent, which was overtaken by China as the world's top consumer of gold in 2013, plummet during the first quarter. According to the World Gold Council, jewellery consumption in India declined 9% to 145.6 tonnes, while India's bars and coins buying showed a huge drop-off of 54% to 98 tonnes. Overall gold demand in India slid 26% during the first three months of 2014. Despite the curbs overall Indian consumption still rose by more than 100 tonnes to 975 tonnes last year while according to some estimates "unofficial imports" almost doubled to more than 100 tonnes. Making it easier to import gold via official channels should reduce smuggling or the "grey" market as it is referred to in India. Image of Golden Temple in Amritsar, Punjab by Dainis Matisons |
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