The crack in the dam
Feb 01, 2016
Last Thursday the “London fix” for silver failed to move the spot price down to the level desired by the price fixers (manipulators). I don’t think this has ever happened before, and it shows that the fixed paper prices for silver are no longer being followed by the markets themselves.
The price of silver was “fixed” at $13.58 at a time when the spot price was at $14.42/oz. The result was that the spot price went down only part way. If I recall, I don’t think it went down below $14.00. At any rate, the difference between the “fix” and the spot price was about 6%.
In other words, the markets did not believe the price fixers. No one wanted to sell anywhere near the “fixed” price. This could mark the beginning of the end of the price-fixing scheme, allowing metals to rise to their true value. Conversely, this could be the beginning of the end of the high price of currencies. When it takes more currency to buy the same amount of silver/gold, it is not really the price of silver or gold that is rising, but rather that the value of currency is falling. So it takes more currency to buy the same amount of metal—or anything else, for that matter.
As Bulliondesk.com's Ian Walker reports, the silver market was thrown into disarray on Thursday after the LBMA Silver Price was set 84 cents below the spot and futures price this morning….
The price is set every day by six participants – HSBC, JPMorgan Chase Bank, Mitsui & Co Precious Metals, The Bank of Nova Scotia, Toronto Dominion Bank and UBS – using a system run by CME and Thomson Reuters.
The “disarray” set in, because the contracts for silver sales are settled according to the spot price or the “fixed” price. When there is a 6% difference between the two, the buyers want the low price, while the sellers want to sell at the higher price. I’m not sure what the contracts actually read, since I have never bought a futures contract in my life, but those who know of such things are talking about the silver markets being in disarray.
As an outside observer, it seems to me that this event is quite significant to the metals market and the currency markets as well. It may not mean much to the average person, but to those involved in futures contracts, it is a big deal. When a dam shows a small crack, it is a serious matter.