This week brought news of a class-action lawsuit that charges the five banks overseeing the daily gold price fix with manipulating the market.
For those unfamiliar, since 1919, London fix prices have been set twice daily by five banks, in recent years by teleconference. You can read details of this mechanism here.
Detractors note this system is close to a century old and places power in the hands of a few actors, with little transparency or oversight. At least one critic suggests that it be replaced by a system based on electronic trades.
The diamond business, too, has long sought a standard, and for the last four decades, the Rapaport list has been it, even spawning its own lingo (“below Rap,” “above Rap”).
The “Rap sheet” is overseen by Martin Rapaport, who derives it every week based on his reading of the market. I have tremendous respect for Martin (who gave me my start in this business), and he has run “Rap sheet” in an ethical and at times courageous manner; in the 1980s, he famously received death threats when the trade thought prices were going too low.
But like the gold price fix, it was born in a different age.