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It is claimed that several banks have been rigging the gold and silver prices to suit themselves by setting influential benchmarks in the markets for Gold, Silver, Palladium and Platinum in London, and others under investigation from the Department of Justice (DoJ) and Commodities and Futures Trading Commission (CFTC), according to reports.
HSBC’s annual report, released as the bank unveiled a 17pc drop in annual profits, revealed that the CFTC had issued a subpoena to the bank, demanding information about its US business’s precious metals trading operation.
The DoJ has requested information from the Bank and HSBC said that it was complying with the request, however the bank was unable to estimate the potential impact.
The Wall Street Journal reported that Barclays is also in the spotlight, as are Goldman Sachs, UBS, JPMorgan, Deutsche Bank, Credit Suisse, Standard Bank, Societe Generale and Scotiabank.
Many of the banks are embroiled in civil lawsuits claiming they manipulated the prices of precious metals.
HSBC’s disclosure in its annual report
The “fixes” for the precious metals had been arranged in the same way for years, with a small group of banks submitting prices to agree a benchmark price, in a similar way to how the Libor interest rate benchmark and foreign exchange benchmarks are arranged.
The process for the precious metals benchmarks are being reformed in the wake of recent scandals, to make the process more transparent.
UK regulators are currently devising new rules for such benchmarks, in order to restore trust in London’s wholesale markets.
Banks have been fined billions of pounds for their roles in the Libor and foreign exchange scandals. The banks did not comment.
These moves within the precious metals markets are extremely concerning for investors – especially when there seems to be elements of criminal activity to fix the market to suit a bank’s investment agenda. Others are beginning to ask if the gold investments are legitimate and if there should be cause for concern landing at the foot of the Gold Investors on the ground.
If banks are continuing to fix the Gold and Silver and other precious metals markets; is it fair to conclude that Gold and Silver prices are not legitimate at the levels they currently sit. What will become of these investigations and how will this affect our Precious metals investments?
MBS Gold is waiting for the Investigation to deepen.