Deutsche Bank, one of the 5 banks involved in setting the daily AM and PM London fix gold prices has announced today it will quit participating in precious metals price setting due to the ongoing investigation by German authorities into alleged precious metals manipulation.
It appears that the daily price fixes may be in Jeopardy particularly in silver, as the bank’s exit would leave only HSBC and the Bank of Nova Scotia as the remaining banks involved in the daily silver fix, and reports indicate others may follow Deutsche’s lead.
As Reuters reports, it appears that the German officials have done more work in 2 weeks than Bart Chilton and the CFTC did in 5 years of “investigating” silver manipulation:
Deutsche Bank will withdraw from gold and silver benchmark price setting, it said on Friday, as European regulators investigate suspected manipulation of precious metals prices by banks.
Deutsche’s exit would leave only 4 banks involved in the daily gold fix:
Deutsche is one of five banks involved in the twice-daily gold fix for global price setting and said it was quitting the process after withdrawing from the bulk of its commodities business.
“Deutsche Bank is withdrawing its participation in the gold and silver benchmark setting process following the significant scaling back of our commodities business. We remain fully committed to our precious metals business,” it said in a statement.
But wait…perhaps Blythe and Jamie can take advantage of Deutsche’s exit:
A source close to Deutsche said on Friday it was seeking to sell its gold and silver fixing seats to another member of the London Bullion Market Association.
But Deutsche’s decision may foreshadow moves by other fixing banks, a source in the London precious metals market said. “It wouldn’t surprise me if the other banks were looking at pulling out as well. Why would they want the aggravation?” said the source, who declined to be named.
Something tells us The Morgue is salivating at the prospects of a fixing seat:
Gold fixing happens by teleconference with four other banks: Bank of Nova Scotia-Scotia Mocatta, Barclays Bank Plc , HSBC Bank USA, NA and Société Générale, all of which declined immediate comment on the Deutsche move.
Chairmanship of the gold fixing rotates annually among the member banks. The last time a fixing seat changed hands was in 2004, when N.M. Rothschild and Sons sold their seat to Barclays. Two years earlier, Credit Suisse sold its seat to Société Générale.
Too bad for Deutsche Bank that the London Fix does not occur in NY under the CFTC’s jurisdiction.