German regulators look into suspected gold and silver manipulation at Deutsche Bank
Back at the end of November we wrote about the UK financial regulator waking from a very deep slumber and starting an investigation into gold and silver price manipulation:
One theory has been that the Western central banks along with the large bullion houses have be coordinating smashes in the paper market – something that will get you labeled as a ‘crazy-conspiracy-theorists’ if you should utter such a notion.
Well it looks like that those ‘crazy-conspiracy-theorists’ might just be onto something after all, as the UK financial regulator is taking a look at the rather opaque and dated way the gold market sets their prices:
The U.K. Financial Conduct Authority is scrutinizing how prices are set in the $20 trillion gold market, according to a person with knowledge of the review who asked not to be identified because the matter isn’t public. The London fix, the benchmark rate used by mining companies, jewelers and central banks to buy, sell and value the metal, is published twice daily after a telephone call involving Barclays Plc, Deutsche Bank AG, Bank of Nova Scotia, HSBC Holdings Plc and Societe Generale SA.
With the process for setting gold looking very much like the Libor scandal all over again:
The process, during which gold is bought and sold, can take from a few minutes to more than an hour. The participants also can trade the metal and its derivatives on the spot market and exchanges during the calls. Just after the fixing begins, trading erupts in gold derivatives, according to research published in September. Four traders interviewed by Bloomberg News said that’s because dealers and their clients are using information from the talks to bet on the outcome.
“Traders involved in this price-determining process have knowledge which, even for a short time, is superior to other people’s knowledge,” said Thorsten Polleit, chief economist at Frankfurt-based precious-metals broker Degussa Goldhandel GmbH and a former economist at Barclays. “That is the great flaw of the London gold-fixing.”
However, as yet, it doesn’t look like the regulators are suspecting foul play – but they would say that wouldn’t they? And didn’t they say the same thing at the start of the Libor scandal?
In private meetings this year, the U.S. Commodity Futures Trading Commission, which regulates derivatives, discussed reviewing how gold prices are set, according to a person with knowledge of the talks. The FCA review is preliminary and not a formal investigation, another person said. The people wouldn’t say what’s being looked at or if regulators suspect wrongdoing.
We wouldn’t be surprised in the slightest if the UK financial regulator really does take a look under this rock to find yet more evidence of a financial system completely rotten to its core with criminal manipulation.
We won’t be holding our breath though.
Now it seems the German financial regulators are starting to take a peak at what’s been going on in the precious metals market for years:
(Reuters) – German banking regulator Bafin has demanded documents from Deutsche Bank as part of a probe into suspected manipulation of benchmark gold and silver prices by banks, the Financial Times reported, citing sources.
Finally, it just might be that this blatant manipulation that we’ve been witnessing all year is starting to be taken seriously by regulators – with the German regulator actually going into Deutsche Bank’s offices:
Bafin has interrogated the bank’s staff during several on-site inspections over the past few months, the newspaper said on its website, citing people familiar with the matter.(http://link.reuters.com/xem45v)
It looks like LIBOR all over again, with the core of the manipulation centered around the ‘gold fix’ – it’s called a ‘fix’ for a very good reason, and when you understand what is actually going on to ‘fix’ the price, it’s hard to believe that it has taken this long for someone to start questioning whether this is the best way to discover the price – because it sure makes it easy for traders to trade on insider information:
Currently, gold fixing happens twice a day by teleconference with five banks: Deutsche Bank, Bank of Nova Scotia-ScotiaMocatta , Barclays Bank Plc , HSBC Bank USA, NA and Société Générale . The fixings are used to determine prices globally.
Deutsche Bank is also one of three banks that take part in the equivalent process for silver.
In the wake of the recent Libor interbank lending scandal, questions have been raised about how benchmark rates are set, prompting authorities and banking industry bodies worldwide to overhaul rate-setting processes.
Which now all means that there are three countries investigating this manipulation:
When the probe was first reported in November, similar investigations in the United States and Britain were also reported to be under way.
Let’s hope one if these investigation actually does a thorough audit of what is going on, because we’re quite sure if that happens we can expect a near carbon-copy of the entire LIBOR scandal to come out in time.
Oh, and maybe, just maybe, we might start to enjoy a gold price that isn’t manipulated/fixed on an almost daily basis.
Link to this article: : http://www.goldmadesimplenews.com/gold/german-regulators-look-into-suspected-gold-and-silver-manipulation-at-deutsche-bank-12283/