In a season obsessed with sport and personal misbehaviour — separately or in combination — the word ‘fixing’ immediately brings to mind ‘match-fixing’, as in ‘Two World Cup referees suspected’ of it, and ‘Former New Zealand cricketer banned for life’ for it, to pick at random from this week’s headlines. ‘Gold-fixing’, by contrast, is a phrase of which the City has been proud for almost a century. But the imminent demise of its historic gold-fixing system is yet another parable of changing times.
Since September 1919, the price of gold has been ‘fixed’ daily by five of London’s leading bullion dealers. In the era when the dollar price per ounce was already set by the US Treasury, first at $20.67 and then, from 1934 until the link was severed in 1971, at $35, movements were narrow and the fix hosted by Rothschilds was little more than a ritual reaffirmation of what those of us who went to work in the Square Mile a generation ago were invariably taught: that London was pre-eminent in global trading, and that its clubbable, pragmatic, trust-based style of dealing was both beyond reproach and universally admired.
But then gold took off to become the safe-haven investment of choice for (to quote myself) ‘the pessimist, the recluse and the dictator’s wife’, soaring to a peak of almost $2,000 an ounce in the depth of the recent recession. To ‘gold bugs’, many of them by nature conspiracy theorists with an innate distrust of all institutions and closed circles, the fixing mechanism always looked suspect. Of the five modern participants, Deutsche Bank (which joined after acquiring one of the founding bullion firms, Sharps Pixley) decided to withdraw last year but found no buyer for its seat. Then Barclays was fined £26 million in May for allowing one of its traders, Daniel Plunkett, to manipulate the fix to avert an option payout to one of his clients in 2012; Plunkett himself was fined £95,600. The Financial Conduct Authority found failings in Barclays’ internal controls (how I wish, dear reader, that I didn’t have to mention my former employer week after week) dating back to 2004, when it took over Rothschilds’ seat.
Barclays’ fine was the first penalty ever applied in the 95-year history of the fix. Old-timers say the mechanism operated with integrity between seasoned bullion men in the interests of an orderly market. For the record, the other three remaining fixers are HSBC (owner of another founder member, Samuel Montagu), Scotiabank of Canada (successor to Mocatta & Goldsmid) and Société Générale of France. But continuity and a relatively clean sheet count for little in today’s climate of suspicion. The World Gold Council has called for greater transparency and convened a conference to discuss reforms. As a lonely survivor in a City that is (to borrow the title of the last volume of David Kynaston’s great history) a club no more, the gold fix has had its day.
The peloton portfolio
Continuing the sporting theme, I’m intrigued to read that Peter Harrison, who is head of investment at Schroders (which happens to be my other former City employer), has hired Shane Sutton, technical director of British Cycling and adviser to Team Sky, as a consultant to analyse the way Schroders fund managers select stocks and allocate assets. Part of Sutton’s role will be about correcting ‘bad behaviours’, a task to which all sports bosses pay close attention these days. The appointment is certainly a publicity coup, so much so that I’m surprised it comes from low-profile Schroders rather than from Neil Woodford — the ‘star’ fund manager who left Invesco Perpetual in April to set up on his own and has rarely had a day out of the City headlines since, grabbing them this week by revealing his continuing enthusiasm for AstraZeneca among ‘my ten favourite shares’. Woodford has been described as ‘having the look of a forthright panellist on a TV football programme’, but has yet to reveal his chosen coach. Peter Harrison, says the FT — to his PR team’s horror, I imagine — ‘has never been a fan of the Tour de France and can’t remember the last time he sat on a bicycle’ — so may be in for surprises from Shane Sutton. Tour competitors, it seems, spend most of their day in a solid pack, having previously decided who among each team will eventually come to the front, then finish with an extreme sprint littered with crashes. I’m not sure that’s how I’d like my portfolio managed.Call for Kevin
My Threadneedle Street mole in a pink coat took up umpiring when creaking knees ended his career as the Bank of England’s medium-paced trundler, and was a great admirer of Mervyn King’s off-spin. So he was horrified to learn that cricket has been banished from this year’s Governor’s Day programme at the Bank’s Roehampton sports ground. Official word is that this was not Governor Carney’s diktat, but the result of the hockey-playing Canadian’s decision to allow staff to pick the sports they prefer: rounders and football came out top. My man rings from a betting shop in Cornhill to say he’s not convinced; he fears this may be another of Mrs Carney’s green initiatives, and that the pitch is in danger of being given over to organic allotments. Bank sportsmen turning in their graves must include former governor and Kent CCC president Robin Leigh-Pemberton, and directors Sir George Abell (capped 75 times for Worcestershire) and J.G.W. Davies, who at Cambridge in 1934 became one of only seven bowlers ever to take Bradman’s wicket for a duck. If Carney’s real concern is that he doesn’t want to show his ignorance of the game, then next year he should emulate another past governor, Gordon Richardson, who reinforced his image as a grandee above the fray by declaring himself non-playing captain of his own XI and sending the great Test player Tom Graveney to bat in his place. I hear Kevin Pietersen has time on his hands, Governor: he could be the answer to your embarrassment. 
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