zerohedge | Global gold prices may have been manipulated on 50 per cent of
occasions between January 2010 and December 2013, according to analysis
by Fideres, a consultancy.
The findings come amid a probe by German and UK regulators into
alleged manipulation of the gold price, which is set twice a day by
Deutsche Bank, HSBC, Barclays, Bank of Nova Scotia and Société Générale
in a process known as the “London gold fixing”.
Fideres’ research found the gold price frequently climbs (or falls)
once a twice-daily conference call between the five banks begins, peaks
(or troughs) almost exactly as the call ends and then experiences a
sharp reversal, a pattern it alleged may be evidence of “collusive
behaviour”.
“[This] is indicative of panel banks pushing the gold price upwards
on the basis of a strategy that was likely predetermined before the
start of the call in order to benefit their existing positions or
pending orders,” Fideres concluded.
“The behaviour of the gold price is very suspicious in 50 per cent of
cases. This is not something you would expect to see if you take into
account normal market factors,“ said Alberto Thomas, a partner at
Fideres.
Alasdair Macleod, head of research at GoldMoney, a dealer in physical
gold, added: “When the banks fix the price, the advantage they have is
that they know what orders they have in the pocket. There is a
possibility that they are gaming the system.”
Pension funds, hedge funds, commodity trading advisers and futures
traders are most likely to have suffered losses as a result, according
to Mr Thomas, who said that many of these groups were “definitely ready”
to file lawsuits.
Daniel Brockett, a partner at law firm Quinn Emanuel, also said he
had spoken to several investors concerned about potential losses.
“It is fair to say that economic work suggests there are certain days
when [the five banks] are not only tipping their clients off, but also
colluding with one another,” he said.
Matt Johnson, head of distribution at ETF Securities, one of the
largest providers of exchange traded products, said that if gold price
collusion is proven, “investors in products with an expiry price based
around the fixing could have been badly impacted”.
Gregory Asciolla, a partner at Labaton Sucharow, a US law firm,
added: “There are certainly good reasons for investors to be concerned.
They are paying close attention to this and if the investigations go
somewhere, it would not surprise me if there were lawsuits filed around
the world.”
All five banks declined to comment on the findings, which come amid
growing regulatory scrutiny of gold and precious metal benchmarks.
BaFin, the German regulator, has launched an investigation into
gold-price manipulation and demanded documents from Deutsche Bank. The
bank last month decided to end its role in gold and silver pricing. The
UK’s Financial Conduct Authority is also examining how the price of gold
and other precious metals is set as part of a wider probe into
benchmark manipulation following findings of wrongdoing with respect to
Libor and similar allegations with respect to the foreign exchange
market.
The US Commodity Futures Trading Commission has reportedly held
private meetings to discuss gold manipulation, but declined to confirm
or deny that an investigation was ongoing.
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