Gold Market is not “Fixed”, it’s Rigged

In 1919 the major London gold dealers decided to get together in the offices of N.M. Rothschild to “fix” the price of gold each day. While this was notionally to find the clearing price at which all buying interest and all selling interest balanced the possibility for market manipulation and self-dealing is inherently systemic in such a cozy arrangement. This quaint anti-competitive procedure continues to this day. In no other market in the world do the major players get together each day and decide on a price. Imagine if Intel, AMD and Samsung were to meet each day to “fix” the price of microchips, or if the major oil companies were to meet each day to “fix” the price of crude oil; wouldn’t there be a public outcry and a flurry of antitrust violation lawsuits? The “fix’ is not open to the public, there are no published transcripts of each fixing, and there is no way to know what the representatives of the bullion banks discuss between each other. The current London Gold Fix is conducted by the representatives of five bullion banks, namely HSBC, Deutsche Bank, Scotia Mocatta, Societe Generale, and Barclays. The “fix” is no longer conducted in an actual meeting but by conference call. The London Gold Pool that was instigated in the 1960’s was incontestably established with the sole purpose of suppressing the gold price. Several central banks furnished gold to sell into the market with the aim of keeping the gold price at $35/oz. This was overt market manipulation. How was this achieved? The internet site www.goldfixing.com explains here as a historical fact that “1961 - Gold Pool of US and main European central banks set up to defend $35 price, by selling at fixing to contain it”. So the London Gold Pool sold into the “fix” to suppress the price and no doubt the bullion bankers making the “fix” were party to this scheme. The London Gold Pool disbanded in 1968 when it suffered massive outflows of bullion trying to frustrate free market forces that were manifesting themselves as insatiable demand for the metal. As there is no London Gold Pool anymore does this mean that this mechanism of selling into the fix to suppress the gold price, that was pioneered by the London Gold Pool, is defunct also? Absolutely not! Analysis of the gold price data shows quite clearly that the price of gold is being heavily suppressed by the exact same mechanism. Fortunately the bullion bankers added the AM Fix in 1968. This means there are two times in the day when we know for sure that the gold price is being set in a clandestine procedure that is controlled by just five bullion banks. Figure 1 Gold Market Timeline We will examine the characteristics of the prices determined by the London Daily Gold Fixings to demonstrate unequivocally the gold price is suppressed. To do this let’s examine what happens in a typical twenty-four hour period as illustrated in figure 1. We have chosen to start and end the 24 hour period with the PM Fix. Three and a half hours after the PM Fix the Comex closes and gold trading is then predominantly conducted in the eastern hemisphere where the western bullion banks have much less influence and the market has a much higher proportion of physical metal trading than does London or the Comex. The period from the PM Fix to the following AM Fix is labeled “overnight” trading (indicated by the blue double-headed arrow). The period from the AM Fix to the PM Fix has been labeled “intraday” trading (indicated by the red double-headed arrow). The intraday trading includes most of the trading day on the LBMA where 90% of the wor...

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