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Gold price fixing allegations finally reach court

Back in March we wrote about two different studies looking into manipulation of the gold price. Both these studies concluded that the gold price has indeed been suppressed lower. Which lead us to say at the time:

Which all means that anyone who’s invested in gold might what to line up and join the mother of all class action law suits:

And this is exactly what appears to happen. As the NYT reports under the headline “Banks sued on claims of price fixing”:

Frustrated traders and offbeat activists have complained for years in whispers and in online screeds that the price of gold has been subject to collusion. On Monday, these accusations of manipulation found a more august arena for expression: the federal courts.

All told, some 20 plaintiffs were in the courtroom, made up of hedge funds, private citizens and public investors:

At a 40-minute hearing, lawyers for more than 20 plaintiffs gathered in Federal District Court in Manhattan to coordinate their linked lawsuits against the five banks that make up what is known as the London gold fix…

The suits, filed by hedge funds, private citizens and public investors like the Alaska Electrical Pension Fund, contend that the banks have used their privileged positions as market makers to rig the price of gold to their benefit.

And it is the ability for the big member gold-banks to trade on information gathered around the ‘gold-fix’ that is drawing the greatest scrutiny:

According to one of the suits, “The ‘great flaw’ of the gold fixing process is that the member banks trade on the information exchanged during the call to manipulate the price of gold and gold derivatives before publication of the gold fix to the wider market.

As usual, all the banks involved are keeping quiet on this ‘conspiracy-theory’ for now:

Each of the banks — Barclays, Scotiabank, Deutsche Bank, HSBC and Société Générale — denied, or declined to comment, on the accusations of collusion, which — at least traditionally — have been dismissed as a conspiracy theory.

Are we about to see yet another conspiracy theory become conspiracy fact (just like LIBOR)?

Nonetheless, concerns that the gold fix may be rigged have escalated of late in part because of investigations into the setting of the London interbank offered rate, or Libor, and suspicions about manipulation of global foreign exchange rates.

A lot of conspiracy theories have turned out to be conspiracy fact,” said Kevin Maher, a former gold trader from New York, who filed the first suit against the banks. (The case is Maher v. Bank of Nova Scotia, 14-cv-01459.) “We now know that Libor was manipulated and that a bad odor is coming out of the Forex market. So why not gold?

There were so many involved in this law-suit that it took the judge some 15 minutes to get through introductions from the representative lawyers:

Over the last few weeks, so many plaintiffs have joined Mr. Maher with copycat complaints that a hearing was held to consolidate the cases and to appoint a lead lawyer. The fourth-floor courtroom was so full of lawyers that it took nearly 15 minutes for all of them to introduce themselves

And it looks like there are more suits to come:

The lawsuits — and there are still more being filed — center on two main aspects of the gold fix: the fact that it is unregulated and that member banks can trade gold, and gold derivatives, during the call.

We’ll be following these lawsuits carefully, and all the evidence that get’s presented in court. And don’t forget – there are still two ongoing manipulation investigations going on by authorities in the UK and Germany.

Will this be the year that GATA et-al are proven to be totally correct with their concerns with the way the gold market is run/rigged?

Link to this article: : http://www.goldmadesimplenews.com/gold/gold-price-fixing-allegations-finally-reach-court-12658/

Posted by on May 9 2014. Filed under Gold News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

1 Comment for “Gold price fixing allegations finally reach court”

  1. Very soon the silver fix mechanism is set to change. What do you think will be the impact on the silver and gold pricing? Are gold and silver set to skyrocket because of this?

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