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Pricing Gold but No Longer Standing on British Tradition |
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Thursday, May 06 2004 @ 01:01 PM EDT
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 Bernard Simon
Another piece of the British empire crumbled yesterday when no one raised or lowered the Union Jack to set the international price of gold.
Instead of meeting twice a day, as they have for almost 85 years, in the oak-paneled offices of the venerable merchant banking group NM Rothschild & Sons in London's financial district, four precious-metals traders - three in London and one in Paris - fixed the gold price on a telephone conference call, basing the decision on their latest readings of supply and demand.
"Nothing was that much different apart from the fact that we didn't walk down to St. Swithins Lane," said Simon Weeks, director of precious metals and foreign exchange at ScotiaMocatta, a unit of the Bank of Nova Scotia. The price was fixed at $392.55 an ounce yesterday afternoon, up from $391.25 when the traders met for the last time on Tuesday.
Yesterday, Mr. Weeks became the first non-Rothschild employee to run the proceedings. The bank, controlled by the family that supplied gold to the Duke of Wellington almost two centuries ago to help British forces win at Waterloo, closed its commodities trading business last month.
The Rothschild seat on the committee is up for sale. The bank's grip on the chairmanship had become a sore point with the other four committee members - ScotiaMocatta, Deutsche Bank, HSBC Bank USA and Société Générale. In the future, the chairmanship will rotate annually.
Rest of the article.
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| Authored by: Gold-Investor on Thursday, May 06 2004 @ 01:06 PM EDT |
Barclays and JP Morgan front runners for gold seat
Katherine Griffiths
Barclays Capital and JP Morgan are the two front runners in the battle to replace NM Rothschild as one of a handful of financial institutions that fix the gold price every day.
Sources said Barclays Capital had the edge over JP Morgan, as the investment banking arm of the Barclays group was particularly keen to expand its commodities trading arm.
Rothschild took the City by surprise two weeks ago when it announced it was pulling out of the gold market, breaking 200 years of tradition of having a "seat" on the board of five banks that fix the price.
The independent investment bank - which also held the chairmanship of the gold fixing board - is expected to conclude an auction for its seat within two months. The price a buyer would have to pay is likely to be in the region of £2m. The money would be for the prestige of being on the fixing board. It would also enable the buyer to tell clients they were close to what was happening on a daily basis in the gold market.
Whoever buys Rothschild's seat must be a market-making member of the London Bullion Market Association.
As well as Barclays Capital and JP Morgan, UBS and J Aron, which is owned by Goldman Sachs, qualify. However, UBS and Goldman are not interested in buying the seat.
Rest of the article.
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