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Silver and Gold ‘Fixes’! How to ‘Fix’ is the issue!

June 19, 2014

The London Bullion Market Association (LBMA) wants to create a better ‘price fix’ for silver and also gold. What would be a couple of good options going forward? First, however, let’s think about the concepts which we call ‘price’ and ‘price fix’. What is a ‘price’ and what is a ‘price fix’? What we need to recognize is that all ‘prices’ in our global markets are now subjective/metaphysical/virtual derivations (within cyberspace). The ‘price’ of any good or commodity is derived from the subjective human mind. Prices are not present (inherent) within our space/time universe as ‘things’. Prices are merely units (numbers) derived by humans (their mind) to represent a derivation of ‘value’. The past ‘fixes’ (for silver and gold) done by personnel at various select banks were human derivations and/or denominations. Select ‘price fixers’ would meet via the phone and then choose a ‘number’ (called ‘price’) to represent the ‘spot price’ for a moment in time. Collusion among select ‘price fixers’ is how we get the ‘price’ of both silver and gold. Where is the objectivity?

Price fixing is a human activity and this would not change if an electronic (auction based) process were initiated!

The LBMA has completed a survey of some 440 market participants and this survey has revealed that the majority would like some type of ‘electronic’ (auction-based) derivation. Would this type of ‘fix’ improve the objectivity when setting the spot price? I would suggest NO. Any electronic (auction based) derivation would still be a group of humans (using their computers) to derive a price fix. There is no existing (inherent) ‘price’ for the metals we call ‘silver’ or ‘gold’. A one ounce silver coin (for example) has NO given ‘value’ that is absolute or permanent. The coin is composed of matter/energy and derives from the land (mining). All items within a marketplace which are physical goods/commodities have no ‘price’ that is structured within the item (thing) itself. This means that all so-called ‘prices’ are, in reality, derivations by the subjective mind (consciousness) of humans. This is important to understand!

A metal (commodity) like silver or gold has NO inherent price. There is NO inherent value within a metal!

When it comes to computer (electronic) derivations for the ‘price’ of silver/gold, the question becomes WHO will make up the auction group? Which computers (and which individuals) will be allowed to derive and fix the spot price? If the computers within our Central Banks are allowed to provide input into the ‘price fix’ then we have made no progress for setting the prices. Central Banks (their trading desks) could continue with their algorithmic manipulations and their naked short manipulations. Who would know what these computer desks would be doing behind ‘closed’ doors? Electronic price fixes may ‘appear’ objective on the surface, but any computer stills needs human input. All human input is subjective and manipulative! Think about the concept of which computers and WHO would be allowed to set the ‘fix’. What we have today are prices derived via our cyber dollar and within cyberspace. Would this create an objective result??? I don’t think so!

Are ‘prices’ derived from OBSERVABLE phenomena? I don’t think so! Prices are ‘subjective’!

One option that could be used would be actual prices derived from coin and bullion dealers for strictly the physical metal. For this to be meaningful, however, we would need to eliminate the so-called Paper Market (which is really an electronic/cyber market today). This so-called Paper Market deals mostly with ‘phantom’ contracts and ‘phantom’ transactions (no physical metal is involved as settlement is often not executed/transferred). Our computers are now trading (in milliseconds) and this does not allow the time for real settlement between traders (buyers/sellers). We would also need to eliminate the ‘naked short’ strategies which have manipulated our silver/gold prices in recent years. Is any of this being talked about at the LBMA? Probably not! My sense is that any option which the LBMA ends up choosing will be ‘MORE OF THE SAME’. What do you think? I am?

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