GoldMoney's at it again

Apologies to readers less anal than me about these things (which is just about everyone, I would imagine), but my little blue prosimian eyes almost popped out on stalks yesterday evening when I saw that GoldMoney's mysterious currency machinations are back again.

I first revealed this weird effect here - on days when the GBP significantly weakens or strengthens against the USD, there is a sharp spike in the gold price (up or down, as appropriate) after trading hours. This spike does not appear on any other Au/GBP charts: just those of GoldMoney. It was clearly a currency 'correction', about which GoldMoney makes no mention on its website. And it can potentially cost you (or make you) serious money, if you're on the wrong (or right) side of it. Please read the first article in full, if you'd like to learn more about this.

However, all then became well, because GoldMoney wrote to me to thank Screwtape Files for flagging up this 'glitch', which had now been corrected. Phew, that's ok then. No more buying gold through GoldMoney and seeing it fall $20 in two seconds because of their 'glitch'. Here's part of what they had to say:

Based on the observations specified in your article we have investigated our price feeds of 10th of February, 2012 and detected that there was a glitch in the rates provided to us by our rate providers. The reason has been investigated and addressed. We do not expect this to happen again and we would like to thank you for making us aware of the error. 

Job done then, pats on backs all round.

Oh, but no such luck it appears. Here are the Au/EUR and Au/GBP GoldMoney charts from yesterday evening. Note the spikes at 1800 GMT:

But on the Au/USD chart, no such spikes appear:

Now, the only reasonable explanation for this would be if there'd been a split-second devaluation of the dollar against the Euro and the Pound Sterling. But a quick check of those charts shows no such devaluation at 1800 GMT. Both currencies had certainly strengthened sharply against the dollar earlier in the day, in several stages, but this is only reflected in GoldMoney's cheeky little currency correction done all in one go at 1800.

So I ask again: why is this happening? Why does GoldMoney not tell its customers about it? And why did they say it had been fixed, when it obviously hasn't?


Warren James said...

I've been giving this some thought all week. At best, this would be a case of 'the bug returns' - i.e. the dev thought it was a simple fix and applied what he/she thought would address it, but it came undone again.

But even with a tech background I can't begin to guess what must be going on with the data to produce such a weird effect. In theory the charting software will be diligently charting the values it gets, which means that something is occurring with the values calculated. Possibly it's something like there's no real data available for a time and the system just guesses based on calculations from other values with an overcompensation, until it gets new values at 6.00 and kicks it down to where it should be. Pure speculation on my part, but in the absence of a second response from Goldmoney, there are not many clues.

Anonymous said...

Well, your guess is as good as mine, Warren. Even Bron couldn't cast any light on this one.

But I don't think it's right that the data for GBP/Au or EUR/Au simply isn't there for a moment. Every other website that gives quotes for these pairs seems to manage it without a hitch, and certainly without the spikes appearing.

So it's not a matter of kicking the price down 'where it should be' - it's more a matter of kicking it down (or up) to where they want it to be. By which I mean, whatever system GoldMoney subscribes to (and I accept that it's probably a problem with their subscription, rather a GoldMoney thing per se) is carrying out an end-of-day currency adjustment, to compensate them for the day's forex movements.

Not only is this wrong and dishonest, but frankly GoldMoney should know better. If they feel, for whatever reason, that this adjustment must be done, then they should at least have the decency to explain it on their website.

I for one am recommending that readers never buy with GoldMoney in currencies other than USD, until they actually sort this problem out. I mean, why buy gold at £1050, if one second later it will be at $1035 even though spot price (by any definition, not just Kitco's) has not changed.

This may be anal of me, but it smacks of real dishonesty now - given that they said it had been fixed even though it blatently has not been.

Anonymous said...

[minor correction] ' at £1050, if one second later it will be at £1035...'

Anonymous said...

I received today another reply from GoldMoney, which I'll share here:

"We have readdressed the issue and have received a confirmation from our rate providers that the issue has been solved as of last Thursday 22 March."

So let's see what happens...