U.S. markets close in 6 hours 20 minutes

Why 7 Banks Are under a Swiss Regulator Probe

Meera Shawn

Gold Prices Fall Again as Janet Yellen Suggests a 2015 Rate Hike

(Continued from Prior Part)

Precious metals retreated

Precious metals saw a down-day on Monday. Gold futures on COMEX, a commodity division of the New York Mercantile Exchange, declined 1.21% and saw a low of $12 per ounce of gold. Gold’s closing price was $1,127 as of Monday, September 28, 2015. Silver futures also decreased and settled at $14.53 per ounce. Platinum and palladium prices also saw down-days. Precious metals overall saw more down-days than up-days in the past ten trading days as of September 28.

The gold-silver spread, which is an indicator of the number of silver ounces required per ounce of gold, gained 2.22 % and settled at $77.56 per ounce of gold. This means that it takes approximately 77 ounces of silver to buy one ounce of gold. The below chart shows a surge in the gold-to-silver ratio that confirms a strengthening gold compared to silver. It will now take more silver ounces than before to buy a single ounce of gold.

The Direxion Daily Gold Miners ETF (NUGT) has declined ~16% on a five-day trailing basis. The Direxion Daily Junior Gold Bear 3X (JDST) has gained ~14% on the same basis. Mining company stocks like GoldCorp (GG), Agnico-Eagle Mines (AEM), and Almos Gold (AGI) significantly decreased their returns on Monday, September 28. These three stocks together account for ~13% of the price changes in the Market Vectors Gold Miners ETF (GDX).

Banks probed

The Swiss Competition Commission (COMCO) is an independent federal authority. Switzerland’s competition commission, known by its German-language acronym WEKO, overlooks combating harmful cartels and monitors dominant companies for signs of anti-competitive conduct. The Committee identified seven banks on September 28 that are being investigated as part of a probe into whether financial companies in Europe, the United States, and Japan colluded to manipulate precious metal prices.

Companies like UBS Group AG, Deutsche Bank AG, HSBC Holdings, Barclays, Morgan Stanley, Julius Baer Group, and a unit of the Tokyo-based trading company Mitsui & Co. are part of the probe. The committee mentioned on Monday that it has information that the banks may have come together to coordinate prices, specifically the bid-ask spread in bullions including gold, silver, platinum, and palladium.

Browse this series on Market Realist: