The alleged widespread manipulation of silver and gold prices should become more difficult after the ending of the silver price fix on August 14th with a survey of 440 London Bullion Market Association Members last week preferring an electronic, auction-based process that’s tradeable with more participants.

Deutsche Bank’s decision to exit the silver price fix left only two banks in the process, and so a new benchmark must be found. The new silver price discovery mechanism may also set a precedent for the gold market whose four-bank price fix is now under investigation by the UK’s Financial Conduct Authority.

Barclays fined $44m

The FCA announced on May 23rd that it had already fined one of the four banks, Barclays $44 million because one of its traders sought to influence the price setting process in 2012. It’s hard to believe this was an isolated incident.

Gold pressure groups allege a widespread collusion between the bullion banks and central banks to suppress gold and silver as true indicators of inflation and failing monetary policies. New price fixing regimes will challenge this cosy relationship and expose prices to new market forces.

Silver prices are exceptionally depressed by any measure. No other commodity on the planet sells for less than it did in 1980, or has been as volatile in price. This smacks of a manipulated market even before the studies conducted by the like of eminent commodities economist Ted Butler which seem overwhelmingly conclusive to many experts.

Cartel over

So take away the cartel on August 14th and the market can test this hypothesis, and it is hard to see how this can be anything other than positive for the price of silver. Gold may also not be far behind in breaking out of its old fashioned price fix but this time silver is in the lead.

Where will the price of silver go? Certainly $100 as an adjustment for inflation over 34 years would look very conservative.