Bazz

The price of gold is decided in London by five banks whose representatives meet twice a day each one suggesting a price they are prepared to settle contracts for. The price is conducted in US dollars and Pounds sterling . They sit on the telephone to their banks at the same time and negotiate and horse trade until they all come up with a set agreed price. It has been going on for years and is anachronistic and open to manipulation depending on their own proprietary trading and their client's wishes. It was originally set up by Rothchilds before the first world war. Deutche Bank is a member but has recently resigned its position. It is suggested that the enquiry into the whole price setting might reveal some untoward illegal activities. In fact Barclays, which is a member, was recently fined 26 million pounds for lack of 'oversight' They "fix" the price twice a day, the afternoon price at 3pm is designed to coincide with the opening markets in the United States.

It is a bit of a mystery to me why this method of arriving at a gold price based on 5 banks and their supply and demand is necessary and probably why it is going to be reformed as others obviously think the same thing. It seems a bit like LIBOR (London interbank offer rate) which does the same sort of thing where banks in London determine the interest rate at which they charge each other in 5 currencies I think, over differing period from overnight to 12 months. These interest rates are then used as base for other interest rates around the world and Barclays again have been accused of fraud and fined. There has been all sorts of collusion amongst banks and you have probably read all about it in the main stream press over the last couple of months.

I am sure if you google all this there will be masses of information to be found.

Hey Joe Blake, that is an extraordinary statement. You want to give up that utube or stop talking to arjay.
Either that or you are trying to get bazz excited.

Thanks Snake, I thought it might be something like that.
It could be like other resources and just be what someone was prepared to pay.
The average person has a feeling that banks are a club which looks
after the member's interest first, second & third.

Barclays Bank has been fined £26m by UK regulators after one of its traders was discovered attempting to fix the price of gold.

The trader, who has been sacked, exploited weaknesses in the system to profit at a customer's expense, the Financial Conduct Authority (FCA) said.

The incident occurred in June 2012, the day after the bank was fined a record £290m for attempting to rig Libor.

Barclays said it "very much regrets the situation" that led to the fine.

The FCA found the bank failed to "adequately manage conflicts of interest between itself and its customers", in relation to fixing the price of gold.

"Barclays has undertaken a significant amount of work to enhance our systems and controls and is committed to the highest standards across all of our operations," said Antony Jenkins, group chief executive.

The FCA also fined the trader, Daniel James Plunkett, £96,500.

"A firm's lack of controls and a trader's disregard for a customer's interests have allowed the financial services industry's reputation to be sullied again," said Tracey McDermott, the FCA's director of enforcement and financial crime.

"Barclays' failure to identify and manage the risks in its business was extremely disappointing."

Mr Plunkett was a director on the precious metals desk.

He was responsible for pricing and managing Barclays' risk on a contract that was specifically linked to the price of gold at 3:00p.m. on 28 June 2012.

If the gold price was above $1,558.96 (£925.57) at that time then Barclays would be required to make a payment of $3.9m to its customer.

But if the price was below that benchmark Barclays would not have to make the payment.

Mr Plunkett created fake orders with the intent of pushing the price of gold below $1,588.96, which he succeeded in doing.

The result was Barclays was not obligated to make the $3.9m payment to its customer, and Mr Plunkett booked a profit of $1.75m for the bank.

When the customer learned of this, an explanation was sought from Barclays. The concerns were then relayed to Mr Plunkett on 28 and 29 June 2012.

The FCA said he misled both Barclays and the regulator by providing a false account of events and failing to admit that he had placed the fake orders.

Gold Fixing is a price setting mechanism that allows investors to buy and sell gold at a single quoted price.

Barclays joined the mechanism in 2004. The other members are HSBC, Societe Generale and Scotiabank. Deutsche Bank was part of the group but has since left.