You are here

LBMA admits London gold market can't be transparent with central banks in it

Section: Documentation

12:32p ET Monday, April 6, 2015

Dear Friend of GATA and Gold:

Central bank involvement may prevent the London gold market from ever becoming really transparent, the chief executive of the London Bullion Market Association has told a Bank of England study group.

The LBMA chief executive, Ruth Crowell, made the assertion in a long statement dated January 30 and sent to the bank's "Fair and Effective Market Review" committee, which is studying regulation of the currency and commodity markets. The LBMA statement was found on the bank's Internet site by gold researcher and GATA consultant Ronan Manly.

... Dispatch continues below ...


Direct Ownership and Storage of Precious Metals
Outside the Banking System in Zurich and Singapore is a precious metals investment company that enables investors to own and store gold directly in their own name (no mutualized ownership) in Zurich and Singapore.

Goldbroker's clients are not exposed to any counterparty risks. They own gold and silver in their own names (the ownership certificate cites the name of the investor and serial number of his bars) and they have storage accounts opened in their own name as well. So's storage partner knows the exact identity of each investor. doesn't store in the name of its clients; rather, Goldbroker's clients store personally. All investors have direct access to their gold and silver bars. was launched in 2011 so that investors would avoid any counterparty risk when investing in physical gold and silver. is listed among GATA's recommended monetary metals dealers. (

To invest or learn more, please visit:

While Crowell wrote that the LBMA welcomes more transparency in the London gold market, particularly through "post-trade reporting," she also praised gold lending by central banks for providing "liqudity" to the market, asserting that "it is vital that the role of the liquidity provider is not diminished but in fact strengthened to make sure the markets remain fair and effective."

The Bank of England's review of the gold market, the LBMA statement said, "should prioritize liquidity, as greater liquidity results in markets which are less easily manipulated, and consequently regulators should afford market participants the tools with which to foster liquidity."

But if the foremost providers of "liquidity" are central banks, their provision of "liquidity" is likely the leading mechanism of market manipulation, as central banks have not just access to effectively infinite financial resources but also the powerful motive to manipulate the markets in which their currencies and bonds trade.

Thus the LBMA has made the same bogus and self-serving claim that was made by futures exchange operator CME Group in January in support of the volume trading discounts CME Group gives to central banks for secretly trading the U.S. futures markets it operates -- the claim that secret trading by central banks deters market manipulation rather than constitutes it:

The LBMA statement acknowledges that "the role of the central banks in the bullion market may preclude 'total' transparency, at least at public level." It adds that "transparency could be increased via post-trade anonymized [emphasis added] statistical analysis of nominal volumes, provided by the clearing banks."

That is, it's OK with the LBMA if its members know what their client central banks are doing in the gold market, but not OK if mere ordinary traders and citizens know.

Thus the LBMA's position is identical to the position of central banks as described in the secret March 1999 report of the International Monetary Fund, which recounted central bank objections to the IMF staff's proposal for greater transparency in the reporting of IMF-member central bank gold reserves.

The IMF staff wanted central banks to distinguish in public reports their gold loans and swaps from the gold reserves held in central bank vaults. The central banks surveyed by the IMF staff responded with horror, complaining that clarity about their gold loans and swaps would impair their surreptitious interventions in the gold and currency markets:

With Crowell's statement the LBMA has proclaimed itself the enthusiastic agent of surreptitious intervention in the gold market by client central banks. This is something else that mainstream financial news organizations will have to strive to overlook.

The LBMA's statement is posted, at least for the time being, at the Bank of England's Internet site here --

-- and for safety's safe at GATA's Internet site here:

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

* * *

Support GATA by purchasing recordings of the proceedings of the 2014 New Orleans Investment Conference:

Or by purchasing DVDs of GATA's London conference in August 2011 or GATA's Dawson City conference in August 2006:

Or by purchasing a colorful GATA T-shirt:

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

To contribute to GATA, please visit: