The decades old process of fixing daily gold prices is under the spotlight in London this week. The process, which has been mired in manipulation allegations, is likely to be significantly modernised.
Mark O'Byrne, Research Director with Goldcore - which trades in gold - explains that the daily price fixing process goes back to 1919 when it came about after the first World War. "Central banks authorised five banks to fix gold prices. Those banks still fix the price on a daily basis. There's a huge lack of transparency and oversight. Banks have the information in advance of the rest of the participants and they have an unfair advantage," he stated.
Mr O'Byrne said there was circumstantial evidence that manipulation was going on and Barclay's was fined £26m. "A class action suit has been taken against the five banks. The German financial regulator is investigating the process. Deutsche Bank - one of the five banks - has now resigned from the process. There are huge concerns and that's why there are negotiations this week to look at reforming or perhaps get rid of it."
He said it was likely that some form of electronic trading system would emerge from the process. "The market is moving towards Asia. We believe ultimately we'll have a global price because Singapore, Hong Kong and Shanghai are increasingly important to the global market place." Mark O'Byrne said there were concerns that the gold price could have been artificially suppressed because of potential rigging. "Given the state of the world in terms of geopolitical risks and ultra-loose monetary policies, people are surprised that gold price has been quite subdued. This is just one factor which we believe could lead to potentially higher gold prices," he concluded.
MORNING BRIEFS - The Bord Gáis Energy theatre in the Dublin Docklands has been put on the market with a guide price in excess of €20m. Property company CBRE has been instructed to handle the sale by the receivers Paul McCann & Stephen Tennant of Grant Thornton who were appointed by NAMA. The 2,111 seat theatre is the largest in Ireland and opened in 2010. The building initially opened as the Grand Canal Theatre but was renamed in March 2012 as of part a naming rights agreement with Bord Gáis Energy which is in place until 2018.
*** Citigroup is about to pay out $7 billion to resolve an investigation into whether it defrauded investors on billions of dollars worth of mortgage securities in the run-up to the financial crisis. That is according to various reports this morning which quote sources familiar with the matter. A majority of the settlement is expected to be in cash. It is understood about $3 billion will go to help struggling borrowers. It is thought an announcement of the settlement between the bank and the US Department of Justice could come as early as next week.
*** A clean out of the top ranks at the Vatican bank is expected to take place today with the president and several members of the governing board reported to be standing down. The measure is part of a restructuring plan for the Catholic Church's central government. Pope Francis has sought to stamp out corruption and other abuses at the bank, which has just reported profits of €2.9m in 2013, down from €86.6m in 2012.
*** There was a 2% increase in the number of professional job opportunities available in the month of June over the previous month, Morgan McKinley reports in its latest Irish Employment Monitor. The figure was up 6% in the half year to the end of June. Certain sectors like pharmaceuticals, ICT and the area of financial services continue to see healthy demand for recruits. The improvement in the property area has had positive knock on effects for support roles such as legal, office support and finance.
*** Nike has said it is ending a 13-year deal to manufacture Manchester United's football kit. The sportswear company said in a statement that the terms on offer did not represent good value for Nike's shareholders. Nike first signed the deal with the club in 2002 and earlier this week it unveiled a new kit for the 2014-15 season. It will be the last one bearing the Nike logo.