Financial Times Op-Ed on Gold Market: Ruth Crowell Responds
I strongly disagree with both the direction and many of the unsupported assertions in Bernhard Schnellmann’s op-ed (“Gold is too vital to be overseen by private entities”, Opinion, August 15).
It would appear that Schnellmann has not kept up with the transparency and governance overhaul that has happened over the past 10 years in the London Gold Market and has not read in full the ECB report he cites.
Daily trade data for all London precious metals products has been published for over six years and vault holdings for over eight, making it one of the most transparent OTC markets in the world. LBMA is not a regulator, but a market standard-setting organisation led by an independent Non-Executive Chair and has independent Non-Executive Directors, three of which are currently former central bankers.
The London Gold Market continues to prove its liquidity and the durability of its infrastructure during the “extreme events” that the author, quoting the ECB, anticipates may happen. The ECB report summarises this quite clearly: “...gold is a safe haven during times of stress in financial markets or elevated geopolitical or policy uncertainty”.
A case in point was the on-again, off-again US tariff fears which led to a price dislocation between the London and New York markets which lasted for no more than a few hours. In short, the professional market and LBMA should be credited with responding quickly, effectively communicating with industry and government stakeholders to maintain an orderly market.
In summary, it is reasonable to say that the London Gold Market and its counterparts in New York and Shanghai, have operated more efficiently than most other international markets.
Despite this, the author suggests that the market should be moved to be under the control of the BIS which is a banker and think-tank for central banks. It has no experience of operating as a regulator in its own right, nor does it operate or control any market infrastructure.
LBMA has demonstrated that it remains open to constructive discussion about governance, with regular reforms and improvements. But reforms must build on the standards, infrastructure, and trust that already underpin the largest and most liquid gold market in the world.
Source: https://www.lbma.org.uk/