A few days ago we reported that the World Gold Council was actively preparing to announce the replacement to the existing gold/silver fix, a system that had allowed the rigging of precious metals for 117 years. Confirming that said rigging would only continue was our report that the person who chaired said WGC “round table” meeting was none other than the former Bank of England Chief Manager of Reserves (which included gold of course), and who was at his post when Gordon Brown dumped half of England’s gold at ridiculous prices merely to bail out one or more banks that were short physical metal (curious how that is such a recurring theme) and were scrambling to obtain the delivery. That’s where Brown and the BOE came in.
Today we learned just what said “fixing” replacement will look like after reports that the CME Group Inc. and Thomson Reuters, largely as had been expected, will run the replacement for the 117-year-old silver-fixing benchmark that’s ending in August, the London Bullion Market Association said.
Confirming that the “selection process” was nothing but yet another rigged farce, designed solely to preserve continuing of manipulation, was this disclosure (ironically coming out of Reuters, the same company picked to continue the fixing):
“In the end, we had a workable structure, and two large organizations with plenty of experience behind them in terms of systems and compliance, and regulatory issues,” said Jonathan Spall of G Cubed Metals Ltd, which conducted an independent review for the LBMA as part of the selection process.
Jonathan Spall….Jonathan Spall…. where have we heard that name? Oh yes, recall: “From Rothschild To Koch Industries: Meet The People Who “Fix” The Price Of Gold” in which we reported:
Alas, Mr. Spall won’t be at Barclays, or the fix, for long. As Bloomberg reported in January 2014
Barclays Plc cut commodities jobs in London and New York as part of reductions in fixed income, currencies and commodities, according to two people familiar with the matter. Bharath Manium, a managing director in commodities structuring, Paul Jackman, a managing director in the commodities index business, Jonathan Spall, product manager for metals in London, and Sudakshina Unnikrishnan, an analyst in London, are leaving, according to the people who asked not to be identified because the move hasn’t been made public.
In fact as was reported by London Gold Market Fixing Ltd, Mr. Spall is no longer with the company since April 9, 2014.
In other words, the person in charge of navigating the “transition” from the old fixing mechanism, of which he was part as recently as April, was a person who was, drumroll, supervising said transition. Surely, his “consulting” was fair and impartial. Naturally, Mr. Spall is no longer at gold-rigging Barclays, a bank which is for all intents and purposes, falling apart but at GCubed Consultants.
Said another way, one of the Barclays guys who was accountable in the Gold Market Fixing Company for the price manipulation of his trader (the infamous Daniel Plunkett) is then rewarded by the LBMA to conduct an independent review of the applicants to run the Silver fix!
To be sure, some are optimistic that the appointment of the CME and Reuters will be an improvement:
“We look forward to using the new fix when buying silver on behalf of clients,” Mark O’Byrne, a director in Dublin at brokerage GoldCore Ltd., said today by e-mail. “Having Thomson Reuters and CME as fix operators is better than a handful of banks.”
Comex, owned by CME Group, traded 14.48 million silver futures contracts and 47.29 million in gold futures last year, according to the Washington-based Futures Industry Association. CME, the world’s biggest derivatives bourse, also offers platinum and palladium contracts, according to its website.
“CME through Comex has a huge part of the financial silver market,” Brian Lucey, a finance professor at Trinity College Dublin, said by phone today. “Thomson Reuters, like Bloomberg or like other trading systems, captures the over-the-counter market very well. LME is big for industrial metals, but not precious.”
We are far less skeptical.
As for further “concerns” of gold and/or silver manipulation, don’t worry, those died with that one single, solitary Barclays trader:
While there’s “no clear evidence” of manipulation during the London gold fixing, it’s possible it occurred, David Bailey, director of financial markets infrastructure and supervision at the FCA, said at a U.K. Treasury Select Committee hearing July 2. The regulator has been visiting member banks involved in the gold fixing this year as part of its review of gold benchmarks, a person with knowledge of the matter said in April.
Sure why not. The only problem: if there was no manipulation besides Barclays, then just why is Deutsche Bank in such a rush to put as much distance as possible between itself and any trace it ever was involved in the fixing process: “Deutsche Bank has already exited the gold fixing, leaving Societe Generale SA, Bank of Nova Scotia, HSBC and Barclays as the four remaining members of the process which takes place twice daily and dates back to 1919.”
Considering the recent escalation in relations between Germany and the US, we are confident we will find out soon enough…