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World Association of International Studies

PAX, LUX ET VERITAS SINCE 1965
Post Collusion in Gold Pricing?
Created by John Eipper on 02/28/14 5:45 AM

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Collusion in Gold Pricing? (Tor Guimaraes, USA, 02/28/14 5:45 am)

It seems as if the financial giants are manipulating markets again. Imagine that.

The talk among traders is that "the London gold fix, the benchmark used by miners, jewelers and central banks to value the metal, may have been manipulated for a decade by the banks setting it, researchers say.

"Unusual trading patterns around 3 PM in London, when the so-called afternoon fix is set on a private conference call between five of the biggest gold dealers, are a sign of collusive behavior and should be investigated, [according to] New York University's Stern School of Business Professor Rosa Abrantes-Metz and Albert Metz, a managing director at Moody's Investors Service."

Bloomberg news reports that "The [Abrantes-Metz and Metz] paper is the first to raise the possibility that the five banks overseeing the century-old rate--Barclays Plc (BARC), Deutsche Bank AG (DBK), Bank of Nova Scotia, HSBC Holdings Plc (HSBA) and Societe Generale SA (GLE)--may have been actively working together to manipulate the benchmark. It also adds to pressure on the firms to overhaul the way the rate is calculated. Authorities around the world, already investigating the manipulation of benchmarks from interest rates to foreign exchange, are examining the $20 trillion gold market for signs of wrongdoing."

Wow, consider all the billions these guys can make over the years. That is what my grandmother had in mind when she told me, "it takes money to make money." On the other hand, all these old people on Social Security and other deadbeats drawing welfare should do with less because they are not making any money from money; they are just consumers.

JE comments:  I presume that irony is intended in Tor Guimaraes's closing statement.  Here is the original Bloomberg article:

http://www.bloomberg.com/news/2014-02-28/gold-fix-study-shows-signs-of-decade-of-bank-manipulation.html

Prof. Abrantes-Metz (a native of Portugal) is an Adjunct Associate Professor at NYU.

I am confused by this article.  Isn't collusion in gold pricing the whole point of the "afternoon fix"?


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  • Collusion, Fixing, Consensus (John Heelan, -UK 02/28/14 12:20 PM)
    JE commented on 28 February: "Isn't collusion in gold pricing the whole point of the 'afternoon fix'"?

    Is it not all in the semantics of the words? "Collusion" implies a less-than-honest agreement for a purpose that benefits the colluders, whereas "consensus" implies a more honest agreement in which personal consciences are involved.


    JE comments: When we're talking gold pricing in London, it's an afternoon "fix." I wonder if in UK English, (price) "fixing" is a less stigmatized word than in the US. "Scheme" and "cheap" are two other damaged words in US English--the former suggests a dishonest plan, and the latter something of poor quality.


    Of course, "consensus" is always a warm and fuzzy thing.


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