Tag Archives: metals exchange

Graph With Stacks Of Coins

Copper Prices Rise with Chinese Imports

Manufacturing expansion in China, the world’s biggest metal consumer, has sent the price of copper to a six-month high with inventories shrinking.

The HSBC Holdings Plc and Markit Economics got a Chinese factory measure for December of 50.5 while the statistics bureau and logistics federations put the number at 51, both of the indicating a clear expansion on Chinese manufacturing. At the same time, Copper piles on the London Metal Exchange dropped for the 41st consecutive season in a row, the longest running streak in almost a decade.

But the rise in the metal’s price seems precarious as the whole business depends mostly on China. As Herwig Schmidt, head of sales at Triland Metals Ltd. in London, put it: “If China suddenly catches a cold, we will see everything go somewhere quite a bit lower.”

Although Chinese exports experienced a drop last month, the country’s imports of refined copper increased in November while shipments were at their highest in 19 months in September.

The inventories of copper at the LME fell to their lowest lever since last January to 365,700 tons, while stockpiles on the Shanghai Futures Exchange are the lowest in nearly one year.

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Phone conversation

London Gold Fix Criticised for Unfair Advantage

A daily private meeting between bankers representing five institutions conducted over the phone with conversations lasting anywhere between minutes to hours. The purpose? To determine the going price of gold for the day. Sounds too “private” and unregulated to be happening anywhere outside a movie? Think again, because that’s how gold prices are set up every day in London since 1919.

Are you wondering whether such an arrangement does not leave too much room for inside information to circulation giving unfair advantages to the parties involved? So do dealers and economists in Britain. The U.K. Financial Conduct Authority is investigating into the manner by which prices in the $20 trillion gold market are set during these meetings, according to some sources. The benchmark rate, known as the London fix, is used by mining companies, jewellers, and central banks alike for the purchase, selling and valuation of the precious metal, and is published twice daily following the telephone calls between Barclays Plc (BARC), Deutsche Bank AG (DBK), Bank of Nova Scotia, HSBC Holdings Plc (HSBA) and Societe Generale SA. (GLE)

The process has come under fire recently as it is to be giving an unfair advantage, first to the participants of these meetings, who can trade gold an its derivatives on the spot market and exchanges even while the calls are in progress and negotiations developing, causing a spike in gold derivatives just after the fixing starts. Then, there are also the clients of the banks involved in the fixing talks who get first reports of the meetings’ content and bet on the final outcome.

The privileged knowledge that the London gold-fixing system offers to the parties involved in the process which is far superior to anyone else’s knowledge on the market constitutes a great flaw.

leit, chief economist at Frankfurt-based precious-metals broker Degussa Goldhandel GmbH and a former economist at Barclays. “That is the great flaw of the London gold-fixing.”

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