truthingold.com / Dave in Denver / June 9, 2014 at 09:08
The cozy little world of gold trading is getting less comfortable.
A handful of bankers in London currently set the world standard for gold prices, a practice that started in 1919 and is widely used by governments, miners and brokers to buy and sell the precious metal and its financial derivatives.
But regulatory probes have shone an unwanted spotlight on the benchmark known as the London gold fix, and prompted calls for change.
The five banks that set the standard – Barclays, Bank of Nova Scotia, Société Générale, Deutsche Bank and HSBC – have been hit by multiple lawsuits from investors alleging they
colluded to rig the price for their own benefit. Deutsche Bank, which gave up its seat on the gold-ixing panel, said the lawsuits had no merit. Barclays, SocGen and HSBC had no comment, and Scotiabank could not be reached.
“This is a setting that is very easy to be manipulated either by one individual bank or by a group of them,” said Rosa Abrantes-Metz, an associate professor with New York University’s business school, whose research identified a series of unusual trades before the gold benchmark was announced.