“The monopoly that the LBMA has had for so many years could be ending fairly soon, and we could see the price of gold start to trade much, much higher after getting rid of the manipulation.”– Precious Metals Advisor Todd Graf
Although the majority of news focuses on the stock and bond markets, there’s never a boring moment in the precious metals space. Just this week, a Russian news outlet mentioned the possibility of the Kremlin establishing its own gold exchange which would disrupt the market’s widespread manipulation of gold prices.
Watch the video to hear what Precious Metals Advisors Todd Graf and Joe Elkjer are saying about the possibility of a Russian gold exchange, how it could benefit the market, and what it means for the price of gold moving forward.
Manipulation in Gold & Silver Markets
Unfortunately, the gold and silver markets are no stranger to manipulation from big players. Experts have long pointed to evidence of gold price manipulation by the Federal Reserve and other central banks around the world. The primary motivation of these undermining efforts is to artificially tilt the price of gold in favor of major holders based on their investment strategies.
Recently, there’s been a wave of crackdowns on gold and silver market manipulation in an effort by regulators to put an end to the price rigging. The former lead in JPMorgan’s precious metals division along with a top trader was convicted of fabricating orders for years to manipulate price action. Additionally, regulators put an end to a common tool big players use to short the silver market.
The LBMA’s Monopoly is Challenged
The London Bullion Market Association (LBMA) is a dominant trade association that has had a stranglehold on the global gold market for decades. It sustains a monopoly on how gold is priced and traded which encourages the status quo leaving the market wide open to ongoing manipulation. (Learn more by reading: Understanding How Gold Prices Are Determined)
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Recently, news broke of Russia’s intention to establish a gold exchange of its own. The Moscow World Standard (WMS)1 is designed to compete with the compromised LBMA by creating a fair place where gold bullion producers can buy and sell products. What at first seems like an isolated act might actually lead the charge for more nations to start their own gold exchanges.
Following Russia’s example, other members of the BRICS nations – Brazil, India, China, and South Africa – could further weaken the current gold market monopoly by creating their own markets. This might usher in a new era of precious metals trading with more competition and less rigging.
How These Changes Affect Gold Prices
Russia’s move to establish a competing gold exchange might provide the necessary disruption to rid the market of significant manipulation. Bullion providers will flow to the most advantageous market, but the simple fact of having a competitor to the LBMA is sufficient to make large-scale tampering that much more difficult.
The ongoing clampdown we’re seeing in both gold and silver markets is indicative of a growing awareness of market manipulation. More scrutiny will make it harder for bad actors to rig the markets, giving investors access to true gold and silver prices. In tandem, these momentous changes are pointing to future growth for precious metals.
Buy Gold and Wait, Don’t Wait to Buy Gold
Gold prices have settled steadily in between $1,700 and $2,000/oz, suggesting a sturdy floor for price action. This recent correction is an ideal time to increase your exposure to gold before prices inevitably shoot up again.
With the potential disruption from Russia’s gold exchange, the growing clampdown on market manipulation, and the worsening economic conditions, precious metals are primed for big moves upward.
Since it’s impossible to time the market perfectly, it’s best to invest in gold now and wait instead of waiting to buy. Request a FREE COPY of our Gold & Silver Investment Guide to learn how you can increase your exposure to these valuable inflation hedges.