Today’s AM fix was USD 1,311.50, EUR 962.99 and GBP 770.56 per ounce.
Yesterday’s AM fix was USD 1,312.00, EUR 964.42 and GBP 773.22 per ounce.
Gold climbed $0.30 or 0.02% yesterday to $1,319.30 per ounce and silver rose $0.11 or 0.53% to $21.03 per ounce.
U.S. authorities targeted Barclays (recently one of their traders was involved in manipulating the London Gold Fix Pricing Mechanism) for developing "Dark Pools" full of predators and feeding clients to them. It reads like something from a Harry Potter book.
A.G. Schneiderman Announces Lawsuit Against Barclays
The regulator, New York's State Attorney, Eric Schneiderman, a quasi political position, announced his lawsuit yesterday as part of his investigation into abuses by the "High Frequency Trading" industry, where certain participants may have received unfair market access and or knowledge of trade flow and thus profited by positioning themselves accordingly.
Dark Pools are closed systems operated by many banks and financial institutions that allow large institutional investors to trade anonymously within the banks client pool, thereby allowing the client to avoid publicity surrounding the public placement of large trades which may in itself affect the price that the client would receive. Dark Pools emerged at the beginning of the 00's and have grown ever since. It is estimated that there are 50 now operating.
Have Barclays erred? Probably, yes, but trust me, most if not all of the participants are doing the same thing. But remember information is power and power has a price and it is the currency of the capital markets. Access has its privileges and the dark pools are sold on the basis of exclusivity to institutional investors seeking 1- anonymity and 2- access.
Here in lies the problem, in order to access privileged information the institutional investor thinks they are getting something for free when in fact the price of entry will always be their trade flow and the power that knowing what is about to be placed is being placed. It allows some participants to front run the process and in doing so gouge the institutional trade in a hundred different ways.
The entire enterprise is the function of greed by almost all parties - the exception being the actual owners of the assets - typically savers and pensioners. Everyone thinks they are winning when in fact they are just shafting each other in different ways and at different times.
In the end the customer pays in the form of poor performance of their investments, the amount of money they receive after 60 years of pension contributions is massively eroded. Some estimate that up to 30% or more of portfolio returns are lost due to industry charges over the lifetime of a pension fund. Sadly, many people put more effort into choosing their holiday destination in a year then they would the provider of financial advice, the results are to be expected.
What is even more troubling is the fact that many of the largest investigations have been against non U.S. firms. This is protectionism at its ugliest. In the "land of the free" pandering to the local electorate is still very profitable. Much of the fines extracted will be paid by shareholders of the banks, not the individuals who actually carried out or oversaw the criminal act.
The actual fines will go to the state and will no doubt be used to pay large pensions and expenses to officials. While the owners of the assets will pay again and again, and most will have no clue at all....as they watch another box set.
Click here for GoldCore's Guide to Investing Gold in Pensions
Mark O'Byrne is on vacation this week. Stephen Flood is covering.
