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Bernhard Schnellmann: The gold market is too important to be left to private clubs
Is it too important to be left to be left to governments as well?
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By Bernhard Schnellmann
Financial Times, London
Thursday, August 14, 2025
While gold continues to serve as a trusted store of value for investors and central banks alike, the institutions underpinning the global gold market remain largely private, opaque, and under-regulated.
The European Central Bank recently warned that under extreme events, the gold market poses financial stability risks. It said "vulnerabilities have arisen because commodity markets tend to be concentrated among a few large firms, often involve leverage and have a high degree of opacity deriving from the use of over-the-counter derivatives. ... Disruptions in the physical gold market could increase the risk of a squeeze."
... Dispatch continues below ...
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The warning is timely, if overdue.
At the heart of the gold trade lies the London Bullion Market Association -- a private trade group that defines the standards by which gold is refined, traded, and stored.
Closely linked is London Precious Metals Clearing Limited, another private consortium that oversees the clearing and settlement of trades. Together, these institutions exercise significant influence over the functioning of the largest OTC bullion market.
Yet neither the LBMA nor the LPMCL has any official authority as regulator for the OTC precious metals market. Their operations, however, are fundamental to a global market used for everything from central bank reserve management to retail investment. ...
... For the remainder of the commentary:
https://www.ft.com/content/3c72a964-01c7-4e89-b5d0-ca8276d3224e
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