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Platinum Fixing Under The Microscope

Tyler Durden's picture




 

Submitted by Dmitri Speck via Acting-Man blog,

Is it honest or is there fraudulent manipulation?

First fines have been imposed for manipulation of the gold fixing, the silver fixing is even discontinued entirely. But is everything in order with the platinum fixing? Have there been manipulations – and are they part of a larger manipulation campaign?

The precious metals fixings have the purpose of enabling large volume trades. However, they also provide reference prices, which are used by merchants and have an effect on subsequent trades. They are therefore an especially suitable target for price manipulations. There have already been statistical hints as far back as 2002 that systematic manipulation of the gold fixing was taking place; in 2011 similar hints emerged in the silver fixing.

We now want to examine the platinum fixing. It takes place twice daily, at 09:45am (AM fixing) and at 2:00pm (PM fixing) London time, which is equivalent to 4:45am and 9:00am EST. It takes a not precisely predetermined amount of time lasting several minutes until the fixing price is established.

There are reliable methods to trace price manipulations taking place at specific times of the day. Calculation of an average intra-day price trend over many days often provides clear evidence. Similar to gold and silver, this method can also be employed to uncover systematic manipulation in the platinum market. We use one-minute prices of futures contracts from December 1997 to April 2014. From these we calculate the average of intra-day price movements.

Fig.1 is therefore no normal intra-day price chart. It rather shows how the platinum price has behaved in the course of the average trading day over approximately the past 16 years. It shows the typical movements – calculated from millions of prices. The horizontal axis shows the time of the day (EST), the vertical axis the average price level (indexed to 100). Since it is an average over a great many days – 4189 all in all – the size of the moves is relatively small.

 

Chart-1-Platinum intraday average

Fig. 1: 16 year average intra-day platinum price – the PM fixing stands out …

 

On the chart, several points in time can be discerned when the average price behaves conspicuously. Especially noteworthy is the decline at the PM fixing. There is, however, also a mild decline at the AM fixing and when the main trading period begins at the COMEX at 8:20am. Interesting also is the slightly accelerated advance near the close of COMEX trading at 1:05pm.

This indicates an upward price manipulation. Trading house Moore Capital was fined for precisely such manipulations at the close of trading – a nice confirmation of the method’s validity. However, most conspicuous are the price moves at the PM fixing. We want to examine these more closely. For this purpose, we take a closer look at average intra-day prices around the time of the PM fixing.

Fig.2 shows a close-up of the previous chart, including the 30 minutes before and after the beginning of the fixing. We can see that prices begin to slowly decline from 8:50am onward. Once the fixing begins at 9:00am, the price decline accelerates between 9:01 and 9:05. Thereafter, average intra-day prices already begin to embark on a counter-movement. From this progression it can be surmised that the typical duration of the fixing over these years was approximately five minutes.

Chart-2-close-up of fixing
A close-up of the time period surrounding the afternoon fixing (EST).

 

For the further examination we will limit ourselves to studying the interval between 9:00am and 9:05am (the “fixing period”). Any manipulations that take place at other times – including those in the minutes preceding the fixing – are not pursued further at this juncture. We thus analyze the price movements of the five-minute interval between 9:00am, the beginning of the fixing, to 9:05am, the time when the downward move on the average intra-day price chart ends. During this time period, the strongest part of the decline occurs. The PM fixing takes place concurrently.

The study includes the price moves of altogether 4189 days – a time period of 16 years. On average, platinum prices fell by 0.0272% in the five minutes of the afternoon fixing. Given that platinum actually rose from $376 to $1,440 during those years, a slight increase would normally have been expected. During the 4189 fixing phases there have been 1730 price increases and 2195 price declines. 271 times prices remained unchanged. One would have at least expected as many price increases as declines. Statistically, there is therefore an excess of 236 price declines at a minimum. A coincidence?

Next: a close look at the distribution of returns – to read the rest of this article, click here.

 

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Wed, 09/10/2014 - 10:53 | 5201808 kliguy38
kliguy38's picture

LMFAO and this is "tough" to figure out

Wed, 09/10/2014 - 11:05 | 5201848 rehypothecator
rehypothecator's picture

"I want either less corruption or more opportunity to participate in it." - Ashliegh Brilliant

Wed, 09/10/2014 - 11:11 | 5201865 Pinto Currency
Pinto Currency's picture

 

 

The discussion of 'fixings' is somewhat of a distraction.

The manipulation is possible because they are trading paper not metal.

The LBMA currently trades 190M oz of gold and 1.6B oz of silver every day.

They are not trading metal but digital instruments that are created from nothing - and then they call that the 'gold' price,  or the 'silver' price, or the 'platinum" or 'palladium' price.

It is completelly corrupt and the new physical exchanges in Asia are changing this corrupt metal market system.

Now the LBMA is getting religion and the bullion banks are sprinting away from the 'fixings'.

Just like offering Scotland increased power when they see the independence movement is rising, this is all a bit late to be taken seriously.

Wed, 09/10/2014 - 11:13 | 5201874 Manthong
Manthong's picture

"There are no markets anymore, only interventions"

I think Chris Powell, GATA said that.

Wed, 09/10/2014 - 11:24 | 5201926 linniepar
linniepar's picture

This has become my new go to metal. I like the long term prospects on rarity alone!

Wed, 09/10/2014 - 11:29 | 5201942 Pinto Currency
Pinto Currency's picture

 

 

Agreed.  Both platinum and palladium are going to be difficult to source as 80% come from Russia and South Africa.

 

Wed, 09/10/2014 - 11:43 | 5201979 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

Two interesting sites offering rare platinum group metals:

http://www.rwmmint.com/

http://preciousmetalpurchase.com/metals/iridium/

Wed, 09/10/2014 - 13:58 | 5202715 seek
seek's picture

You're back!

Wed, 09/10/2014 - 12:21 | 5202191 daedon
daedon's picture

Apparently nobody nobody gives a shit about actual metal, it's all about certificates, kind of like living in FarmVille on facebook, but it's GoldVille.

Wed, 09/10/2014 - 13:22 | 5202519 KnuckleDragger-X
KnuckleDragger-X's picture

What/??? Your saying that those paper certificates aren't real? Say it ain't so!

Wed, 09/10/2014 - 12:00 | 5202085 Quinvarius
Quinvarius's picture

I am pretty sure the new electronic fix processes are completely removing the last bits of metal that were involved.  When that manipulation scam came out, it appeared the guy was dumping bars and then having his paper trading desk buy back paper to balance the account.  You can take these changes a lot of ways.  I take it as an admission that they don't want to, or can't, use anymore real metal in the fix process.

This is an interesting Greg Hunter interview from today:

http://www.youtube.com/watch?v=aZwSiHBxm0c&list=UUG-G8LLr38fQUNZU8K0t-EA    

Wed, 09/10/2014 - 16:34 | 5203470 F0ster
F0ster's picture

Did anyone catch this CME Group nugget in January? I found it while trolling around last night...

"The definition of HQLA level 1 liquid assets does not appear to include gold bullion. We believe gold bullion should qualify as a level 1 liquid asset due to its characteristics of low risk, highly liquid, flight to quality, active outright sale market, high trading volumes, diverse number of market participants. In addition, gold bullion serves as an international store of value and is central bank eligible."

http://www.federalreserve.gov/SECRS/2014/May/20140502/R-1466/R-1466_0131...

 

 

Wed, 09/10/2014 - 10:55 | 5201813 junction
junction's picture

Just use the following: " _____ fixing."  Fill in the metal in the underlined section.  All valuable metals are fixed by the CME and the major refiners and, of course, the banksters.

Wed, 09/10/2014 - 11:02 | 5201839 insanelysane
insanelysane's picture

Tulip fixing.

Wed, 09/10/2014 - 12:28 | 5202229 Tall Tom
Tall Tom's picture

Back then, in the time of Tulip Mania, Dutch Guilders WERE GOLD as GOLD IS MONEY after all.

 

The massive problem...WHICH YOU REFUSE TO UNDERSTAND...is that price fixing is FRAUDULENT, CORRUPT and IMMORAL...in anything which is traded...ANYTHING.

 

There were no TULIP FIXES of any sort recorded in history of which I am aware.

 

The Platinum Fix has almost nothing to do with Tulipmania.

 

It was a good attempt at equating the two phenomena. But...IT WAS AN EPIC FAIL.

Wed, 09/10/2014 - 12:33 | 5202250 Doubleguns
Doubleguns's picture

REE fixing. Chinas part of the pie. 

Wed, 09/10/2014 - 10:55 | 5201816 Bawneee Fwank
Wed, 09/10/2014 - 10:58 | 5201826 p00k1e
p00k1e's picture

Everything is rigged.

Look around.  Tens of millions of people work their entire lives and are basically at the same spot that they were when they started. 

Wed, 09/10/2014 - 10:59 | 5201827 oudinot
oudinot's picture

Nice game if your're ' in'.

Wed, 09/10/2014 - 11:04 | 5201843 Tenshin Headache
Tenshin Headache's picture

Fraud tends to be endemic toward the end of an historic bubble.

Wed, 09/10/2014 - 11:06 | 5201854 tuttisaluti
tuttisaluti's picture

means a banker is a fixer?

Wed, 09/10/2014 - 11:11 | 5201860 alexcojones
alexcojones's picture

Simple Explanation:

Because more Real Money is being manufactured, Precious Metals are no longer needed.

When people see our hard-working President OZero, they think confidence, and besides, Heavy Metal is Toxic and doctors tell me they should be flushed from our systems.

Dr OZero is helping US and so is the FedRes Health Clinic.

Sometimes I have to channel my inner MDB

Wed, 09/10/2014 - 11:08 | 5201864 krispkritter
krispkritter's picture

Is there anything that isn't fixed? Oh right, the fraud and economy...

Wed, 09/10/2014 - 11:13 | 5201875 world_debt_slave
world_debt_slave's picture

In this day, everything is fixed, on Steroids.

Wed, 09/10/2014 - 11:16 | 5201885 SolarSystem1932
SolarSystem1932's picture

Off topic, but just taking a moment to brag...

http://www.zerohedge.com/news/2014-07-09/fact-or-fiction-environmental-s...

Any body remember my comment about:

Stock ticker:IMSC

I publicly made a rare comment about it.

Back to cutting grass...

Wed, 09/10/2014 - 11:19 | 5201893 Latitude25
Latitude25's picture

The more the manipulation the sooner it will end.  The FED, ECB and BOE are so hell bent on suppression that they don't realize that a controlled price rise would be to their advantage long term.

Wed, 09/10/2014 - 12:57 | 5202379 Cacete de Ouro
Cacete de Ouro's picture

That Rothschilds agent Douglas Beadle is the Treasurer of the London Platinum and Palladium Market management committee

A coincidence?

http://www.lppm.com/display.aspx?type=committee

Thu, 09/11/2014 - 01:40 | 5205266 onmail
onmail's picture

Piracy unlimited.

Loot loot loot

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