London has reconsidered the gold fixing process. The new formula is designed to prevent manipulation with the gold rate.
Four international banks - Barclays, Bank of Nova Scotia, Société Générale and HSBC – which perform electronic calculation of the gold ounce rate twice a day, morning and afternoon, are now obliged to do it under the supervision of an independent administrator.
Experts call the gold market one of the most secretive. Mass media have repeatedly reported that the world's largest banks in collusion with the U.S. financial authorities conduct fraudulent transactions with the yellow metal.
As reported by Le Temps, a Swiss daily, objective suspicions on this score intensified this month after Rosa Abrantes-Metz, a lecturer at the Business School under the New York University, published her studies. Having analyzed the evolution of the gold rate between 2001 and 2013, she came to the conclusion that it was unreasonably too often and too drastically decreased, which could not be mere coincidence.
"It's dangerous when a small number of participants in the process in the absence of any supervision can fix the price of gold between them, having many conflicting interests," says Arbantes-Metz.
Until now, the "golden quartet" was not accountable. The London Gold Fixing, representing quotations for the gold ounce, has practically not changed since its introduction in 1919: the starting price is declared depending on purchase and sale orders registered overnight in Asia or in early morning in London. This price is sent to customers who proceed to purchase. The rate is calculated based on physical supply and demand.
In 2004, the NM Rothschild & Sons Bank ceased to be a member of the gold fixing, and since then it is carried out electronically under the supervision of the banking quartet.
In early 2014, the multi-year silence about the tampering with gold rates was broken after the Federal Financial Supervisory Authority of Germany (BaFin) stated that there were speculative operations with precious metals on a massive scale.
According to experts, a full investigation into the matter would reveal not only the members of the "gold trust", but also its beneficiaries, who have a large amount of gold and right now are preparing the world for the introduction of the gold standard.
According to the Strategic Culture Foundation, the first hints that the U.S. Treasury, Wall Street banks and some banks in the City of London are involved in illegal machinations with the yellow metal started to come from the Gold Anti-Trust Action Committee (GATA) established by industry experts and small gold mining companies in the 1990s. GATA has set itself the task of exposing the activities of banks to undercut gold prices.
Once the gold standard was abolished in the 1970s, there was a rapid increase in the price of gold (within the framework of the Bretton Woods system, the price of the yellow metal was fixed at $35 per troy ounce).
The 1980s saw the beginning of globalization, which was understood as the promotion of U.S. interests worldwide. This required a strong dollar, while gold clearly prevented this with its continuously rising prices. According to observers, in view of this situation the U.S. authorities together with the largest banks launched a project aimed at artificial curbing prices for the yellow metal.
This, in turn, delivered a painful blow to the gold mining industry in many countries, hitting especially small companies having low profit margines.
It was these companies, that were interested in creating GATA, which started to disclose various machinations in the gold market and which could prove based on circumstantial evidence there was a cartel operating the world over and launching large quantities of gold on the market.
In GATA’s opinion, gold was supplied by the U.S. Treasury and perhaps by the central banks of other countries. This being the case, accounting entries could contain “physical gold”, whereas in fact there were only warrants kept in custody.
Alex Shishlo, Editor in Chief of the European Bureau, Rough&Polished
