Is Germany Jumping on the Silver Manipulation Train?

Hamburg Binnenalster & Rathaus

If you thought the case on silver price manipulation was closed, think again. 

Though the US Commodities Futures Trading Commission (CFTC) made the news back in September after it ended its investigation into the alleged manipulation of the silver market, across the ocean, the party is just beginning — Germany’s Federal Financial Supervisory Authority (BaFin) recently started “looking into the rate-setting processes for gold and silver,” according to The Wall Street Journal.

“The probe was launched a number of months ago and is still ongoing,” the Associated Press quotes BaFin as saying in a statement released last week. As yet, few other details are available — confidentiality prevents BaFin from disclosing which banks are involved and from discussing the current state of the investigation.

Setting precious metals prices

But what exactly are the rate-setting processes that BaFin is looking into?

Explaining how gold and silver prices are set, The Wall Street Journal states that both are fixed daily in London. In terms of the gold price, every morning and afternoon, representatives from Barclays (NYSE:BCS,LSE:BARC), Deutsche Bank (NYSE:DB), HSBC Holdings (NYSE:HSBC,LSE:HSBA), the Bank of Nova Scotia (TSX:BNS,NYSE:BNS) and Societe Generale (EPA:GLE) speak via conference call, exchanging bids and offers “on behalf of the banks and their clients.” These numbers are then “adjusted up or down to reflect the number of buyers and sellers.”

Similarly, silver prices are set during a midday conference between the Bank of Nova Scotia, Deutsche Bank and HSBC.

BaFin’s concern is that these banks may be manipulating prices for the two precious metals, the Associated Press said. That’s a major issue considering the prices they come up with are ultimately used to determine spot prices around the world, not just in London.

No end in sight? 

As mentioned, BaFin has thus far been tight-lipped regarding its probe, meaning that it’s hard to say how long market participants will need to wait for its conclusion — if the CFTC’s recently completed investigation is anything to go by, an end could be years in the making.

In the meantime, fans of the white metal might consider keeping an eye on the CFTC. Though its inquiry is now closed, David Morgan, an independent precious metals analyst at, has said, “if you look at what they said, they said based on the ‘evidence at this time,’ that still opens the door for investigation.”


Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Related reading: 

Silver Flatlines as CFTC Wraps Up Manipulation Investigation

Silver Manipulation: Closure Ahead?

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