The precious metals pricing world has come under a lot of pressure since the LIBOR scandal, causing major banks – historically responsible for “setting” the price of metals like gold, silver, platinum and palladium – to update their schemes and switch from telephone based price setting to digital price setting.
After the silver fix was overhauled earlier this year, the platinum and palladium fixings in London will be taken over by the London Metal Exchange. The change will happen on December 1.
Silver left the daily silver fix after Deutsche Bank AG said it would stop taking part in the fix and tried to sell its seat.
“The LME has great experience in metals and extending into platinum-group metals is something they should be able to readily accommodate,” Ross Norman, the chief executive officer of London broker Sharps Pixley Ltd., told Bloomberg. “With the LME taking platinum and CME taking silver, the market is poised to see who is going to take gold.”
LME, the 137-year old institution acquired by Hong Kong Exchanges & Clearing Ltd. for $2.2 billion in 2012, developed an LMEbullion platform for electronic pricing.
“We are well-positioned to combine our steadfast commitment to the London market with unrivalled access to Asian participants in order to increase the use and dissemination of the London prices,” Garry Jones, LME chief executive officer, said in the company’s statement.
It has yet to be seen what sort of implications the new pricing mechanisms have for the precious metals, but so far trading has remained similar. For people concerned that the pricing mechanism will change considerably due to its new presence in Hong Kong, perhaps looking at the Shanghai Silver Exchange can serve as some perspective. Since the Shanghai Silver Exchange opened, silver is more than 50% below its price from back then.
On October 16 platinum fell to its lowset point over a week, and dropped below the price of gold for the first time since April 2013, concerned that slowing economic growth will curb demand.
Platinum has fallen approximately 17% sicne mid-July, in part because the South African mine strike that deepend a third straight supply shortage ended.
Industrial metals are likely being sold due to concerns that global growth is fragile.