Fixing the price
As Kamaaina Loan blog has often said, we (and all other pawnbrokers) are at the mercy of the international gold market. We have no way to influence the price.
If we offer you $500 on Monday because gold is selling at, say, $1300, and it goes down the next day to $1200, that’s our risk. Nothing we can do about it. (And if the price goes up, lucky us.)
It would be nice to think that gold is a true market. We don’t want to play if somebody is scamming the game.
It turns out, somebody is. Or was. In this Bloomberg News report, we learn how a Barclays trader managed to depress the world price by a few cents in order to cheat a client out of $3.9 million.
The manipulation was small and lasted only minutes. Not enough to affect our pawnshop, but worrying nonetheless.
We would like to think that the world market is big enough and free enough to avoid serious manipulation. But we know people will try.
(Barclays was in a position to work this scam because it is one of 4 banks that participate in the daily “London fixing.” The other members are from Canada, Scotland and France, reflecting the international balance of influence in 1919 when this system was set up.)