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The Silver Fix is Dead ? What’s coming up next ?

Last week, the big news in the silver space came courtesy of the London Silver Market Fixing (LSMF), which said on Wednesday that it will stop administering the London silver fix at the end of the day on August 14, 2014.

A Q&A included in the private company’s press release manages to be both informative and vague. For instance, while it’s crystal clear about the fact that business will continue as usual until the date named above — after which time “a daily Silver Fixing Price will no longer be published by the Company” — it offers no information about what its decision may mean for market participants.

Indeed, it states that “the Company is not in a position to comment” on what will happen to those “with contracts referencing the Silver Fix,” also noting that its “decision relates only to the London Silver Fixing,” meaning that it can’t comment on the fate of the fixings for goldplatinum and palladium prices.

What is the silver fix?

As the LSMF explains on its website, it has been fixing the price of silver for more than 110 years with the primary aim of “providing market users with the opportunity to buy and sell silver at a single quoted price.”

The process of fixing that price is fairly complex, but The Wall Street Journal provided a good explanation at the end of last year. Essentially, the news outlet notes, representatives of Deutsche Bank (NYSE:DB), HSBC Bank USA and the Bank of Nova Scotia (TSX:BNS) speak midday via conference call, exchanging bids and offers “on behalf of the banks and their clients.” Those numbers are then “adjusted up or down to reflect the number of buyers and sellers.”

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"For a mountaineer, the important things are the effort, the posture and the muscles. The rope that holds him serves no purpose when everything works but it gives him a sense of security. In the same way, all gold does is ensure confidence; it's a safe haven."