Gold and Silver Prices Are Set in Libor-Like Daily Conference Calls Between a Handful of Big Banks

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The Fix Is In?

There is increasing evidence that the gold market is manipulated. The amount of physical bullion may be greatly over-stated, and gold may be manipulated in the same way that Libor rates are:

The Telegraph noted Monday:

[Bank of England executive] Paul Tucker told MPs that Barclays' abuse of the Libor system may be only one part of the banks' dishonesty over crucial financial information, suggesting that other markets should now be investigated. An official inquiry into Libor — which helps determine interest rates for householders and businesses — should be broadened to include several over markets where banks are trusted to report their own data, he said. ***

The Libor scandal could be repeated in a number of other u201Cself-certifyingu201D markets where prices are determined, he said.

u201CSelf-certification is clearly open to abuse, so this could occur elsewhere,u201D he said.

A Financial Services Authority inquiry into Libor should be extended to other self-certifying markets, he said. The Treasury said last night that the review, led by Martin Wheatley, was free to examine markets other than Libor.

***

Some markets in gold and oil are also based on self-certification.

Mainstream commentators are starting to publicly discuss manipulation in the precious metals markets. See this, this and this.

Avery Goldman noted last year:

On March 15, 2011, the Commodity Exchange (COMEX) and the New York Mercantile Exchange (NYMEX) advised the CFTC that they had approved J.P. Morgan's application to become a licensed vault facility, using a u201Cself-certificationu201D process. The newly licensed vault, located at 1 Chase Manhattan Plaza, NY, NY, is ready to roll as both u201Cweighmasteru201D and depository, for delivery of gold, silver, platinum and palladium contracts, as of March 17, 2011, two days later.u201D

ETFs, bullion banks, storage facilities and other holders of gold that are u201Cself-certifyingu201D — without any checks by third party auditors — have been caught misreporting and raiding even allocated precious metals accounts, and using the loot to speculate or pay off other debts.

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George Washington blogs at Washington’s Blog.

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