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- Platinum Fixing Under the Microscope (Dimitri Speck, Seasonax, The Hedgefund Journal) Over a period of 16 years (December 1997 to April 2014) the price of platinum (Pt) increased from $376 an ounce to $1,440. During that time there was systematic price suppression at the two daily reference price fixings in the London Platinum and Palladium Market. There is now a class action suit for restitution and damages by those who traded physical platinum and palladium during the specified time period. (Palladium (Pd) increased from $203 at the end of December 1997 to $802 at the end of April 2014.)
Speck provides the following chart which includes data for 4,189 trading days. Manipulation is alleged because there has been a greater tendency for price declines before the fixing times. In a market that has risen several fold there would be the expectation that the average for the fixing prices would be no less than the average for each day and most probably higher. The graph below shows that the average price increase for each of the 4,189 trading days was 0.03%. The average decline to the am fixing was 0.02% and to the pm fixing 0.06%. Manipulators could have averaged a gain of 0.09% per day over the 4,189 days by buying at the pm fix and selling at the close. That may seem like a tiny amount, but if a trader can skim 0.09% a day from $1 million daily trades that is more than $200,000 a year into the skimmer’s pocket and out of the other non-manipulating traders’ pockets. That is a 20% annual gain just from the skim on a trading account, extracted from all the other market participants. With more than $5 billion of platinum produced each year, large traders can make millions a year in net skims.
For more about the class action suit filed for recovery of losses and damages from alleged manipulators, see GEI News.
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