Gold price manipulation in London markets

[Suradit69]

It seems like the corruption in London markets in not limited to LIBOR, but also may involve gold price fixing. Anyone who thinks there's a level playing field and transparency in western markets is deluding himself.

The LIBOR scandal came to light last year, when various media outlets reported that banks had submitted false information used to compile LIBOR (London Interbank Offered Rate). Banks had misstated the rate at which they estimated they could borrow funds overnight from other banks, because admitting to an increased cost for overnight loans would signal that the financial health of the bank submitting the data was weakening.

And now...

U.K. scrutinizes how price of gold is fixed •

• The benchmark rate for the $20T gold market has become the latest focus of regulator scrutiny, with the U.K.'s Financial Conduct Authority looking at how the "London fix" is set, Bloomberg reports.
• In a process that goes back to 1919, the rate is published twice a day following a telephone call between Barclays (BCS), Deutsche Bank (DB), Bank of Nova Scotia (BNS), HSBC (HSBC) and Societe Generale (SCGLY).
• The process can last up to over an hour, with participants being able use the information from the call to trade gold and its derivatives while the discussion is taking place.
• "It's controlled by a handful of firms with a direct financial interest in where it's set, and there is virtually no oversight - and it's based on information exchanged among them during undisclosed calls," says Rosa Abrantes-Metz of New York University.

http://www.bloomberg.com/news/2013-11-26/gold-fix-drawing-scrutiny-amid-knowledge-tied-to-eruption.html?source=email_rt_mc_body&app=n

[falang07]

With the ability to trade paper gold and anything else in Forex without a physical delivery, this is all just an artificially manipulated market. Add short-selling, and you get the picture. If everyone asked physical delivery at this moment, the price would skyrocket and the majority would just realize there is no gold for them. The same as if all depositors in a bank suddenly asked for their deposits to be paid out, the bank simply does not have it and would just have to go bankrupt. Then the government would simply print more colorful papers for those depositors to fulfill the deposit protection scheme, and if this happened to every bank in the country, the inflation would skyrocket, too, so even though you would get your money back, it's real value would become lower than the paper they are printed on is worth. However, no one can print gold so those holding real gold or anything of a real value, would be affected much less.

[falang07]

So basically today's slogan is "In paper we trust" instead of the old fashioned "In gold we trust". Should a really serious problem happen, it is very easy for any central bank to saturate the system with more paper or digital money made out of thin air, since they are really the ones who are legally allowed to do it anytime and in any scope. So yes, there are deposit protection schemes but it would become a joke in case of a serious breakdown of the system. Still, people believe more the corrupt governments and such promises more than the real value. There was a reason to abandon the golden standard, and it was exactly this, to be able to manipulate the markets at their free will and to hold the unlimited power of printing the money, thus the unlimited power to control the mankind.

[12DrinkMore]

With the ability to trade paper gold and anything else in Forex without a physical delivery, this is all just an artificially manipulated market. Add short-selling, and you get the picture. If everyone asked physical delivery at this moment, the price would skyrocket and the majority would just realize there is no gold for them. The same as if all depositors in a bank suddenly asked for their deposits to be paid out, the bank simply does not have it and would just have to go bankrupt. Then the government would simply print more colorful papers for those depositors to fulfill the deposit protection scheme, and if this happened to every bank in the country, the inflation would skyrocket, too, so even though you would get your money back, it's real value would become lower than the paper they are printed on is worth. However, no one can print gold so those holding real gold or anything of a real value, would be affected much less.

If a bank went bankrupt it would have to sell off the loan book and its assets. This would be very deflationary and is the reason why the Fed took all the mortgage crap onto its balance sheet.

A run on bank deposits would result in the depositors moving their deposits to another bank in the system so the total amount of the deposits remain the same. The first bank would have to borrow from the money market or if closed out of there, the central bank in order to balance its books.

Only if the general population lost faith in the currency would there be a sky rocket of inflation. In a modern economy where 98% of the money exists only in the electronic world, it would be interesting to conjecture whether the "tools" exist to prevent runaway inflation.

For example, the payment system could still function, but the rate of transfers could be slowed down preventing a rapid spiral of transactions as people desperately tried to spend spend spend.

The last few years have shown that even a total liquidity freeze in the shadow banking system can be fixed by the immense fire power of the central banks. I doubt whether the population will have a complete loss in confidence in the banking system.

[12DrinkMore]

With a vast and liquid market existing in gold and other commodities, I do not understand why the market is subject to these "fixings" at all. You can buy and sell humongous amounts of gold twenty four hours/day.

IMO there is absolutely no need to have a bunch of banks being given a privilege to "fix things for themselves" when the market price can be used to decide the price every second.

[Stewpid Kynt]

I doubt whether the population will have a complete loss in confidence in the banking system.

bitcoin is now at Last:$954.00 it was at $214 at the beginning of this November.

[12DrinkMore]

I doubt whether the population will have a complete loss in confidence in the banking system.

bitcoin is now at Last:$954.00 it was at $214 at the beginning of this November.

You can't be serious?

Its a bubble and trouble and looks to me like a Ponzi scheme, get in first and reap the rewards, get in last and you could lose the lot.

There is no elasticity in the system and it relies totally on confidence which could disappear overnight, and the ability to convert to USD's could freeze at anytime.

The early acquirers will make a few million bucks and then get out.

[Stewpid Kynt]

I doubt whether the population will have a complete loss in confidence in the banking system.

bitcoin is now at Last:$954.00 it was at $214 at the beginning of this November.

You can't be serious?

Its a bubble and trouble and looks to me like a Ponzi scheme, get in first and reap the rewards, get in last and you could lose the lot.

There is no elasticity in the system and it relies totally on confidence which could disappear overnight, and the ability to convert to USD's could freeze at anytime.

The early acquirers will make a few million bucks and then get out.

bitcoin Market cap:$11,056,478,107.75 so your only out by a factor of about 10,000. not bad for a clue less one. reference> https://www.bitstamp.net/ scroll down.

may have to copy and paste that link to get to the right place. thaivisa is a ponzi scheme that is allergic to the truth

original quote is from mtgox which you will have to search because it definitely with be fraudulently linked from thaivisa.

Edited November 27, 2013 by Stewpid Kynt

[12DrinkMore]

I doubt whether the population will have a complete loss in confidence in the banking system.

bitcoin is now at Last:$954.00 it was at $214 at the beginning of this November.

You can't be serious?

Its a bubble and trouble and looks to me like a Ponzi scheme, get in first and reap the rewards, get in last and you could lose the lot.

There is no elasticity in the system and it relies totally on confidence which could disappear overnight, and the ability to convert to USD's could freeze at anytime.

The early acquirers will make a few million bucks and then get out.

bitcoin Market cap:$11,056,478,107.75 so your only out by a factor of about 10,000. not bad for a clue less one. reference> https://www.bitstamp.net/ scroll down.

may have to copy and paste that link to get to the right place. thaivisa is a ponzi scheme that is allergic to the truth

original quote is from mtgox which you will have to search because it definitely with be fraudulently linked from thaivisa.

Well, OK, so they will get out with a few hundred million. I would. And probably so would you.

Interestingly enough market capitalisation is now up to Madoff levels, where 65,000,000,000 of clients' money somehow went astray leaving in the end some 18 Billion of losses.

Just twelve months ago one of these bitcons was USD 12. Just one month ago you could buy in for USD 120 and today it will cost you USD 930. And backed by exactly what? Only the willingness of the next buyer to pay that.

It is NOT a currency it is speculative vapourware.

The only question is how many more suckers can be drawn in until it collapses? There will be a lot of losers in this.

https://www.bitstamp.net/risk-warning/

I am thinking about where the Achilles heel is. It may end as being a tax problem. Asset appreciation falls under capital gains taxes. Somebody trying to buy assets in the real world will attract a certain amount of attention from the taxman.....

Edited November 27, 2013 by 12DrinkMore

[mmh8]

So if I follow the argument correctly, the conclusion is if gold is purchased with bitcoins it will be less susceptible to price manipulation

[falang07]

If I had any bitcoins bought before this crazy price surge, I would quickly start changing them for gold before this bubble will burst. I find it really crazy that people are willing to pay such high price for some encrypted numbers with no real value or guarantee? I admit paying for papers called money is crazy, too, but there is some guarantee associated with it. Bitcoins, on the other hand, can crash any day.