After 5 years of their investigation of silver manipulation, the WSJ reports tonight that the CFTC is having internal discussions regarding the manipulation of gold and silver on the daily London fix.
While we can’t say more, it appears that the CFTC may be trying to get in front of some big news that is reportedly scheduled to break in the very near future regarding the alleged gold and silver manipulation.
From the WSJ:
The Commodity Futures Trading Commission is discussing internally whether the daily setting of gold and silver prices in London is open to manipulation, according to people familiar with the situation.
No formal investigation has been opened, the people said. The CFTC is examining various aspects of the so-called price fixings, including whether they are sufficiently transparent, they said.
Gold prices are set twice daily by five banks via teleconference, while three banks set silver prices. The fixings are then used to determine spot prices world-wide, including jewelry and sales from mining companies to refineries. The prices also help determine the value of derivatives tied to the metals.
The London gold market fix dates from 1919, and now sees twice-daily conference calls involving units of five banks: Barclays, Deutsche Bank AG, HSBC Holdings PLC, Bank of Nova Scotia and Société Générale.
Spokespeople for Barclays, HSBC and Deutsche had no immediate comment. Representatives from the other two banks couldn’t immediately be reached.
The silver fix, dating from 1897, involves Scotia, Deutsche and HSBC.
“[The fixings are] not arbitrary, it’s very much done on a demand supply basis until a price is arrived at. It’s fully transparent, it’s nothing like Libor,” said a spokesman for the London Bullion Market Association, the trade organization that sets the standards for the quality of gold and silver traded in the London market, but do not run the fixings.
If previous history is any indication, we should expect the CFTC’s discussions to wrap up, oh, say sometime in 2018.