London Silver Price Fix to End Aug 14th

Adam Taggart
By Adam Taggart on Wed, May 14, 2014 - 2:17pm

It was announced today that, after 115 years, the daily setting of the London silver "fix" will cease as of August 14th. From Reuters:

London silver fix to be scrapped from August

The London silver "fix", a global benchmark for spot silver prices, will cease to operate after Aug. 14, the company that administers the process said on Wednesday, amid rising regulatory scrutiny of price-setting in bullion markets.

Deutsche Bankicon1.png AG, HSBC and Bank of Nova Scotia will continue to participate in the fix until then, the London Silver Market Fixing Ltd said.

Last month, Deutsche Bank had resigned its seat on the London gold and silver fixes without finding a buyer after its decision to withdraw from the bulk of its commodities business.

"Deutsche Bank has postponed its resignation from the London Silver Market Fixing from 29 April 2014 to 14 August 2014, at which point the benchmark will terminate," according to an emailed statement from the bank. The gold fix, along with other commodity benchmarks, has come under increasing scrutiny by regulators in Europe and the United States since the London Interbank Offered Rate (Libor) manipulation case last year.

Silver bounced over 1% on the news, and PM sites around the Internet reacted with surprised pleasure. Zero Hedge has gone as far as declaring this milestone the "beginning of the end" of PM price manipulation:

Following a crackdown on precious metal manipulation by various European regulators (mostly Germany's BaFin, recall "Precious Metals Manipulation Worse Than Libor Scandal, German Regulator Says"), which led to the shocking outcome that Deutsche Bank would pull out of the London gold and silver fixing committees, the London Silver Market Fixing company ended up with a most curious outcome: it would have just two members: HSBC and Bank of Nova Scotia. And, as an even more shocking result, overnight the London Silver Fix announced that after August 14, 2014 it will no longer exist - the first of many victories for all those who have fought for fair and unmanipulated precious metal markets...

...As for what happens after August 14, when the London Silver fix is officially gone, we can't wait to find out.

In the meantime, we are confident the existing members of the mirror fix, that of gold, will be scurrying under rocks to avoid all public exposure. We plan to spoil their plans later today when we profile just who they all are.

(read the full article here)

Whatever the repercussions, we'll be following them closely here. I will end by noting that such a development is one that we would expect to see if indeed the silver market price had been unfairly contained, and those containing it decided to slink off before a brighter spotlight is shined on their activity. 

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12 Comments

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Timing?

Why August 14th? That's not my birthday.

tricky rick's picture
tricky rick
Status: Bronze Member (Offline)
Joined: Dec 9 2011
Posts: 92
price fix in or out?

Hate to be Debbie Downer, but me thinks "they" are on to the new thing while we are looking at the old thing.  Keep stackin' and ignore the noise...

 

 

AaronMcKeon's picture
AaronMcKeon
Status: Bronze Member (Offline)
Joined: Apr 29 2014
Posts: 71
Possible Outcomes

I'd be curious to hear people's opinions on what this actually means, both in the period between now and August 14 as well as afterwards.  I've recently divested out of a few investments and have been averaging into silver and am trying to figure out how, if at all, this should affect my pace of averaging in.

- Aaron

Wildlife Tracker's picture
Wildlife Tracker
Status: Gold Member (Offline)
Joined: Jan 14 2012
Posts: 403
Odd timing

 

 

Short-term the price looks at a turning point (One of these long-term resistance/support lines is going to be crossed)

Long-term the price looks to be at a turning point (Long-term silver pattern should be completed by October 2015, crossing that trend line in the past has resulted in incredible upside and downside)

 

Wildlife Tracker's picture
Wildlife Tracker
Status: Gold Member (Offline)
Joined: Jan 14 2012
Posts: 403
How much silver should you buy

Depends on how much money you want to make

Also, where is the price manipulation in this chart?

KennethPollinger's picture
KennethPollinger
Status: Platinum Member (Offline)
Joined: Sep 22 2010
Posts: 653
Why Should the same Pattern continue?

Is there possibly a basic incorrect assumption here?  I thought there was a "new normal,"

whatever the hell that is.  Or maybe, NO normal whatsoever. Patterns included?

Oliveoilguy's picture
Oliveoilguy
Status: Platinum Member (Offline)
Joined: Jun 29 2012
Posts: 578
Does this chart correlate with Dollar Decline?
Wildlife Tracker wrote:

Depends on how much money you want to make

Also, where is the price manipulation in this chart?

Wish I could do charts like you guys.Thanks...Very helpful.  As a large Silver holder I love it! But does this say as much about the dollar as silver, since silver here is priced in dollars? 

 

Wildlife Tracker's picture
Wildlife Tracker
Status: Gold Member (Offline)
Joined: Jan 14 2012
Posts: 403
I am one of the folks that

I am one of the folks that believe that gold/silver are more correlated with oil rather than with the dollar. Therefore gold and silver are a hedge against oil prices rather than the dollar specifically.

I don't have any USD data on my computer, so I can't put a chart together. What I can do is share two short presentations by a great gold-obsessed chemical engineer who happens to also be an awesome gold historian. In this presentation he runs through the relationship with gold and oil..

Now gold and the dollar

Also, I don't know if you saw the video I had posted in the silver and gold group, but I presented this chart which also shows a strong correlation between oil and silver production cost data

Mind you, that production cost data is growing exponentially...

and that is where the trend line comes from, and therefore the pattern based on the trend line.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5568
It means nothing...

While the silver 'fix' has essentially been in place since Moses Mocatta (now part of Scotia Mocatta, the fixiest of the fixers) set up his shop in London in 1671, I don't ascribe much to its demise here in 2014.

Instead I think that 'they' have discovered newer and better ways of controlling prices and these have been in place long enough that the banks and shops long involved in fixing the prices of PM's have all more or less decided to walk away from the physical job in London.

Don't forget, it was almost exactly ten years ago to the day that the Rothschilds decided to exit the London gold fix.

Rothschild to pull out of gold market after 200 years

Apr 15, 2004

The investment bank that has chaired the London meetings setting the world gold price since 1919 is quitting the market.

NM Rothschild will withdraw from all its commodity trading activities, which also include an oil trading business set up less than two years ago, as part of a strategic review.

The move brings to an end nearly 200 years of tradition. NM Rothschild was founded in London in 1810 by Nathan Mayer Rothschild, who helped finance the Duke of Wellington's army in the Napoleonic wars through gold trading.

The company hosts and chairs twice-daily meetings which effectively set the world's gold price. The meetings are held in a plush chamber in the bank's offices at St Swithin's Lane in the City. The other four firms involved are Deutsche Bank, HSBC, Canada's Scotia Bank and Societe Generale.

During the fixes, telephone lines are kept open to trading rooms where dealers are in touch with customers. Potential price movements are unlimited and the fix has been known to take up to two hours, although it is usually over in a matter of minutes.

My guess at the time was that they saw it as the dying end of the business.  The mistake would be to assume that the Rothchilds had gotten out of gold and fixing the price of gold.

I don't believe either is true, then or now.  Gold has too long of a storied role in the wealth ad health of nations for such an illustrious banking dynasty to simply walk away.

If they actually did simply walk away, then it's true that your offspring cannot always be counted on to carry on the family traditions, including being smart.

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1428
If you control the exchange....

If you control the exchange, you don't need the "Silver Fix" process.  Ask the former head of the German options market who also was the CFO of Porsche at the same time and played VW stock to enrich Porsche. 

Also, ending this reduces the chance of prosecution for crimes related to it. 

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1428
If you control the exchange....

If you control the exchange, you don't need the "Silver Fix" process.  Ask the former head of the German options market who also was the CFO of Porsche at the same time and played VW stock to enrich Porsche. 

Also, ending this reduces the chance of prosecution for crimes related to it. 

LogansRun's picture
LogansRun
Status: Diamond Member (Offline)
Joined: Mar 18 2009
Posts: 1443
Doc, it's so nice to see you've come around!
cmartenson wrote:

While the silver 'fix' has essentially been in place since Moses Mocatta (now part of Scotia Mocatta, the fixiest of the fixers) set up his shop in London in 1671, I don't ascribe much to its demise here in 2014.

Instead I think that 'they' have discovered newer and better ways of controlling prices and these have been in place long enough that the banks and shops long involved in fixing the prices of PM's have all more or less decided to walk away from the physical job in London.

Don't forget, it was almost exactly ten years ago to the day that the Rothschilds decided to exit the London gold fix.

Rothschild to pull out of gold market after 200 years

Apr 15, 2004

The investment bank that has chaired the London meetings setting the world gold price since 1919 is quitting the market.

NM Rothschild will withdraw from all its commodity trading activities, which also include an oil trading business set up less than two years ago, as part of a strategic review.

The move brings to an end nearly 200 years of tradition. NM Rothschild was founded in London in 1810 by Nathan Mayer Rothschild, who helped finance the Duke of Wellington's army in the Napoleonic wars through gold trading.

The company hosts and chairs twice-daily meetings which effectively set the world's gold price. The meetings are held in a plush chamber in the bank's offices at St Swithin's Lane in the City. The other four firms involved are Deutsche Bank, HSBC, Canada's Scotia Bank and Societe Generale.

During the fixes, telephone lines are kept open to trading rooms where dealers are in touch with customers. Potential price movements are unlimited and the fix has been known to take up to two hours, although it is usually over in a matter of minutes.

My guess at the time was that they saw it as the dying end of the business.  The mistake would be to assume that the Rothchilds had gotten out of gold and fixing the price of gold.

I don't believe either is true, then or now.  Gold has too long of a storied role in the wealth ad health of nations for such an illustrious banking dynasty to simply walk away.

If they actually did simply walk away, then it's true that your offspring cannot always be counted on to carry on the family traditions, including being smart.

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