Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : The Hot Button Questions:- Money, Banks, & the Economy -- Ignore unavailable to you. Want to Upgrade?

To: maceng2 who wrote (612)	4/18/2004 7:21:27 AM
From: maceng2	Read Replies (1) \| Respond to of 1417

Wanted: new chairman for exclusive gold fixing club channelnewsasia.com LONDON : Twice a day for the past 80 years, five bankers from across London have gathered at N M Rothschild and Sons to perform an odd ritual seemingly at odds with the fast-moving, technology-driven ways of modern finance. With the use of only a phone and a small flag each, the five pin-striped bankers are responsible for setting the benchmark gold price tracked by investors, producers, consumers and central bankers around the globe. But, despite gold prices close to 15-year highs, Rothschild caused something of a stir in the bullion market last week by announcing its withdrawal from commodities trading, including the gold fixing process. "Our income from commodities trading in London, including gold, has fallen as a percentage of our total income in each of the past five years," said chairman David de Rothschild. Since 1919, five bankers have met at 10:30 am and 3:00 pm every day at an office on St. Swithin's Lane, a stone's throw from the Bank of England, in the heart of London's financial district. An opening price is announced by the chairman, and is then moved up and down until the numbers of bars to be bought or sold are balanced. Members contact their dealing room by phone, and raise a small flag to declare orders from customers. These days, gold is also traded around-the-clock in markets in London, the Far East and New York. But the London gold fixing is still an important benchmark. The decision has left the other four members of the gold fixing -- the Bank of Nova Scotia-ScotiaMocatta, Deutsche Bank, HSBC and Societe Generale -- with an empty seat to fill. Any replacement must be a so-called market-making member of the London Bullion Market Association. Other such members are AIG, Barclays, J Aron (part of Goldman Sachs), JP Morgan Chase and UBS. In theory, others firms could apply to become a market-making member, and then to join the gold fixing. For Rothschild, the withdrawal from the gold market ends a 200-year tradition. The bank has built up one of the largest, dedicated precious metal trading teams in London. About 40 jobs are at risk, including some oil traders. The Rothschild family rose to fame after being commissioned by Britain in 1814 to solve the problem of funding the Duke of Wellington's armies in Spain and France during the campaign to defeat France's emperor Napoleon Bonaparte. In 1825 the firm was asked by the British government to supply enough gold to avert a threatened collapse of the country's banking system. Fifteen years later Rothschild become bullion broker to the Bank of England and later to chair the London gold fixing. For some, the decision by such a long-standing gold bug to exit trading of the metal is a symptom of the dwindling importance of gold as an investment and as a reserve asset for central banks. "The fetishisation of shiny yellow metal, decades after it ceased to be used as the anchor of the international monetary system, is a lingering anomaly in modern financial markets," the Financial Times said in an editorial comment. "Perhaps Rothschild's last service to the bullion market could be to keep a live gold trader on display behind glass as a reminder of a bygone age..." But others are more bullish on the outlook for gold: precious metals consultancy GFMS Limited said last week that gold could reach 450 dollars this year as investors seek cover from a plunging dollar and terrorism. Gold was fixed at 400.85 dollars per ounce on Friday afternoon on the London Bullion Market, off a 15-year high above 430 dollars per ounce seen earlier this month. It was unclear how many flags had been raised in the process. - AFP