With London giving up on the Silver fix, there is a current struggle to establish a new norm. There are several competing companies and countries with different systems and claims to right. It is to be seen as to which one of these will dominate the market.
So who are the major players in the fight for the silver fix?
The global banks want to maintain control of the silver fix, but under stricter and more active monitoring of price manipulation and investigation, are stepping down from their positions. The gap that they are creating is allowing others to try and step in.
China is the largest producer and importer of gold, as well as a large importer of silver. It only makes sense that if you are buying a lot of something that you would benefit highly if you were able to set the price of that product. The end of the silver fix is bringing a new time where all the fixes will be challenged and the price manipulations of banks will make setting new standards for precious metals prices very difficult. In an effort to establish themselves as a major player china has set up the Shanghai Gold Exchange (SGE), which aims to open to outside trade brokers and possibly expand into the silver or other precious metals.
Several global websites have expressed interest in setting a silver fix. Kitco is a precious metal seller who has had live quotes and other market information, and they have come out with a new averaged silver fix that uses the data from the market bid/ask to establish a silver fix. They are doing this in four different times zones, 10 AM New York Silver Fix, 10 AM UK Silver Fix, 10 AM Hong Kong Silver Fix, and the 10 AM Mumbai Silver Fix. They believe that having more than one a day and having them based in the major silver buyer time zones will help the market reflect the true silver price.
Why is this fight over the silver fix important?
There are nearly 100 billion ounces of paper based silver (stocks, derivatives, ect) that are bought and sold based on a contract system that uses the silver fix as the price. Without this daily silver fix the losing party of the silver contact will be able to argue the real price of silver, and without a standard for the industry may decide to default on this contract. China has stated that it was reserving the right to default on commodity derivatives including silver. China is also thought to be behind JP Morgans extensive short position on silver for hedging on their physical silver buying. The Silver fix is so important because it will likely set the standard for what will happen with the rest of the precious metal markets.