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Silver price manipulation, is regulation putting a stop to it?

by Mark O’Byrne, Gold Core:

Fear of regulation may impede bank’s from manipulating London’s silver benchmark

  • New regulations in 2018 have spooked bullion banks and silver fix operators
  • Lack of liquidity in silver fix auction has lead to high volatility in the market
  • Silver benchmark has strayed from spot price multiple times since 2016
  • No new silver benchmark operator lined up to take over in the Autumn
  • No smoke without fire as actions point to silver price manipulation
  • Silver remains suppressed and at a low price for investors stocking up
  • – Gold’s tempered climb makes gains more ‘sustainable’

    Simple economics tells us that markets and prices are driven by demand and supply. Unfortunately, this isn’t always the case in the silver market. However, the threat of new regulations may be putting a stop to some bullion banks from fiddling the London silver benchmark.

    Silver price manipulation is always a thorny issue and one that has been taken on by academics, lawsuits, by veteran silver analyst Ted Butler and by the Gold Anti-Trust Action Committee (GATA). As we have reported previously, allegations of silver price manipulation are far past the point of rumours, in the last couple of years bullion banks have been called to account for their behaviour. Deutsche bank even agreed to settle out of court and pay $38m, in response to a class-action lawsuit.

    But it seems the rising attention (and cost) of manipulation by silver bullion banks is not the only thing that is putting a stop to a behaviour that has been evident for over a decade. Reuters reported yesterday that fear of being accused by regulators of market manipulation has resulted in participating banks being reluctant to add liquidity during the daily auction.

    Banks finally fear regulation

    The low volume of orders and lack of liquidity has resulted in the benchmark price failing on multiple occasions to provide a fair and accurate snapshot of what is known as the ‘spot price’. The spot price is calculated based on a much wider and faster market. Huge divergences from this spot price have resulted in unexpected gains and losses, according to Thomson Reuters data, since at least January 2016.

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1 comment to Silver price manipulation, is regulation putting a stop to it?

  • randy0302

    What total BS. Price magically falls at the fix because of lack of liquidity?
    Really? Why were record amounts of paper traded last year? Up40%YOY.

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