Kiss the Gold Fix Goodbye

Since 1919, the London gold “fix” has set daily market prices in a private conference call between 4 of the world’s biggest banking institutions. This, as many recall, has led to a fair share of scandals and accusations of anti-trust violations throughout the years.

Well this controversial system will finally be getting the boot on March 20th. Taking its place will be a new digital benchmark system managed by the ICE Benchmark Administration (IBA).

Many gold trading firms are looking forward to the change, believing it will improve the transparency of the precious metal markets. As Adrian Ash, head of research at BullionVault, told the Wall Street Journal:

While you can’t legislate against human nature – especially where derivatives betting entices traders to try and game the underlying market – the tighter controls and stronger record-keeping will better enable rogue orders to be spotted and sanctioned.

Gold will be the last of the four major precious metals – gold, silver, platinum and palladium – to switch to a digital benchmark system. Silver and the PGMs went electronic in 2014.

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