Which Good Delivery List can you Trust?
When you read news headlines much like the ones below it always leaves me wondering who is running this show?
There are a number of tin foil hatters conspiracy theories out there to go down a rabbit hole but let’s not go there on this post but when two groups – ‘supposedly separate groups’ – that the industry trusts do not agree on the same names I keep asking how can two groups with the same agenda get two different outcomes on the same thing?
What does Reuters News have to say about this?
As you can see Peter Hobson from Reuters reports in two articles on how the LBMA and LPPM reacted to the Russian Invasion of Ukraine in terms of suspensions and sanctions and also within the LPPM news covers the fact that the LBMA suspended 6 Russian Gold Refineries, but does not question why, while the LBMA banned two refineries, the LPPM have chosen not to do so!
Reuters Metals Sanctions Headlines
At least the LBMA reacted and did the right thing under the sanctions albeit in their usual slow paced response to anything that negatively impacts their conferences, see Ronan Manly’s BullionStar on the DOJ case against one of the LBMA’s most prominent board member plus the Deer in Headlights article.
Reuters clearly chose not to challenge this difference of decision between the LBMA and the LPPM using their media powers, why?
What about the stance of the other Precious Metals Industry groups?
Ronan in one of his long pieces covered the Russian Palladium and Platinum – Too Important to Sanction but where are the Responsible Jewellery Council (RJC) or the World Platinum Investment Council (WPIC) or the even the LBMA’s new buddies in Responsible Gold sourcing the World Gold Council (WGC, see also the section on the WGC website where it says What we Do,, the 3rd point is improving trust)?
So many webinars and conferences, so little time!
Tumbleweed from them all….
What about LPPM Responsible Sourcing Governance I hear you cry?
As per Peter Hobsons article “Gold and silver bars produced by the refineries while they were accredited remain valid to trade, according to LBMA rules, which state that refineries “are to comply with all relevant economic/trade sanctions lists.“
Why are the LPPM ignoring their own Sanction Policies as per the LPPM Responsible Sourcing Governance page on their website?
Why didn’t Peter Hobson challenge this? I mean it’s a reasonable question and its not expecting an investigative journalistic deepfice, merely looking at their website!
"LPPM SANCTIONS POLICY" Quote from Site
Failure to meet the standards required could have serious implications for LPPM Good Delivery refiners. Sanctions could include suspension subject to resolution or being transferred to the Former List with immediate effect.
I guess the wording that includes “could include” gives them every opportunity to allow these refiners to keep supplying metal to the market without question!
Guess the old Boys Club Flock together like Birds of a Feather! But what people fail to realise is that the actual quote finishes with Until the Cat Comes!
British Government Impose Russian Sanctions
Dominic Raab said the UK has sanctioned “more Russian banks than the EU” so I took this matter directly to Dominic Raab the British Politician (not the Cat) on Twitter and by email, Quelle surprise no reply! But then again who am I to him anyway but a thorn in the side!
So I then emailed Liz Truss who has been great in a post Brexit world for the UK but not on this so much, let’s see how she fairs with these Russian sanction issues!
Liz Truss – Foreign Secretary announces 65 new Russian sanctions to cut off vital industries fuelling Putin’s war machine. Tweeted and Emailed her! Cc to Boris Johnson and Annelise Dodds who called out Dominic Raab in the House of Commons for being too soft! Let’s see where this goes! I got an auto reply email back from Liz Truss suggesting I send the email to the Foreign, Commonwealth & Development Office fcdo.correspondence@fcdo.gov.uk which I did and using my email tracing I can see they opened it 3 times so far! More tumbleweed is expected.
Overnight Update: Looks like I was wrong on the tumble weed as I got a lengthy reply from the Foreign, Commonwealth and Development Office but they have not directly addressed this issue wit hthe LPPM not following sanctions but did say there are more sanctions in the pipeline but are unable to say at ths time. However this still leaves the Russians the ability to shift metal out of the country freely.
So Who are the LPPM and Where did they come from?
In a previous deep dive article where Ronan Manly had previously discussed the LPPM – The London Platinum and Palladium Market and uncovered the intricate web the industry is weaving itself into, it’s interesting to read the part about the London Platinum and Palladium Fixing Company Limited (LPPFC) in relation to LPPFC being one of the defendants in a consolidated class action suit taking place in the Southern District court in New York.
The LPPFC entity is allegedly accused of platinum and palladium price manipulation along with the fixing members of LPPFC, namely Goldman Sachs Group Inc, HSBC Bank USA NA, ICBC Standard Bank PLC, and also UBS (not a fixing member of LPPFC), you will be familiar with all those banks whose fines could possibly end world hunger!
UBS allegedly rolled over and turned snitch against the others (not just in this case either, apparently)!
Now here’s what happens according to not only the BullionStar site but the LPPM themselves!
On Thursday 31 July 2014, LFFPC announced via a press release “London platinum/palladium fixes seek third-party admin, in wake of silver/gold“
“shortly commence an RFP [Request for Proposals] process with a view to appointing a third party to assume responsibility for the administration of the London Platinum and Palladium Fixing“.
So you see the switcheroo here? LFFPC is now the LPPM! That's Magic.....
The Names have been changed to Protect the Innocent!
The other thing to consider here is that the LPPM are not the only ones failing to adhering to their own principles (ok so they have the “could include” get out of jail card here but the ‘Independent’ LBMA is also known for not complying with its own guidelines.
Take the DOJ case above on Manipulation where JP Morgan was fined $920 million for manipulating precious metals which was most likely a fraction of what they earnt from these trading tactics. When will the regulators start fining a multiple of the money earnt instead of fractions?
It also took the LBMA weeks to remove Michael Nowak from the Board which was highlighted by Ronan again in the article LBMA Removes JP Morgan’s Michael Nowak from the LBMA, Ronan goes on to highlight that LBMA in discussions with JP Morgan which you can see his extraction from the FT below we have not seen any actions taken by the LBMA against JP Morgan we at least publicly.
As of the writing of this post The former LBMA Board Member Michael Nowak, in addition to other ex-JP Morgan traders and staff, still stands accused by the DOJ of Racketeering amongst other ex-JP Morgan traders and staff (innocent until proven guilty).
I wonder what is happening to the Ex-JPM Traders in Singapore where the law is very different, Guilty until Proven Innocent? No news so far from the MAS in this regard either, which is strange cos they threw a few young traders under the bus for the same manipulation breaches back in 2019 Three charged with alleged spoofing of futures market, providing false statements to SGX.
I do hope these guys were not just to make an example of and then there are different rules for the big boys!
According to the FT’s first story on Friday 20 September
LBMA in ‘discussions’ with JP Morgan after board member indictment:
“The London Bullion Market Association is in “discussions” with JP Morgan after its board member was indicted by the US Department of Justice for a “massive, multiyear scheme” to manipulate the precious metals markets.
The LBMA said that it had not made any decision to remove Michael Nowak, JP Morgan’s head of precious metals, from its board.
“We are still in discussions with JP Morgan"
Department of Justice - RICO Act
The DOJ went after JP Morgan under the RICO Act which according to Wikipedia is defined as Racketeer Influenced and Corrupt Organizations Act. You can also read Inside the JPMorgan Trading Desk the U.S. Called a Crime Ring. JP Morgan settled as we all know but the DOJ is still pursing the traders under the Rico Act.
While the LBMA has its Global Precious Metals Code which might as well be the same rules as Fight Club! Because clearly when a membership breach occurs no one talks about it!
Taking the excerpt from the website itself the LBMA’s Global Precious Metals Code states that: “Market Participants should not engage in trading strategies or quote prices with the intent of hindering market functioning or compromising market integrity.” “Such strategies also include collusive and/or manipulative practices, including but not limited to those in which a trader enters a bid or offer with the intent to cancel before execution ( sometimes referred to as “spoofing”, “flashing” or “layering”) and other practices that create a false sense of market price, depth or liquidity.”
The Gold Anti Trust Association (GATA) has been on this case for well over a decade now talking about gold price manipulation, here is the latest from from GATA on this topic….Gold market manipulation: Why, how, and how long? (2021 edition).
We only have to look back at the Deutsche Bank Gold Manipulation going back to 2016, seems Deutsche Bank has quietly slipped back into the gold business despite pulling out over this escapade!
Mitsui slipped out after allegedly turning grass (snitch for the American readers) in the Mitsui Gold Manipulation case but guess who is now back in the game? Mitsui & Co. to issue cryptocurrency linked to gold.
The too big to fail criminal institutions just can’t seem to stay away long. I guess they think the market has short memories or that they can remove content online easy enough to carry on like nothing has happened!
What is the relationship between the LBMA and the LPPM?
Well according to the LBMA’s own website
“In all these respects, it is very much a sister organisation of the LBMA except that its primary responsibility is for platinum and palladium rather than gold and silver. This close relationship is enhanced by cross-representation on each others’ Boards/Management Committees”.
This goes back to my comment about Birds of a Feather….so hopefully we get to see just who the Cat is in the end. Just not today unfortunately!
Precious Metals Industry Negativity
With so much negativity around both organisations and its members, the question still remains unanswered!
Which Good Delivery List can you trust?
My personal view is that neither are fit for purpose, I feel the banks being involved in deciding which refineries to accept through to sourcing is much like having the Fox in the Hen House!
Then there are the LBMA Good Delivery refineries that sit in positions of power many of whom have plenty of negative media attention (all denied and believed of course) about them online yet they are making decisions that preclude others from this market! Conflict of interest much?
More independence is needed here and not from those that are accused and especially those that are fined for manipulation or sourcing illicit gold! But again, who am I, oh yes, another thorn in their side!
Spencer Campbell
Director SE Asia Consulting - Precious Metals Consultant
