The "Boss" of the Gold Fixing
For 85 years, the price of the world's most coveted metal was decided in a single room in the City of London. One firm ran the meeting.
Dear reader,
St Swithin’s Lane, City of London. A wood-panelled room. Five men, five telephones, five small Union Jacks on wooden poles. Nothing about this scene suggests that what happens next will ripple through every gold mine, every central bank, every jewellery market on earth. That is precisely the point.Twice a day, every working day, this room decided the price of gold.
Not suggested it. Not influenced it. Decided it — a single number, published to the world, that miners in South Africa, central bankers in Washington, jewellers in Bombay and speculators in Zurich would all use as their reference point. The benchmark against which hundreds of billions of dollars of contracts, reserves and transactions were settled.
And at the head of the table, every single time, sat a representative of the same firm: N.M. Rothschild & Son
How It Began
The story starts, as so many City stories do, with war and its aftermath. After the First World War, retaining London’s position as the world’s premier financial centre was a central preoccupation of British financiers and the Bank of England alike. Gold was the mechanism through which that pre-eminence would be maintained.
In early 1919, the Bank of England began engineering the gold market’s reopening. It first negotiated a “July Agreement” with South African mining companies guaranteeing that over a third of the world’s newly mined gold would be sold in London. With supply secured, the question became: who would run the market?
The Bank of England invited N.M. Rothschild & Sons the main agent for the South African mining companies to act as the market’s chairman. It was a logical choice. Rothschild and the Bank of England had been joined at the hip since the early 1800s.
The first fix took place on 12 September 1919, at a price of £4 18s 9d per ounce, $20.67 in dollar terms. That opening price was a substantial premium above the guaranteed floor, a reflection of the pound’s continued weakness after the war. The market had spoken. The mechanism worked.
It would continue working, in essentially the same form, for the next 85 years.
The Ritual
What made the London Gold Fixing so extraordinary and, in retrospect, so improbable was its deliberate simplicity.
Each day, participants gathered at the offices of N.M. Rothschild & Sons on St Swithin’s Lane, close to the headquarters of the Bank of England. The representatives of the five members assembled in the small panelled room, watched over by portraits of crowned heads of Europe, former clients of Nathan Rothschild himself. Each man took his seat. Each picked up his telephone. Each placed his Union Jack on the desk in front of him.
Then the chairman, always a Rothschild representative, announced an opening price.
The other members would indicate whether they were buyers, sellers, or neutral at that price. The chairman would then adjust the price iteratively up or down until a consensus was reached where buy and sell orders from all five members were balanced.
The flags were the genius of the thing. Each representative had a small Union Jack on his desk, which he raised immediately upon hearing of any order change from his dealing room. As long as any flag was raised, the chairman could not declare the price fixed. So the room waited. Phones murmured. Numbers changed. Flags went up, came down, went up again.
When all five flags were finally lowered when every bank’s orders had balanced the price was set. That was the gold price. For the whole world.
The procedure was tested over 15,000 times, in every type of market circumstance imaginable. Through the Great Depression. Through the Second World War. Through the Nixon shock of 1971, when the US severed the dollar’s link to gold entirely and sent the price into free float. Through the gold rush of 1980, when prices briefly touched $850 an ounce. Through crashes, crises, and the entire transformation of global finance.
The flags went up. The flags came down. The price was fixed.
The Exit
In April 2004, N.M. Rothschild & Sons announced it was leaving the gold market after 200 years. The official explanation came from David de Rothschild himself: “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. Following a strategic review of our activities we have concluded that this is no longer a core area of activity.”
And on the surface, entirely plausible. By the early 2000s, the economics of commodities trading had shifted dramatically. Electronic markets were compressing margins. Bulge-bracket banks with vast balance sheets HSBC, Deutsche, Barclays were increasingly dominating physical gold trading in ways that a focused merchant bank simply couldn’t match. The chairman’s seat, once a position of genuine commercial power, had become an administrative role. The prestige was real; the profits, less so.
But the timing was still odd. Gold was trading at around $400 an ounce when Rothschild walked away. Within four years it would double. Within seven it would be approaching $1,900 the most dramatic gold bull run in modern history was just beginning. The firm that had set the global gold price for 85 years stepped back at almost exactly the wrong moment or, depending on how you look at it, the right one.
By withdrawing from the fixing, NM Rothschild was no longer obligated to sell its gold to anyone, including central banks a constraint that came bundled with the chairman role. Whether that freedom was part of the calculation, nobody has publicly said.
On 4 May 2004, the final Gold Fixing chaired by N.M. Rothschild & Sons took place in the Gold Fixing Room at New Court. Barclays Capital subsequently acquired the seat. The room was dismantled. The portraits came down.
And then came the footnote that only the City could produce: from 2006 to 2012, the chairman of Barclays was Marcus Agius son-in-law of former NM Rothschild chairman Edmund de Rothschild. The name had left the building. The connections, apparently, had not.
Gold in 2026
Fast forward to today, and the price of gold is still set in London twice a day, every trading day, as it has been since 1919. The room is gone. The flags are gone. The portraits are gone. But the principle survives.
Since March 2015, the benchmark has operated under a new name: the LBMA Gold Price, administered by ICE Benchmark Administration. The old private conference call arrangement was replaced by a fully electronic auction platform more transparent, more participants, auditable, and compliant with international benchmarking standards.
The mechanics will feel familiar. Each morning at 10:30 and each afternoon at 3:00, an auction opens. A chairperson sets a starting price. Participants banks, bullion dealers, trading houses submit their buy and sell orders by volume. Rounds run at 45-second intervals. If supply and demand don’t balance, the price adjusts and another round begins. When equilibrium is reached, the price is published.
The world still uses it. Mining companies value their output against it. Central banks reference it. Jewellers price their inventory by it. It remains, after more than a century, the single most important number in the global gold market.
What has changed is everything around it. No leather chairs. No Union Jacks. No chairman’s opening price echoing across a panelled room. Just a server, an algorithm, and a number arriving, as it always has, twice a day, from London.
Thanks for reading,
Ollz
References & Further Reading
The London Gold Fix — Helen McCaffrey, Treasury Analyst, N.M. Rothschild & Sons Ltd. Published in The Alchemist, LBMA.
The Early Development of the London Gold Fixing — The Alchemist, LBMA. The most rigorous academic account of how the fixing came together in 1919.
History of the Gold Price Fixing — The Rothschild Archive, New Court. The official institutional history, including the final fixing of 4 May 2004.
Flag from the Gold Fixing Room, New Court, 2004 — The Rothschild Archive. The story of the surviving Union Jack desk flag, with photographs.
The First Gold Fixing — LBMA. Detailed account of the Bank of England’s role in engineering the 1919 launch.
What’s Behind the Global Flight into Gold? — Gary Dorsch, Editor, SirChartsAlot Inc.
Great article thanks!
Cool stuff