Ronan Manly: LBMA gold price benchmark ignores market conditions and shortchanges investors

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By Ronan Manly
BullionStar.com, Singapore
Thursday, April 30, 2020

As the gaping spread between London/LBMA spot gold prices and front-month COMEX gold futures prices persists for a sixth week triggered by the bullion bank exchange-for-physicals liquidity blowup on March 23, one unappreciated aspect of this gold price discovery scandal is that daily London LBMA Gold Price auctions are deliberately ignoring Comex gold prices when setting the opening price (starting price) in the twice-daily gold price auction.

By ignoring the much-higher Comex gold futures prices while setting the LBMA gold auction starting price, the auction administrator -- the Intercontinental Exchange Benchmark Administration -- is ignoring current market conditions in the gold market. (A stated methodology of the auction is to use current market conditions.)

... Dispatch continues below ...



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The LBMA Gold Price auction is thus shortchanging global gold market participants and investors who all use the LBMA Gold Price benchmark (the final price from the auction) as a critical reference rate.

The motivation? To take the spotlight off the fact that the London spot gold market is broken and that the LBMA market makers have liquidity problems. ...

... For the remainder of the analysis:

https://www.bullionstar.com/blogs/ronan-manly/lbma-gold-price-benchmark-...

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