Thursday, July 3, 2014

Gold news of note ( July 3 , 2014 ) ..... Funny how just as Deutsche Bank and Barclays have quit / been forced out of the gold manipulation business , along comes the Indian Central Bank -- India’s Central Bank To Sell Gold On The Market In Exchange For Gold At The Bank Of England ........ addditional items touching on gold and gold manipulations to consider ( h/t GATA )

Caught Rigging Gold And Dark Pools, Barclays Begs To At Least Keep FX Manipulation

Tyler Durden's picture

2014 has not been kind to Barclays: first, the UK bank proved countless goldbugs right when it was first caught rigging the gold market (the first documented case, not the last) and a few short weeks later, the New York Attorney General crucified the bank for misleading its Dark Pool clients, and letting their order flow be, quite lucratively, front run by "aggressive" predatory algos - something it explicitly had stated it won't allow. So with one after another revenue stream crashing before its eyes, what is the Chairman of the scrambling bank to do? Why beg to at least keep the FX manipulation going.
What follows is not from The Onion. It is from FT:
The foreign exchange marketneeds “fine tuning” rather than heavy handed reform, the chairman of Barclays argued on Thursday, as he unveiled a new compliance academy aimed at raising standards within the bank.

Sir David Walker said that while the forex market was “vulnerable to taint”it had worked well for a very long time and that the focus now should be on ensuring better conduct by traders.
Translation: it may be rigged, but it's rigged in a way that makes the riggers money. As for everyone else, if only the regulators had kept their mouth shut, nobody would have been the wiser and we could just blame those fringe blogs accusing banks of manipulating various assets of being "conspriacy theorists." Which reminds us: we need to send some more Christmas stocking "stuffers" to the FSA...
“There is some very intelligent, sensitive fine-tuning needed, but we should bewary of throwing the baby out with the bathwater,” he said.
Translation: let's pretend to "fix" the rigging, slap the banks with a few thousand pound fine, and we can all go back to normal. After all, with all our HFT frontrunning revenue and kickbacks about to go down the drain, we need to make money somehow! Because if we go down... well, as Hank Paulson explained so clearly, the entire nation will follow.
Sir David said he wanted it to become a “world centre in excellence”, acting as a benchmark for compliance and leading to the creation of a new certificate in compliance. Training of Barclays’ 2,100 compliance officerswould take them beyond the job of policing fellow employees and encourage them to “mentor” colleagues on their behaviour. Barclays spends £300m a year on its compliance function.
Translation: now that all our market manipulation has been revealed for the whole world to see, it probably is a good idea to at least give lip service to complying with the laws and regulations. So we will just hire a few thousands chimps, dress them in business suits, and give them a banana: that way they can pass for "compliance" officers.
Sir David said it was “wholly appropriate” that regulators now look at the forex market and that some oversight may be needed, but that it was important not to “spoil” a market that worked effectively for most clients. George Osborne, the UK Chancellor, last month announced powers to regulate Libor would be extended to other benchmarks including forex.
Translation: those clients who were part of the rigging were very happy, and they also made tons of money, just like us, by taking advantage of everyone else who thought it was a fair, efficient and regulated market. If you continue pursuing this line of inquiry we will have to spill the beans about them too, and you don't want to see the names we will be forced to reveal. Who knows, it may go all the way up to Threadneedle Streeet.
And the conclusion:
[Sir David] acknowledged thatthe “animus” against banks was not going to go away soon, arguing that the current environment meant that banks were being treated as guilty until they proved themselves innocent. “I’m sorry to say that there will be accidents from time to time,” Sir David said at an event to announce the compliance academy. “They are not evidence of the failure of what we are rolling out. They are indicative that it takes time. We always have been very clear some of this stuff will take 5-10 years.”
Translation: Sir David, whose bank was just busted in the two biggest market manipulation scandals since the Libor scandal, where, oh snap, Barclays was one of the most guilty parties too, is confused why banks are treated as "guilty until proven innocent." And yes: when you are manipulating every single market you participate in, well, you will get caught now and then and yes "accidents will happen."
But so much for that: let's all just sit back, take a third mortgage on the house, use the proceeds to buy GoPro, and look forward to Monday and the regularly scheduled upward melting market diversion produced and directed to make everyone forget just how rigged everything truly is.

India’s Central Bank To Sell Gold On The Market In Exchange For Gold At The Bank Of England

Tyler Durden's picture

India’s gold policy over the last several years is about as dysfunctional as any government policy I have ever seen, and that’s saying a lot. In case you need a reminder, here are a few posts I have written on the subject:
In a nutshell, Indians were buying too much gold for their government’s comfort, so the “authorities” stepped in with duties and import restrictions in an attempt to stifle the trade. So smuggling soared.
Fast forward to today. It appears the government has finally realized they can’t stop their citizens penchant for gold, so they have decided to dump central bank gold onto the market. What is incredible to me is that they are justifying this with a so-called “swap” into phantom gold at the Bank of England. The favored global hub of shady, rent-seeking, banker oligarchs.
What’s even more interesting about this is the fact that so many Central Banks seems to be swapping or selling their gold to Western interests. Most notably Ecuador selling to Goldman Sachs, which I highlighted in the piece: Ecuador to Transfer More Than Half its Gold Reserves to Goldman Sachs in Exchange for “Liquidity.”
MUMBAI, July 2 (Reuters) – India’s central bank said on Wednesday it has sought quotes from banks to swap gold in its own vaults for international-standard gold, aiming to improve the management of its reserves.

The Reserve Bank of India said the operation would “standardise the gold available with RBI in India with respect to international standards” and the gold acquired would be delivered to its overseas custodian, the Bank of England.

By holding gold reserves in London, the RBI would gain flexibility to mobilise them if needed to defend the currency. It shipped some of its gold holdings to Britain in 1991 as part of a series of emergency measures to tackle a financial crisis.
This begs the question of who really needs the gold, the RBI, or London bankers?
According to the World Gold Council, India holds the 11th-largest gold reserves of 557 tons. At current market prices, they would be worth nearly $24 billion. It was not immediately clear how much of that would be swapped.

Market participants said the central bank was likely to offload its old gold onto the local market in India.
At least the people will get a hold of it as opposed to criminal Central Bankers.
That would have the beneficial effect of boosting domestic gold supply without hitting India’s current account – which faces renewed pressure as the conflict in Iraq has pushed up India’s oil import bill.

“It’s a good move by the RBI, this will at least ease the stock requirement of the jewellery industry,” said a senior official with a foreign bank that supplies gold to India.
You have to wonder if this in any way relates to concern about the upcoming Swiss referendum on the country’s gold reserves, which Parliament has been fighting hard to prevent from happening. For example, back in May Bloomberg reported that:
Swiss parliamentarians urged rejection of a popular initiative that would curtail the Swiss National Bank (SNBN)’s independence by requiring it to hold a fixed portion of its assets in gold.

Members of the Swiss parliament’s lower house voted 129 to 20 with 25 abstentions today against the plan, which demands that at least 20 percent of the central bank’s assets be in gold. It would also disallow the sale of any such holdings and require all SNB gold be held in Switzerland.

No date for a national vote has yet been set.
Well it appears based on a Bloomberg headline from this morning that a date has been set. A friend sent me the following:
There may be some very concerned bankers in New York and London this weekend.
Full article here.

Additional items 


China gold imports may drop 400 tonnes amid financing curbs, consultant says

By Jan Harvey
Thursday, July 3, 2014
LONDON -- Chinese gold imports could fall by up to 400 tonnes this year as the government tightens controls on gold financing deals and domestic demand softens, a leading precious metals consultant said on Thursday.
Philip Klapwijk, director of the Hong Kong-based Precious Metals Insights, said the Chinese authorities are once again moving to rein in abuse of gold lending, after a crackdown on commodity financing last year.
He said weaker import volumes in recent months -- China's gold imports from Hong Kong dropped in May to the lowest level since January last year -- suggested the gold lending business was already being partly wound down.
In the full year, imports could fall 300-400 tonnes, or as much as 22 percent, he said. ...
... For the full story:

Koos Jansen: Dutch bank ABN AMRO didn't default on its gold obligations

8:30a ET Wednesday, July 2, 2014
Dear Friend of GATA and Gold:
Gold researcher and GATA consultant Koos Jansen reports today that when the Netherlands bank ABN AMRO got out of the gold business last year, it did not really default on commitments to customers. The bank's withdrawal from the gold business, Jansen writes, was essentialy prompted by corporate changes and a government order that had the effect of moving the bank's gold custodian to Switzerland. Jansen's commentary is headlined "Did ABN AMRO Default on Its Gold Obligations?" and it's posted at his Internet site, In Gold We Trust, here:
CHRIS POWELl, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

UK regulator sees 'no clear evidence' of gold market rigging by investment banks

By James Titcomb
The Telegraph, London
Wednesday, July 2, 2014
The City regulator has "no clear evidence" that banks are rigging the price of gold, although the process to set it is open to abuse, an official at the watchdog has said.
David Bailey, the head of market infrastructure and policy at the Financial Conduct Authority, told MPs on Wednesday that participants in the 95-year-old gold fix could potentially manipulate it.
"It is possible, but I have no clear evidence that that has actually happened," Mr Bailey told the House of Commons Treasury select committee.
The committee's chairman, Conservative MP Andrew Tyrie, said flaws in the price fixing could put "millions of people" at risk and said the regulator should be able to quickly act on any indication of rigging.
The gold fix is a twice-daily process to set a market rate for its price, which has existed since 1919.
Four London banks -- HSBC, Barclays, Societe Generale, and Scotiabank -- hold a conference call determining the level of supply and demand in the market, and twice set a benchmark price which influences trading in the precious metal.
Such benchmarks are being heavily scrutinised in the wake of the Libor scandal, which has seen several banks pay out fines worth hundreds of millions of pounds for rigging the lending rate.
Subtle changes to these reference points can have a significant impact on markets, potentially affecting pensions and other investments.
Next Monday the World Gold Council will convene in London to consider changes to the fixing, at a summit to be attended by the FCA.
Alberto Thomas, a partner at the advisory group Fideres Partners, said he estimated that the gold fix was rigged on between 10 and 30 percent of trading days and that there was a "strong indication of manipulation."
Mr Tyrie said: "If this evidence is even half true, the regulators need to find a way of acting much more quickly. Were they to conclude that their powers are inadequate, they should tell Parliament."
The FCA was also urged to ask for extra powers by John Mann, the Labour MP. "This is a flawed and manipulable market that needs to be sorted out by yourself," he told Mr Bailey. "Why don't you come to us and say: 'It's open to abuse; this system needs to change.'?"
Mr Bailey said the FCA does not have the power to regulate the gold fix, although it has been reviewing the process.
In May the watchdog fined Barclays L26 million over failings related to the gold fix, which allowed a trader at the bank to exploit systems in an attempt to profit at the expense of a customer.

Koos Jansen: Chinese gold demand remains robust and in an uptrend

12:05p ET Monday, June 30, 2014
Dear Friend of GATA and Gold:
Analyzing the most recent weekly offtake data from the Shanghai Gold Exchange, gold researcher and GATA consultant Koos Jansen concludes that Chinese gold demand remains "robust" and generally in a long-term uptrend. Jansen's analysis is posted at his Internet site, In Gold We Trust, here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Bank of England gets pretty intimate with the London Bullion Market Association

4:14p ET Monday, June 30, 2014
Dear Friend of GATA and Gold:
GATA's friend and consultant R.M. calls attention to some documents demonstrating that the Bank of England's involvement with the gold market may be even more intimate than generally understood.
In a presentation to the London Bullion Market Association's Fifth Annual Assaying and Refining Seminar, held in March 2013, a Bank of England customer relationship manager, Luke Thorn, disclosed that the bank participates on three LBMA committees.
"We are not a member of the LBMA," Thorn said of the bank, "but we continue to play a key role in the London market. We have observer status on the Management, Physical, and Vault Committees."
Thorn's presentation is posted at the LBMA's Internet site here --
-- and at GATA's Internet site here:
And at the LBMA's Precious Metals Conference in Rome last September, the head of the Bank of England's Customer Banking Division, Matthew Hunt, confirmed the bank's participation on two of those committees:
"More specifically on gold," Hunt said, "though we are not active traders in the market, we are a large custodian and some of the people in our team responsible for gold observation sit on the LBMA Management Committee and the LBMA Physical Committee as observers. Thus we retain a significant engagement with the gold market via that route."
Hunt's presentation is posted at the LBMA Internet site here --
-- and at GATA's Internet site here:
Thorn said the Bank of England holds gold "on behalf of our customers, who are Her Majesty's Treasury, central banks, and some LBMA members."
Of course having private customers and such a "significant engagement" in a commodity market puts a central bank in a peculiar position. After all, as Thorn notes, there are many gold vaults in Britain besides the Bank of England's. So it may be asked why the bank maintains such business at all -- unless, of course, gold is not a mere commodity but the world's natural and international money whose valuation central banks may very much want to control lest gold embarrass their own currencies.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.