Swiss Regulator Fines UBS For Silver Price Manipulation…So This Is Now A Matter Of Fact Not Speculation

November 12, 2014

silver barsThe Swiss Financial Market Supervisory Authority found evidence of ’serious misconduct’ by UBS employees in trading precious metals and most markedly in silver in an investigation of the bank’s foreign exchange and precious metal trading operations, it emerged today.

Traders have used electronic chat media to front run silver prices. That is to say traders have been illegally employing their knowledge of an upcoming silver transaction to profit from price-sensitive orders.

Like FOREX manipulation

‘The behavior patterns in precious metals were somewhat similar to the behavior patterns in foreign exchange,’ said Mark Branson, Finma CEO. ‘We have also seen clear attempts to manipulate fixes in the precious metals markets.’

Regulators in Switzerland, the UK and US ordered UBS and four other banks to pay about $3.3 billion to end an investigation into the rigging of foreign-exchange rates and precious metal markets. Nobody is going to lose their jobs over silver price manipulation but ‘bonuses for foreign exchange and precious metals employees globally will be capped at 200 per cent of their basic salary for two years’.

This will come as a welcome official acknowledgment of price fixing in the precious metals trade which has long been a matter of speculation without proof. Today the Swiss regulator confirmed what has been alleged but many in the business will still be asking whether the penalty applied is appropriate to the scale of the damage to the market.

There is no talk of compensation for customers who have been swindled by these traders. Silver is a $5 trillion per annum global market and even comparatively small percentages syphoned off would amount to a very great deal of money.

False market

There is also the matter of creating a false market in silver. What would the price have been without this manipulation?

More importantly for silver investors now, where will the price go without this manipulation in play? Will the bankers who took the calls from the central banks not pick up the phone any longer? Not it would seem if the kind of blatant manipulation seen since the Bank of Japan’s QE9 money printing started is anything to go by.

Really the regulators should not be signing off so quickly on silver price manipulation. The market needs a deeper probe to be assured that still obvious price manipulation is stopped.


Peter Cooper is the editor and publisher of the ArabianMoney investment newsletter and the popular financial comment website

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