Death Spiral for the LBMA Gold and Silver auctions?

Posted on 14 Apr 2017 at by
Ronan ManlyThis week the LBMA Silver Price and LBMA Gold Price daily auctions were both hit by unusual price movements over two consecutive days, on 10 April and 11 April. In both cases, the prices being quoted in the auctions deviated noticeably from their respective spot prices. There is little information on what exactly happened in the silver auction since none of CME (calculation agent), Thomson Reuters (benchmark administrator) or the LBMA (benchmark owner) have addressed this issue in public. For the gold auction, the final auction price on the afternoon of 11 April was far below where the spot price was trading at that time. The introduction of central clearing to the gold auction looks to have affected liquidity, as some banks have temporarily bowed out of being direct participants.Again, neither the gold auction administrator, ICE Benchmark Administration, nor the benchmark owner, the LBMA, have issued a statement explaining the exact series of events that caused this price divergence. Continue reading…

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