What is the Silver Fix?
The Silver Price Fix is a daily price benchmark for the silver spot market price.
The silver fix is set during a conference call at noon London time between HSBC, the Bank of Nova Scotia, and formally Deutsche Bank (who recently quit the silver fix, likely do to pressure from German Bank regulator Bafin). Today, two commercial banks currently set the silver price fix.
During the daily silver price fix phone call, the two banks exchange bids and offers for silver on behalf of themselves and their clients. They then declare the price ‘fixed’ when they determine supply and demand is equal at a certain price.
Who uses the Silver Fix?
The silver fix is used to set spot prices worldwide.
It affects for example the price that miners charge for silver, or the price of industrial silver used in electronics, jewelry, etc.
What does this mean for Silver Buyers & Sellers?
Unless a new system is created, buyers and sellers will either need to price their deals on the moving silver spot price, or use another daily benchmark such as the silver futures closing price on the U.S. Comex exchange.
Will the Gold Price Fixes (both AM & PM) be ending next?
The end of the silver fix brings into question the future of the other precious metal benchmark fixes – especially gold.
Following Deutsche Bank’s withdrawal in late April, the gold fix continues to be operated by four member banks regardless of its process being old-fashioned and opaque.
The London Gold Fix's days are most likely numbered. The statistical evidence of price collusion is all too obvious.
Below is a 5 year running chart on the intraday gold price. Note how the gold spot price cascades downward ahead of both the London AM & PM Gold Fixes.
What happens now?
The two banks (HSBC and the Bank of Nova Scotia) will continue to publish the silver fix up to and including August 14th 2014. What happens beyond that date is speculative at the moment. The silver market is headed for unknown territory.
On a longterm basis, we believe today's silver and gold bullion prices are an extreme value. This is why we continue to buy and hold for the long haul.
We encourage you to do the same while silver and gold prices hover near 3-year price lows.
