Gold Fix Study Shows Signs of Decade of Bank Manipulation

[TransitJohn]

The London gold fix, the benchmark used by miners, jewelers and central banks to value the metal, may have been manipulated for a decade by the banks setting it, researchers say.

Unusual trading patterns around 3 p.m. in London, when the so-called afternoon fix is set on a private conference call between five of the biggest gold dealers, are a sign of collusive behavior and should be investigated, New York University’s Stern School of Business Professor Rosa Abrantes-Metz and Albert Metz, a managing director at Moody’s Investors Service, wrote in a draft research paper.

“The structure of the benchmark is certainly conducive to collusion and manipulation, and the empirical data are consistent with price artificiality,” they say in the report, which hasn’t yet been submitted for publication. “It is likely that co-operation between participants may be occurring.”

The paper is the first to raise the possibility that the five banks overseeing the century-old rate -- Barclays Plc, Deutsche Bank AG (DBK), Bank of Nova Scotia (BNS), HSBC Holdings Plc (HSBA) and Societe Generale SA (GLE) -- may have been actively working together to manipulate the benchmark. It also adds to pressure on the firms to overhaul the way the rate is calculated. Authorities around the world, already investigating the manipulation of benchmarks from interest rates to foreign exchange, are examining the $20 trillion gold market for signs of wrongdoing.

http://www.bloomberg.com/news/2014-02-28/gold-fix-study-shows-signs-of-decade-of-bank-manipulation.html

Shocked, shocked I tell ya.

[Aerows]

1. JUST a decade?

It's been going on longer than that.

[Igel]

2. Let's have it peer reviewed.

And let them make their dataset public so that we can rule out p-hacking. Claims are cheap, and easily believed when we want to believe.

And really, "It is likely that co-operation between participants may be occurring.”

Yes, there's a good chance that it's possible. Nice point to show, but shocking? Nah, not really. Not if they meant what they said.


Now, if they had meant "It is likely that co-operation between participants is occurring" do you think they'd have said so? Maybe not.

Hard to know what people mean by what they don't say if they don't mean what they do say and it's unclear if they even know there's a difference between saying and not saying or between possibility and reality.

Pomo faux go. So go, no go, no no, no know. Sometimes I think we're speaking Judoon (which is obviously an exonym).