Ross Norman: Is the London fix fixed?


2:14p ET Friday, February 28, 2014

Dear Friend of GATA and Gold:

Ross Norman, CEO of London bullion dealer Sharps Pixley, today defends the daily London gold price fixing against yesterday's Bloomberg News report of another study that has concluded that the fixing likely manipulates the gold price:

That study was the second one this week, following the one described by the Financial Times here:

There are perfectly good explanations for some of the questions about the London gold fix, Norman writes, and he provides what he thinks they are. He also criticizes Bloomberg News for "a failure to ask the right questions."

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But Norman acknowledges that central banks have an interest in the London fix and he presumably would concede that they are involved in the gold market surreptitiously every day. So there are still more questions about the London fix, questions GATA long has been trying to persuade Bloomberg News, the Financial Times, and other news organizations to ask.

For example, if they were known, would the objectives and motives of central banks in the gold market be universally considered noble and in the public interest? If so, why is central bank involvement in the gold market so surreptitious? What exactly are the relationships and transactions between central banks and the banks managing the London gold fix and between central banks and other bullion banks?

How does the London gold fix, a private gathering of competitors in the market, get around Britain's Competition Act, the equivalent of antitrust law in the United States, which prohibits collusion among competitors? Certainly the London gold fix is unique; there is no similar mechanism for oil, soybeans, pork bellies, and other major items of trade. So why couldn't gold pricing be left to ordinary markets just as pricing of those other items is?

Of course the latter questions may be answered by the first questions -- by the interest of governments and central banks in being able to influence gold pricing more surreptitiously than they might be able to do in a more open setting.

And while Norman, a former gold trader for a bank that used to chair the London gold fix, may know as much about it as anyone, the fix's proceedings are not open to the public. The public can only be told that the London fix is on the up and up, as Norman maintains; the public is not permitted to see for itself.

Presumably there is a reason for that, and those who are not interested in bidding on a bridge in Brooklyn can probably figure out what it is.

More questions that financial journalism has failed to pose about the gold market may be found here:

Norman's commentary is headlined "Is the London Fix Fixed?" and it's posted at the Sharps Pixley Internet site here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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