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How you can overcome the manipulation of the gold price fix

by , 04 July 2014

A recent case of a trader at Barclays manipulating the price of gold through the gold price fix highlights the issues in the gold market. With Barclays being guilty of this, it shows there is a high probability that it isn't the only bank of the four in the gold price fix group that's guilty of this. Let's take a closer look at the evidence and what you can do to buy gold when the banks haven't manipulated the price…

The vanishing story of gold price manipulation in the FT

In February this year, the Financial Times published an article that revealed a consulting agency uncovered a suspicious pattern of gold price manipulation by the banks on the gold price fix panel.

The strange thing is, the article vanished two days later from the FT’s website.

But that wasn’t the end of the article. ZeroHedge had their own copy.

The article said that consulting agency Fideres found that gold prices were manipulated 50% of the time between January 2010 and December 2013!

The agency said that often the gold price would rise or fall immediately before one of the twice-daily conference calls. Then the gold price moved just when the call ended. And then the gold price would reverse back to where it was.

This led Fideres to suggest that some sort of collusive behaviour was taking place.

Daniel Brockett of Quinn Emanuel told the FT the study suggested that the banks not only tipped clients off, but colluded with one another. And if this is the case, many investors would suffer as a consequence. Investors like commodity traders, futures traders and pension funds.

If this is the case and these banks are manipulating the price of gold, you can’t trust a word they say about gold.

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How to combat price manipulation

One way you can try to sidestep any price manipulation is any market is to invest by rand cost averaging.

Rand cost averaging involves buying a set rand amount of an investment, such as gold, at regular intervals. This also forces you to buy more when the price is down and less when the price is high.

So there you have it, how you can overcome the manipulation of the gold price fix.

How you can overcome the manipulation of the gold price fix
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