Yesterday’s Federal Open Market Committee was predominantly dovish. The Fed left interest rates unchanged and the projection for further rate hikes for the remainder of the year was notably less ambitious than in previous meetings. Gold had been trailing lower for most of yesterday’s trading session but the FOMC ignited it. Gold shot up to make fresh three month highs before sellers emerged ahead of the 200 day moving average at $1,132. After failing at the 200 DMA technical barrier, gold has moved lower today and will look to find support at its 100 day moving average of $1,106.
The talk of the market today was the price action seen on the LBMA Silver Price. The LBMA Silver Price is a benchmark used by miners, refiners, jewelers, central banks, consumers, financial institutions, and traders around the world that, in theory, provides an instant in the day where there is full transparency of the silver price. Buyers and sellers emerge to trade on the LBMA Silver Price until there is volume equilibrium and then the price is set, or fixed. Every time that the price is fixed for it, the spot price of silver at the time should more or less be exactly in line with it. In an unbelievable and unprecedented market event though, the LBMA Silver Price today fixed over 80 cents below the spot market. It was set at $13.58 with the spot market trading around $14.42… a 5.50% discrepancy… not even close! What makes it all even more outrageous is that policy makers, in the name of “transparency” and “regulation”, forcibly revamped the century-old London fix in 2014 with this new LBMA Silver Price. After today’s price setting, how’s that transparency and regulation working out for them now? Any producer that sold on today’s LBMA Silver Price is irate, and rightfully so. This is a classic case where more regulation and government influence ultimately hurts the participants in a given market. We’ll see if anything comes of the CME and LBMA investigating the case further… my guess is not much.