Anti-Gold Terrorism Goes Unabated: The “New” Gold Fix Is Already Corrupt

LONDON–JPMorgan Chase & Co. (JPM) has become the seventh direct participant in the twice-daily auctions to set the LBMA Gold Price benchmark, according to the price administrator, Intercontinental Exchange Inc.   LINK

The more things “change,” the worse they become.   After Deutsche Bank dropped out of the old LBMA gold fix, the remaining “price fix” banks were:   HSBC, Barclays, Bank Nova Scotia (Scotia-Mocatta) and Soc Gen.

With JP Morgan now announced as the seventh direct participant, here’s the list of participants:   HSBC, Barclays, Bank Nova Scotia, Soc Gen, UBS, Goldman and JPM.

Can someone explain to me how this is supposed to be an improvement over the old fix? Does anyone trust any of these banks?  All seven of them would have – and should have – collapsed in 2008.   The world would be a better place if that had been allowed to happen.

All of them (except somehow maybe Goldman) have been prosecuted and fined for manipulating interest rate and foreign exchange markets.  Is anyone really stupid enough to believe that these banks will conduct the business of fixing the gold price in London in a fair and honest manner.

The fact that the new system is now electronic does not “fix” anything.  In fact, as we have seen ad nauseum with anything and everything connected to the cyberworld (think:  HFT trading) it’s easier to rig something electronically than manually.

I have heard conflicting accounts about reasons China does not have a seat on the new gold price fix committee.  The most credible is that China did not seek to have bank representation.  Instead, China is going to roll out its own yuan-based gold fix mechanism sometime later this year.

Myself and all of my colleagues who have been researching, studying, trading and investing in the precious metals sector since at least 2001 (GATA founded in 1998) all agree that the last three years have seen, by far, the most aggressive, egregious and blatant effort by the Fed/U.S. Government – in conjunction with the EU Central Banks – to manipulate the precious metals market in order to support the massive money printing schemes being used to finance Government spending, keep the banks from collapsing and finance illegal wars.

6 thoughts on “Anti-Gold Terrorism Goes Unabated: The “New” Gold Fix Is Already Corrupt

  1. Dave, I agree with all of the above, however let me point out that there are far more limitations to the cartel’s manipulation of gold than just China. For example, down here in Australia – literally a gigantic gold mine, and gold was the element that first made Australia rich – the price of gold IN Australian Dollars is now higher than ever!

    And that’s BECAUSE, mutatis mutandis, the recent fall of the AUD – against the USD in which gold’s price is denominated – correlates almost in exact proportion with the rigged rise of the USD. In other words, as the USD exchange rate tends to be inversely correlated with the USD denominated price of gold, whenever gold sinks the Australian Dollar price of gold rises. Alternatively when the Australian Dollar rises against the USD then so does the price of gold, including as measured in AUD. So the USD based manipulation of gold is LIMITED by the correlated currency exchange rates! For non-Americans it’s hedged in both directions.

    Consequently, AUSTRALIAN gold miners win either way! Or at least are more immune to USD based manipulations than American miners are. And I think (although I’m not yet sure, still researching), the same might apply to Australian based miners with interests in Africa, etc, although of course there’s always the concern of “sovereign risk” in African countries, but then it’s unlikely for ALL African countries to have revolutions at the same time, so I think (just thinking out loud here) perhaps some miners with interests in DIVERSE African countries might be suitably hedged against sovereign risk? (Not to mention that there’s no guarantee against AMERICAN sovereign risk, either!)

    Disclaimer: I’m new to this and I’m not a big player, just a middle class Aussie sharing some ideas out loud for discussion.

    BTW, an unrelated thought I recently had, but I think it’s relevant to your post: Recently it occured to me, that the idea of physical gold having “no third party risk”, will NOT be true as long as the cartel controls the price! Because isn’t the cartel’s ability to smash the price of physical gold with naked shorts, in fact a kind of “third party risk”? Your thoughts, if any?

    1. What you describe is not really “third party risk.” The value of gold has increased 480% since its low in 2001 to today. Even if you measure the gains in SPX from its low in 2009, the value of gold has increased significantly more than any other asset class. The manipulation is a shorter term issue. Gold has no third party default risk because its value is not dependent on the good faith or credit worthiness of another entity.

  2. “the last three years have seen, by far, the most aggressive, egregious and blatant effort by the Fed/U.S. Government – in conjunction with the EU Central Banks – to manipulate the precious metals market in order to support the massive money printing schemes being used to finance Government spending, keep the banks from collapsing and finance illegal wars.”

    It will soon be over. I seriously doubt that the Chinese are buying thousands of tons of gold with the intention of allowing the US/UK/BIS to indefinitely suppress gold prices. Also the US/UK need large stockpiles of physical gold to continue this charade which I seriously doubt that they have.

  3. Dave, you wrote in reply to my above comment:

    “Gold has no third party default risk because its value is not dependent on the good faith or credit worthiness of another entity.”

    But that still does not address the fact that the price of gold is – for now, for the time being and for the forseeable future – determined by third parties. You are partly correct that “gold has no third party DEFAULT risk” (emphasis mine), but still, doesn’t it remain true – for now and the forseeable future – that temporarily the price of physical gold demoninated in US Dollars, IS determined by third parties?

    I mean, yes I agree gold has “no third party DEFAULT risk” (emphasis mine), but is a third party DEFAULT risk the ONLY risk worth thinking about?

    In other words, isn’t the risk of the cartel artificially reducing gold’s price (in USD), another kind of “third party risk”, unless and until the cartel loses control? Because until the cartel loses control, gold will be worth only what the cartel says – in US Dollars, but not in other currencies, which is my main point! The cartel cannot control the price of gold in any currencies other than USD!

    Hm, well, at this time, I think THIS is the best answer to the American Empire! ;-):

  4. We are missing the point.

    It’s all very interesting to speculate on where the “price” of gold (and silver) is going and why, but this speculation is not idle, right?

    We intend to ACT upon our forecasts, and this requires us to examine outlawing and CGT.

    The window of opportunity to convert precious metal into fiat during a hyperinflation in order to pay off debts is likely to be vanishingly narrow. If precious metal went crazy, the State might just step in and outlaw private ownership or disposition. And for CGT they wouldn’t even need to amend current legislation – fiscal drag would mean the outrageous appreciation of precous metal would generate enormous CGT yields for the State. And anyone who tried to dodge it would give the State causus belli on their ass.

    There are only two scenarios where physical precious metal ownership makes sense – if you intend to “average out” to offset a job loss in an economic downturn, or as currency if it all goes a bit “Mad Max”.

    If you harbour dreams of killing your mortgage with a moonshot of precious metal, forget it – you’ll own your house outright for about five minutes before the State bankrupts you with a giant CGT bill.

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