The daily silver price used as a benchmark by traders, miners and jewellers risks losing credibility with investors after it was set beyond levels traded on the market last week.
The London Bullion Market Association Silver price was set at $13.58 an ounce Thursday, 3.5 percent less than the intraday low on the Comex in New York. On Friday, the LBMA price fixed at $14.08, about 1 percent under the level the spot metal was then trading at and less than the lowest intraday price in the futures market.
In an interview with Bloomberg, Simon Grenfell, Natixis’ Global Co-Head of Commodities, explained that the silver benchmark has settled outside the same day’s spot trading range at least 10 times in the last six months, compared with twice for gold. Of course, this will have implications beyond the single trading day, as it affects transactions based on averages and price barriers.
“The new silver price setting mechanism appears broken,” says Grenfell, “making this an issue that the regulator should be looking at.”
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