New York court investigates claims silver and gold prices rigged – by Trevor Sykes (Australian Financial Review – May 9, 2016)

Silver and gold are looking strong again, partly because of interest rate movements but possibly also because of a court case being settled in New York.

The interest rate factor is clear. One of the arguments against holding precious metals has always been that they yield no interest. Now we are in an environment where government bonds and bank deposits yield very low interest anyway, so that argument has lost much of its strength.

The court case, in the southern district of New York, has so far been unreported in Australia. A group of plaintiffs sued Deutsche Bank, the Bank of Nova Scotia, HSBC and their private company the London Silver Market Fixing Ltd for breaches of US anti-trust legislation. Another defendant was the Swiss-based UBS.

The plaintiffs alleged the banks rigged the silver market by publishing false prices. London Silver Fixing had run the daily silver auctions in London until August 2014, when the London Bullion Market Association (LBMA) took over the auctions.

Silver traders sued the banks and the company in 2014, alleging that the banks had abused their controlling position in the silver market to reap illegitimate profits from trading. They were alleged to have hurt traders who invested billions of dollars based on the benchmarks which were set by the banks.

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