Silver Market In Disarray After Benchmark Price Fix Manipulation

Tyler Durden's picture




 

As Bulliondesk.com's Ian Walker reports, the silver market was thrown into disarray on Thursday after the LBMA Silver Price was set 84 cents below the spot and futures price this morning.

The LBMA Silver Price – the crucial daily benchmark used by producers and traders around the world to settle silver products and derivatives contracts – was set at $13.58 per ounce.

 

At the time of the auction, which begins at 12 noon London time, the spot price was at $14.42 per ounce while the futures price on the CME was at $14.415, leaving a number of market participants extremely confused as to what has happened.

 

“Unfortunately, it is not [a mistake],” Ole Hansen, head of commodity strategy for Saxo Bank, told FastMarkets. “This could be the end of the fix. It took 14 minutes to find a fix – they obviously found a fix way off of the market.”

 

The difference between the two was nearly six percent but the benchmark cannot be changed, a person familiar with proceedings told FastMarkets.

 

Another source also suggested that the continued existence of the fix has been put in jeopardy by the huge discrepancy in today’s price, adding that many producers – who still use the price as their daily reference – may have lost significant amounts of money if any contracts have been settled according to the fix.

 

“A huge number of contracts are still settled on that price,” another said. “This will no doubt cause significant problems.”

 

The matter is being investigated internally, FastMarkets understands, so CME has no official comment at this time.

This is how the market reacted to this clear manipulation...

 

As we have detailed previously, the ‘fix’ or ‘benchmark’, as it is now known, is still the global benchmark reference price used by central banks, miners, refiners, jewellers and the surrounding financial industry to settle silver-based contracts.

While some traders continue to use the 24-hourly traded spot price, larger players prefer the snapshot-style daily benchmark to settle bulkier contracts on a traditionally over-the-counter (OTC) market.

The price is set every day by six participants – HSBC, JPMorgan Chase Bank, Mitsui & Co Precious Metals, The Bank of Nova Scotia, Toronto Dominion Bank and UBS – using a system run by CME and Thomson Reuters.

CME and Thomson Reuters won the battle to provide the methodology and price platform for the daily process back in July 2014, replacing the 117-year old fix in August that year under sweeping reforms of the entire precious metals complex.

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Thu, 01/28/2016 - 13:42 | 7109173 indaknow
indaknow's picture

Nothing to see here move along

Thu, 01/28/2016 - 13:46 | 7109199 WTFRLY
WTFRLY's picture

Joo World Order Event Horizon has already been breached. This is all entertainment now.

Thu, 01/28/2016 - 13:49 | 7109203 nope-1004
nope-1004's picture

The matter is being investigated internally

lmao.... for full and fair impartiality, correct?  Hope they send in Geithner or Rubin to assist.  Wouldn't want the public to be misled.....

Thu, 01/28/2016 - 13:50 | 7109226 Soul Glow
Soul Glow's picture

Or Gary Gensler.  He did a stellar job at the CFTC!

Flash crash across gold, silver, and platinum.  What is the correlation there?  SOmeone who owns large amounts of all metals dumped paper futures?  Was a mining hedge dumped?  Or did the PPT come in and short all three asset classes?  Either way, it is a remarkable trade.

Thu, 01/28/2016 - 13:57 | 7109266 Silky Johnson
Silky Johnson's picture

The fact it's called, "the fix", tells you all you need to know. The shit is broken!

Thu, 01/28/2016 - 14:02 | 7109300 Durrmockracy
Durrmockracy's picture

The whole notion of "price" is fucked.  And I have no respect for stackers that reference "dollar price".  How much fake money to buy real money?  Fuck the dollar, fuck anyone who wants to see the "dollar" live....

Thu, 01/28/2016 - 14:23 | 7109411 Xibalba
Xibalba's picture

Just let the paper price die.  Exchange fiat for silver at any price you can.  It'll be cheaper than trying to buy it after the bonesmen finish their 'project'

Thu, 01/28/2016 - 14:24 | 7109419 Father Thyme
Father Thyme's picture

The "fix" is in.

Thu, 01/28/2016 - 14:40 | 7109505 BurningFuld
BurningFuld's picture

This is what happens when you do your hookers and blow with Charlie Sheen. Things get fucked up!

Thu, 01/28/2016 - 15:29 | 7109743 jeff montanye
jeff montanye's picture

the (zionist, tribal, bankster) bonesmen and the (zionist, tribal, bankster) jews.  what a story yet to be told.

metals are blowing up.  watch this and prepare to educate your children and grandchildren in proper portfolio management.

 

Thu, 01/28/2016 - 15:53 | 7109943 Socratic Dog
Socratic Dog's picture

Unlikely your descendents will have a "portfolio" to manage.  Unless you mean lead, tools, knowledge, practical skills, land, maybe even a little silver.

They'll blame you, likely.  And they should, we have let this happen.

Thu, 01/28/2016 - 16:12 | 7110077 prefan4200
prefan4200's picture

This was just a test. Now they know they can price it any mother-fucking place they want to, without repurcussions.  Look out below, silver a'fallin' !!

Thu, 01/28/2016 - 19:08 | 7110865 ufos8mycow
ufos8mycow's picture

People laughed at me and called me ghetto when I got my gold teeth. Who's laughing now byotches?

Thu, 01/28/2016 - 20:39 | 7111194 Pinto Currency
Pinto Currency's picture

 

 

They are trading more than 1 billion oz of silver in gross daily turnover at London's LBMA.

The whole 'market' appears to be a complete sham.

http://www.safehaven.com/article/36309/silver-is-it-the-lbmas-greatest-rig

Thu, 01/28/2016 - 22:06 | 7111488 DeadFred
DeadFred's picture

Buy puts on SLV. It's going down. 1 cent contracts pay 8 bucks if it's bankrupt by April. 800:1 payoff if this isn't a random problem and the sick puppy dies. My opinion

Fri, 01/29/2016 - 07:55 | 7112582 Manthong
Manthong's picture

Well, the good news is that
AG which should be a least $35.00/oz  is really, truly, actually, completely, totally, suppressed
by the F’n bankers and will bust out with a nuclear bang…. Like AC says.. be nimble.. be agile.. bend over backwards until your nose kisses your butt, but then be a little more agile.

Thu, 01/28/2016 - 19:10 | 7110867 Temporalist
Temporalist's picture

Meanwhile at the Bat Cave, Bart Chilton still has not found his pants...much less his sense of ethics and morality.  (He was able to find his hair dryer and vent brush however)

Fri, 01/29/2016 - 08:02 | 7112597 Manthong
Manthong's picture

geez.. he is too busy blowing Daschle and the highly connected wife to worry about his mane.

Thu, 01/28/2016 - 16:26 | 7110161 Shift For Brains
Shift For Brains's picture

+226.7625

I heard an acquaitance talk recently about having a "dream" of owning a house adjoining the fairway of a rather pricey private enclave's golf course nearby.  Could hardly contain myself. Imagine. Millions of Third World rejects streaming into Europe, the US is falling faster than Building 7 and this dude wants to get out on the links with a putter! He's a walking/talking Charles Schwab ad: "Click to start planning your financial goals today!"

More likely, your goal will be to hold your position until help arrives and drives off the zombies stumbling toward you.

Thu, 01/28/2016 - 19:04 | 7110842 Citxmech
Citxmech's picture

Reminds me of this illustration of the American Dream:  https://www.youtube.com/watch?v=LG-Z-kYSC4s

(The "How do I do it?. . . " ad)

Thu, 01/28/2016 - 20:09 | 7111083 I need more asshats
I need more asshats's picture

Most people do not understand how important it is to have a machete in your "toolbox".

Thu, 01/28/2016 - 23:42 | 7111840 mt paul
mt paul's picture

important to have a machete
in your golf bag , maybe

Fri, 01/29/2016 - 02:57 | 7112319 WTFRLY
WTFRLY's picture

This is Joomanji, pickup any weapon you can.

Thu, 01/28/2016 - 19:49 | 7111010 Anasteus
Anasteus's picture

The fact that all industries and markets submissively accept dummy numbers presented by few psychopaths as 'prices' is one of the biggest mysteries in the world.

Fri, 01/29/2016 - 02:41 | 7112307 Ward no. 6
Ward no. 6's picture

right

Thu, 01/28/2016 - 15:14 | 7109711 Ignatius
Ignatius's picture

"The price is set every day by six participants – HSBC, JPMorgan Chase Bank, Mitsui & Co Precious Metals, The Bank of Nova Scotia, Toronto Dominion Bank and UBS – using a system run by CME and Thomson Reuters."

"The fix is in." 

All I know is that they didn't ask my opinion.

Thu, 01/28/2016 - 15:52 | 7109935 Squid-puppets a...
Squid-puppets a-go-go's picture

mebbe JPM asked for a lower fix for a last minute scoop to corner what remains of the phyzzy silver market

Thu, 01/28/2016 - 17:31 | 7110493 Hail Spode
Hail Spode's picture

Just what I was thinking. Some well-connected bunch had an agreement to buy large amounts of silver at whatever the "FIX" price was going to be today. And the poor seller is supposed to deliver at that price, even though it was 6% below market.

So let's see who made a big purchase today.....

Thu, 01/28/2016 - 15:59 | 7109986 Captain Debtcrash
Captain Debtcrash's picture

What's crazy is that when I searched for other news stories on this debacle there were none, barring from gold and silver bug sites.  How could this not be huge news.

Thu, 01/28/2016 - 21:13 | 7111297 DavidPierre
DavidPierre's picture

The insider elite are laughing at everyone spending so many calories and so much energy reporting, discussing, analyzing and agonizing over the paper vs. physical issue. Meanwhile the biggest theft in history is taking place right under our nose as they pluck every ounce of physical gold and silver out of the system from the idiots and the idiotic mining companies who are willing to sell it at the paper price levels. The biggest transfer mechanism is the Central and bullion banks. The banking system has been ripping us off in every aspect of our lives for decades. Why on EARTH would anyone question or doubt that they're ripping us off in the precious metals market? Seriously. Everyone in their heart of hearts knows that gold/silver are the ultimate root of any monetary system. Why would the banks rip us off using paper currency schemes and not touch the metal? For God sakes, the metal is what they're ultimately after. That's why the first thing any military does when they take over a country is it takes the gold. The most recent proof of this Ukraine. That practice goes back to at least the Romans.

http://www.lemetropolecafe.com/james_joyce_table.cfm?pid=12695

Fri, 01/29/2016 - 06:34 | 7112489 1033eruth
1033eruth's picture

For any price huh?  Is that your sage advice?  I'll sell you silver at $50 an ounce.  How much do you want?  Back the truck up, right?  

Thu, 01/28/2016 - 14:26 | 7109430 y3maxx
y3maxx's picture

...Short covering initiated the crash.

Definately not caused from manipulation.

Thu, 01/28/2016 - 15:27 | 7109593 OregonGrown
OregonGrown's picture

SORRY.... and thank you for playing.  BUT.....

Short covering makes prices of stocks or commodities RISE...... not fall!

Thu, 01/28/2016 - 15:33 | 7109828 Iam_Silverman
Iam_Silverman's picture

"Short covering makes prices of stocks or commodities RISE...... not fall!"

Maybe he misspoke and meant to say a Short Squeeze cause the price jump?

Thu, 01/28/2016 - 15:37 | 7109844 OregonGrown
OregonGrown's picture

Misspeaking.... it could happen to the best of us... look below for my example!

Thu, 01/28/2016 - 21:02 | 7111270 Slomotrainwreck
Slomotrainwreck's picture

It wasn't long ago that there were a couple dozen "big banks". They have since been gobbled up by the elite's. Now there's only a half dozen to control things. Some bank folks control some things. If you like your silver price we can keep your silver price. Dont like? We keep it anyhow.

Fri, 01/29/2016 - 00:12 | 7111961 HungryPorkChop
HungryPorkChop's picture

Just moar' signs of a dark age where those in power can manipulate, distort, lie and steal however if the local peasants dare trespass on the King's forest then its death by hanging.  I'd ask where are the enforcement agencies serving warrants and removing computers in the middle of the night but realize they have a couple militia surrounded in Orgeon.  Now back to your regular programming.  

Thu, 01/28/2016 - 14:29 | 7109440 OregonGrown
OregonGrown's picture

"By this measure silver is one of the few assets that is not overvalued.  Including gold."

 

Dude...clicked your link and i must say...

.....you dont know how to read a fucking graph!!!  

If you did..... you would retract that IDIOTIC statement!

Thu, 01/28/2016 - 14:32 | 7109459 Baa baa
Baa baa's picture

What link?

Thu, 01/28/2016 - 18:51 | 7110797 KesselRunin12Parsecs
Thu, 01/28/2016 - 15:39 | 7109849 jeff montanye
jeff montanye's picture

imo you are mistaken.  s/he has read the graphs correctly.

of course the values on the vertical axes are arbitrary but one should look at the long term price movement and on that basis silver is the cheapest, gold next, of the assets shown. 

remember, buy low, sell high.

Thu, 01/28/2016 - 15:54 | 7109948 Squid-puppets a...
Squid-puppets a-go-go's picture

what other essential commodity has never breached its high of 35 years ago - and remains 70% lower

Thu, 01/28/2016 - 16:25 | 7110142 Esso
Esso's picture

I dunno, that would be 1980-81. Crappy Chevy Camaros? Give me a hint.

Coal, maybe?

Thu, 01/28/2016 - 19:05 | 7110849 Implied Violins
Implied Violins's picture

FU on the old Camaros. First car to ever get me laid. Was worth every penny of the eventual 10 grand in repairs.

Thu, 01/28/2016 - 14:46 | 7109491 OregonGrown
OregonGrown's picture

derp..... lol.... i didnt see the word "not"...... my bad!

 

downvoted my own dumbass comment because i "obviously dont know how to read a fucking comment" and upvoted you!

Thu, 01/28/2016 - 14:53 | 7109585 skinwalker
skinwalker's picture

Perhaps you should limit yourself to two bowls a day. 

Thu, 01/28/2016 - 15:08 | 7109598 OregonGrown
OregonGrown's picture

WITCH!

<pointing at skinwalker>

 

2 bowls? I call that breakfast - with my morning coffee!!!

Thu, 01/28/2016 - 15:40 | 7109870 jeff montanye
jeff montanye's picture

i am not surprised.

Do NOT follow this link or you will be banned from the site!