LBMA Silver Price Under Scrutiny

Bloomberg Business reported that on Thursday, the LBMA silver price, which is used as a benchmark by traders, miners and jewelers, was “set beyond levels traded on the market.” As a result, it’s now losing credibility with market participants who fear that it doesn’t accurately represent the silver price.
Among those who’ve stepped forward to criticize the LBMA silver price is Ross Norman of Sharps Pixley. He said Sunday, “[t]he LBMA silver price (aka the silver fix) is not fit for purpose.”
As quoted in the market news:

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.
The benchmark is hosted by CME Group Inc. and Thomson Reuters Corp. under a five-year license from the LBMA and overseen by the U.K.’s Financial Conduct Authority. Bloomberg LP competes with Thomson Reuters in selling financial and legal information and trading systems, and posted a rival bid to host the silver pricing in 2014.
“We are investigating the trading activity that took place during the Thursday Jan. 28 auction,” Thomson Reuters said in a statement, adding that it would be “inappropriate” to comment further on the matter at this stage. The benchmark is set in “a transparent electronic auction mechanism designed to adjust the price until there is equilibrium between buy and sell orders,” CME spokesman Chris Grams said by e-mail Thursday.
The LBMA and FCA declined to comment.

Click here to read the full Bloomberg Business report.