nother 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 Soci�t� G�n�rale. In the
future, the chairmanship will rotate annually.
Philip Klapwijk, chairman of GFMS Ltd., a precious-metals consultants
group in London, said the twice-daily London price fixings remained "very
much the benchmark" for institutions taking physical delivery of gold.
But speculative trading and hedging with futures trading, Mr. Klapwijk
said, had increasingly gravitated to the Comex division of the New York
Mercantile Exchange.
The London Bullion Market Association, which controls the price-setting
process, plans to introduce a live Web-based commentary on the daily
price-setting this year.
In an effort to broaden London's influence in the international market,
the association is seeking to help institutions in countries with
expanding gold consumption - like China, India and Russia - to set up
efficient markets.
The association has scheduled its annual meeting this year in
Shanghai.
Until yesterday, the Union Jack played a crucial part in the
price-setting process. A participant who wanted to interrupt proceedings
to take a new buy or sell order or to consult his office would raise a
flag on his desk. The price could not be fixed while a flag was raised.
Though electronic communication has replaced the face-to-face meeting
at the Rothschild offices, the flag - albeit not a Union Jack - has not
entirely disappeared from the proceedings.
From now on, those who want to interrupt the price-fixing on the phone
must say the word "flag," followed by their company's name.
Mr. Weeks wrapped up yesterday morning's meeting - as he plans to do
every day - with the words: "There are no flags, and we're
fixed."
