Gold Fix Demise May Free Gold’s Price To Rise
Wednesday, 30 April 2014
Deutsche Bank Departs London Fixings On Tuesday 13th May
German banking giant, Deutsche Bank, announced yesterday that it will be resigning from both the London Gold Fixing and London Silver Fixing panels, and that it is withdrawing without having found a buyer for either of its seats on the respective panels. According to informed sources, the Bank’s last day as a member of the Fixings is Tuesday, 13th May.
While Deutsche’s resignation was expected and there had been signs that it was struggling to find buyers, the news is noteworthy in that by giving only two weeks’ notice, the bank’s departure is now imminent, and the worst case fear for the other participants seems to have now been borne out, namely that prospective buyers of the seats have been frightened off by the growing regulatory investigations into the nature of the fixings and additionally, up to 20 commercial lawsuits which are alleging that the Fixing process is conducive to the manipulation of gold and silver prices.
When Deutsche departs, this will leave only four members, namely, Barclays, HSBC, Société Générale (SocGen) and Scotiabank, and only two members for the silver fixing, HSBC and Scotiabank. SocGen currently chairs the Gold Fixing, while the Silver Fixing is currently chaired by Scotiabank. The mechanics of the Fixing process are described here.
The gold and silver fixings are actually organised through UK limited liability companies of which the member investment bank traders are directors. There are five directors and five alternate directors of “The London Gold Market Fixing Limited” and three directors and three alternate directors of “The London Silver Market Fixing Limited”. When Deutsche resigns from the two companies, it is actually Deutsche’s director and alternate director to the two companies who will be resigning, namely Matthew Keen and James Vorley.