Financial authorities are undertaking an assessment of financial benchmarks in the wake of a series of scandals, including over the gold fix.
The new system is set to replace the current one which is currently being run by just four western bullion banks, one of whom – Barclay’s – were fined for manipulation of the gold price last year. A second one, UBS, was found guilty by Switzerland’s financial regulator (FINMA) of “serious misconduct” and a “clear attempt to manipulate precious metals benchmarks,” particularly with silver.
The new system is set to expand participation to at least 11 members including some Chinese banks for the first time. Given that China is now the largest producer and buyer of gold in the world, it is significant that Chinese interests will have a say in determining the daily price fix along with the current British, Canadian and French banks.
The change in weighting at the London Gold Fix to give the Chinese representation of over 25% appears to be driven by fear that the Shanghai Gold Exchange (SGE) may soon supersede London as the hub of the global gold market and location where the daily gold price is determined.
Looking for a secure way to buy physical gold and silver?
GoldMoney company offers you 6 months of FREE storage if you sign-up and buy physical metals via GoldReference site. Simply choose “GoldReference.org” from the dropdown list, or manually write goldreference, when you open a Holding at GoldMoney. See also our page How To Buy Gold & Silver Online.