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Spot ‘Price’ of Gold and Silver…not based on Reality!

April 23, 2013
Our VIRTUAL Computer markets currently are the basis for the Spot Price of Gold and Silver. Trading within these computer screen markets creates the reference points for the spot prices and the daily fixings. The London Gold and Silver fixing involves some 11 Market-Making Members (with five designated for gold fixings and three for silver fixings each trading day). Go to:  http://www.lbma.org.uk  for the list of the 11 banks involved. Most likely each Bank has one policymaker designated as the final quote maker for gold and for silver.
Prices for gold are fixed two times daily and silver one time daily. Is there some collusion (and/or deceptive information) involved in the FIXING of these prices? It appears that a telephone conference call is the methodology for reaching  an agreement on the FIXINGS. Why do the fixing members avoid the real-time transactions in the PHYSICAL markets (or are they deceived about the nature of trading within these markets today)?

Why are these 11 Banks (let’s assume there are 11 individuals involved on a rotating basis) setting the PRICES from the VIRTUAL (computer screen) transactions for all the World markets? Pundits call our Virtual Computer Markets (now all digital markets) the PAPER market to differentiate between PAPER pricing and the PHYSICAL pricing. Why is not the PRICING (used by the fixing members) based on the actual physical supply/demand transactions?

Our Virtual Computer Markets (called the Paper markets) are mostly FICTIONAL markets (in that actual physical supply/demand transactions are ignored). Transactions today are executed in real-time and at the speed of light via HFT computer trading (now mostly executed via algorithms). Visit these websites for current gold and silver fixings:

Gold:      http://www.goldfixing.com  (Barclay’s Capital, Deutsche Bank, Scotiabank, HSBC, Societe Generale)

Silver:   http://www.silverfixing.com      (Deutsche Bank, Scotiabank, HSBC)

Why are ALL the fixing quotes being initiated by personnel in LONDON? It appears that these fixings developed (in London) after the U.S.A. closed their gold markets in 1934 (per the decision of FDR). When the free exchange of gold was allowed again (after December 31, 1974) the LBMA in London emerged as the primary Market FIXING Center (the initial reference point for real-time spot pricing).

Currently, all 11 Banks that make up the Fixing committee reside in London and communicate via a conference call to determine the daily quotes for Gold and Silver. All this seems archaic and unrepresentative of a Free Market Process. Gold and Silver are WORLD commodities and also Precious Metals for many investors. Shouldn’t PRICES be set from actual physical transactions (Supply and Demand)? This seems like elementary economics 101.

Today, however,  we have HFT computers and Algorithms (computer programs) setting the ‘prices’ of gold and silver in the Virtual Computer Screen Markets. The London Fixings are then set daily from these Virtual Computer Markets. Andrew Maguire, a gold/silver trader from the U.K., who follows the London Fixings,  seems to understand how these Fixings are manipulated. Go to:  www.kingworldnews.com  for an audio interview of Mr. Maguire on these issues. The following written statement was derived from Wikipedia on this issue:

Short selling

The price of gold is also affected by various well-documented mechanisms of artificial price suppression, arising from fractional reserve banking and naked short selling in gold, and particularly involving the London Bullion Market Association, the United States Federal Reserve System, and the banks HSBC and JP Morgan Chase.[34][35][36][37] Gold market observers have noted for many years that the price of gold tends to fall artificially at the start of New York trading.[38] Andrew Maguire, a former Goldman Sachs trader, went public in April 2010 with assertions of market manipulation by  JP Morgan  Chase and HSBC of the gold and silver markets, prompting a number of lawsuits.[39][40]

Personally, I have sufficient evidence to conclude that many PRICES (especially gold and silver) are being suppressed and manipulated within our VIRTUAL computer screen markets. This was done  to the extreme during trading sessions on April 12 and April 15 . Gold declined some 13% over TWO trading sessions (silver some 17%). Anyone with a discerning mind should be able to derive the conclusion that Supply and Demand are NOT setting these PRICES. Some claim that traders at Goldman Sachs International, 120 Fleet Street, London, U.K.  (and also headquartered in New York) could be initiating ‘naked shorts’ to affect real-time prices.

Others believe that JP Morgan Chase, London Wall, London, U.K. (and also headquartered in New York) could be involved in manipulating silver prices. Manipulation and suppression could be accomplished  today via Computer Algorithms, HFT transactions by select Hedge Funds, and the strategy of Naked Shorts (where settlement is delayed and/or cancelled after a transaction has occurred). Speed of light transactions can suppress prices via phantom shares (in real-time) which then avoid any settlement in real gold or silver. Settlement is usually delayed for as many as three days (after a real-time transaction has occurred). This delay would allow phantom shares to act as a price suppression mechanism in real-time.

This is why we NEED a NEW World Exchange for ‘pricing’ gold and silver in real-time…based upon PHYSICAL transactions (not Virtual/paper) transactions. The biggest producer of gold today appears to be CHINA. Why could not China (and others) establish a new Market-Making Committee that is Global in Scope for ‘pricing’ these precious metals? This committee could monitor the physical transactions and then create a FIXING which is more relevant for real-time physical transactions. Our Virtual computer screen markets allow to many deceptive manipulations and phantom transactions to be reliable (for the pricing of PHYSICAL gold and silver in real-time). Give this suggestion some thought and pass the word to others who might desire this type of CHANGE. A reform of the LBMA fixing seems unlikely given their history and mode of operation.

The Wall Street Journal had a great article on April 18 with the headline: Gold Buyers Jump as Prices Plummet. This article made a strong case why current DEMAND for gold and silver exceeds current SUPPLY. There is also ample evidence within the past few days that the Physical gold and silver markets have decoupled (to some degree) from the Phantom digital markets. This leads credence to the view that we need a new pricing mechanism for all real-time pricing of the Physical Precious Metals. Let’s think ‘out of the box’ on some of these crucial issues! Enjoy! I am:  https://kingdomecon.wordpress.com

2 Comments leave one →
  1. June 23, 2014 10:33 pm

    I want to buy monster boxes, but, it is impossible to buy at your quotes. How can I accomplish this. Can I buy through you? Or could you lead me. I am sick of the games the dealers play and the profits they want? They are mostly $.08 off? Can you advise me where to buy? Thank you Thomas Stone. tdsding@aol.com.

    Like

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