Every business day, the prices of precious metals (gold, silver, etc) are fixed by the London Bullion Market Association (abbreviated: LBMA), which are internationally published benchmarks prices. Those fixing prices are used to deal in large amounts, or to achieve the accepted average price of precious metals. Simply speaking, the London precious metals fixing prices are used to allow the buyers and sellers to trade at a fair market price.
What is the silver fixing price ?
It is a silver price used as a benchmark to pricing the major global silver products and derivatives. Similar to gold fixing price, the silver price fixing is conducted by three members of LBMA via conference call:Bank of Nova Scotia-ScotiaMocatta (chairman)
Deutsche Bank AG
HSBC Bank USA.
Unlike gold price fixing, silver price fixing is set or fixed once a day, at 12:00 am London local time, in USD cents, GBP pence and EUR cents per troy ounce. It is held on each business day. Silver price-setting started in 1897.
The silver fixing is an open procedure at which the market participants can transact business according to a single quoted price. Same as gold price fixing, in the proceeding of fixing, orders can be changed as the price is moved lower or higher, until such time as the sellers' and buyers' orders are satisfied and the price of silver is said to be "fixed".
Why to fix the silver prices?
There are lots of the banks' orders are limit orders. In other words, the seller or buyer is willing to sell or buy at any price below or above a certain limit. Consequently, if the chairman lowers price, more orders may come into the pool; conversely, more orders may drop out of.
It is really important that the silver fix price is not a fixed price. The silver fixing is the price at the exact instant in time at which it is agreed. Within seconds, the price of silver will fluctuate again. In other words, our silver transaction price does not use London gold fixing price, which is approaching to the silver fixing. As we deal with our transactions, the London silver fixing often is used as a benchmark price.
Therefore, getting insight on the silver price changes during the fixing process, we can increase, decrease or even cancel our interest based on that information.