The daily price of silver is determined or ‘fixed’ by what’s known as the London Silver Fixing, and it’s done once a day at noon Greenwich Mean Time (GMT). There is also a Gold Fixing which works in a similar fashion but occurs twice daily.
At the start of the fixing, the three members – Bank of Nova Scotia-Scotia Mocatta, HSBC and Deutsche Bank – enter a telephone conference call. The chairmanship rotates annually –Bank of Nova Scotia-Scotia Mocatta is the current chair – and their representative announces an opening price and the other members report that number to their traders.
They relay this price to their customers and, depending upon their interest, decide if they will be buyers or sellers at that price. If buyers and sellers agree on a price, members then state how many ounces of silver they want to trade.
If there is not an equal number of buyers and sellers then the price is moved until the two sides are in agreement. This will go on until a ‘balance’ is achieved for both price and amount (in ounces). When that happens, the chairman declares that the price is fixed. There is some wiggle room in that a price is considered fixed if the buy and sell sides are within 300,000 ounces of each other.
The members collect a fee for handling transactions. They buy silver from clients at the fixing price plus 1⁄4 cent (U.S.) and sell to clients at the fix plus 3⁄4 cent.
The current fixing system has developed over 300 years, and originally took place in London coffee shops. Adjustments have occurred over time; see a detailed timeline here. In 1967, the fixing was expanded to include ‘spot’ prices for three, six and twelve months going forward. Another change included posting the silver prices in U.S. dollars. In 1999, Sterling and Euros prices were added.
Daily prices in 100-ounce lots are posted on the website of the Silver Fixing