Is London Manipulating Gold and Silver Prices?

    Text size

As we've explained before, manipulation of gold and silver prices is happening right here in the United States.

Our Global Resources Specialist Peter Krauth interviewed silver market analyst Ted Butler last year, who explained how big financial institutions were using high-frequency trading to depress silver prices.

And earlier this month, Money Morning Chief Investment Strategist Keith Fitz-Gerald detailed how these same big firms were toying with retail investors in the gold market.

Now, in the wake of the Libor scandal in London, which involved the rigging of interest rates by certain banks, it looks like prices in other markets such as gold and silver could be being rigged in a similar fashion.

Widespread Rigging in Markets

Bart Chilton, commissioner of the CFTC (Commodity Futures Trading Commission), spoke last month about possible 'fixing' of prices in other markets besides interest rates.

"Why would they [other markets] be any different in the minds of those that may have sought to push or pull rates?" he wrote in a CFTC statement. "Given what we have seen in Libor, we'd be foolish to assume that other benchmarks aren't venues that deserve review."

Chilton believes these other markets "are legit areas of inquiry," and "every single market needs to be reviewed, and potentially investigated."

Another group questioning gold and silver price manipulation is the International Organization of Securities Commissions. In a recent paper, it stated that "the risk of manipulation will be greater where participants. . .have both incentive and opportunity to submit inaccurate data or apply a methodology inaccurately."

The organization added that the problem is particularly acute "where judgment is required in determining the data to be submitted."

In other words, it's possible people will put forth data that will make them the most money possible...

"Fixing" Gold and Silver Prices

Turning specifically to the gold market, the price of gold has been "fixed" in London twice a day.

The full article is reserved for subscribers of Money Morning.
Sign up now for immediate access - it's absolutely free!

(After submitting your email address the page will refresh with the full article. You will receive a welcome email from Money Morning including the benefits of your free subscription.)