The English government took steps this month to ensure that silver will be traded in a fair and orderly manner, resulting in Deutsche Bank removing itself from the London gold and silver fixing committee and the dissolution of the London Silver Fix, effective after mid August of this year. Dissatisfaction with uneven and curious trading patterns in gold and silver led to the changes, culminating in Barclays Bank being fined $43.9 million for its role in a similar scheme involving gold trading.
According to English financial authorities, the time from the announcement of the change up until mid August of this year will be used as a period of adjustment as the silver market adapts to regulated and orderly market operating in the absence of London Silver Fixing. Fixed silver prices will no longer be published on a daily basis. Silver will trade in a more open, free and transparent manner according to most, while some old school precious metals traders would argue that the new provisions will result in a silver market with fewer large institutional players and therefore less liquidity. Only two remaining institutions will participate in the silver market pricing mechanism after August 14 and four institutions remain involved in London gold pricing.
The end result of the changes to London silver pricing seem clear: more transparency in the London silver market and less of an ability for a handful of bankers to control and manipulate London silver prices. Institutions and individuals outside of the old guard of the London silver market will have more influence on pricing and movement of the metal, as it should be. With the free market now controlling the upper hand in silver trading and progress being made towards greater transparency in the gold market, these new developments should prove to be ongoing factors in silver and gold soon making a breakthrough out of the tight trading ranges that we’ve been seeing.
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