Interview with a Legend of the Market
Peter Smith recently retired as Managing Director of JP Morgan where he had spent 50 years of his career since he first started working in the City of London back in 1967. To mark the momentous occasion, the Alchemist caught up with him and asked him to reflect back on his illustrious career. The word “legend” is often banded about too easily, but in Peter’s case it is fully justified; he really is a legend of the bullion market.
From right to left Peter Smith, Neil Harby and Aelred Connelly
FIRST OF ALL PETER, WE’D LIKE TO CONGRATULATE YOU ON YOUR GLITTERING CAREER IN THE FINANCIAL SERVICES SECTOR, PARTICULARLY OVER THE LAST 40 YEARS, WHICH YOU HAVE DEVOTED TO THE BULLION MARKET
Thank you, it has been an interesting 50 years at a major investment bank here in London and, whilst it has been with the one employer, it has involved ten different London offices on countless different floors and locations within them during those 50 years.
I was also privileged to have been given some very interesting roles, starting as the junior in the Credit Department in 1970 and being appointed head of that department in 1974, becoming one of the youngest heads of a mainstream department at JP Morgan (JPM) at that time.
From there, I branched out into a loan workout role trying to recover debts from clients facing difficulties – an area calling for rapid personal development to handle the prevailing economic events, which included a property crash, a banking crisis and union strikes, leading to the UK experiencing three-day weeks and periods of the working day with no electricity or heating, as well as uncertain supplies and train availability.
This led to becoming the Deputy Credit Officer for EMEA, with lending authority of up to US$500,000 on my own and US$5 million with my boss – smallish numbers today but reasonably significant back in the 1970s.
In 1979 came the offer to help set up the ‘London Gold Department’ as the New York office had started trading gold futures on the COMEX and wished to expand into mainstream Loco London OTC gold trading. The offer presented a very interesting challenge, but one with a degree of personal career risk, because in my lending officer role, I was a front office investment banker, while the Gold Department role on offer was to establish and run the mid and back offices, a less glamourous operational role. Nevertheless, the opportunity was too compelling to dismiss, so I readily accepted the leap into the unknown.
IF YOU WERE STARTING OFF IN THE BULLION MARKET NOW, WHICH PERSON (APART FROM YOUR WIFE CHERRY!) WOULD YOU WANT BY YOUR SIDE IN THE OFFICE?
This is a very interesting question. In my 50 years at JPM, I have worked with some truly exceptional people, such as Guy Field, who joined JPM as Global Head of the Bullion Department. Although few people may remember him nowadays, Guy was the founding Vice Chair and a strong supporter of LBMA, and both challenging and wonderful fun to work for.
Another person was Martin Stokes who joined JPM as Head Bullion Trader in the early 1980s, following the collapse of Johnson Matthey Bankers, which was on life support from the Bank of England (BoE). Martin and I worked in partnership for many years, developing and growing the business until shortly after the merger between JPM and Chase in 2000.
Of course, I could go on about many valued longterm friends and talented colleagues with strong skill sets; even so, if I was starting in the bullion market today, I would ask Ross Norman to partner with me. Ross has enjoyed a very varied selection of roles within the world of bullion, from refining and recasting precious metals into London Good Delivery bars, trading and sales at a gold fixing member, establishing with two other entrepreneurs the first usable news website for the bullion market, and then recreating Sharps Pixley to provide high net worth individuals with a London West End shop for precious metals.
Not only would I want to benefit from the diverse insights into so many facets of the precious metals business that Ross possesses, but he is also one of those people who are always interesting to listen to, invariably upbeat and on the money, and the sort of person who constantly sees the glass as half full and ready to be filled to the brim again with some well-focused effort.
IN A MOMENT OF PEACEFUL REFLECTION, WHAT WOULD BE YOUR MOST CHERISHED MEMORY FROM YOUR CAREER?
Again, a question with so many answers fighting for position to head the list, but ultimately the choice is very simple. I lost my first wife in early 2000 and suddenly my life was turned upside down. There was the merger with Chase, many friends and colleagues were no longer at JPM, and I had to miss the first LBMA bullion conference in Dubai (the only one I have not attended).
Following such disruption in my personal life, my work at JPM and chairing the LBMA Physical Committee became my anchor and the main focus of my energies, which eventually led to me meeting Cherry, when she worked at LBMA. Later, we gradually got together, initially meeting for the odd lunch-time drink and a snack, before we realised in 2010 that we should get married. So without LBMA, I would most likely have never met my wife Cherry!
WHAT WOULD BE YOUR GREATEST ACHIEVEMENT, AND CONVERSELY DISAPPOINTMENT, DURING YOUR TIME IN THE MARKET?
As one of the original members of the LBMA Physical Committee under the Chairmanship of Les Edgar, I consider that my greatest market achievement was taking over the Chairmanship when Les retired, then holding that position through 26 years of truly remarkable change in a field that I have always found to be incredibly interesting and under constant self-analysis to ensure that it not only keeps pace with the needs of its players but tries to keep one step ahead.
Maintaining the Gold and Silver London Good Delivery Lists is of daily necessity for the market to function efficiently in today’s much more conscious and ethical world, with increasing emphasis on conduct and controls.
Hence, the Proactive Monitoring Programme and the Responsible Sourcing Programme, which continue to be bolstered and enhanced, are also great achievements.
Before I move onto any disappointments, there are a couple of other market-related achievements I would like to mention and they are, firstly, my Founder Chairmanship role in creating the London Precious Metals Clearing Limited, which established and sets out the rules for Loco London precious metals clearing. Secondly, suddenly becoming Chairman of the LPPM when Phil Clews-Garner was recovering from a major back operation, a stand-in role that eventually translated into almost five years as the Chair of LPPM.
THE GREATEST DISAPPOINTMENT FOR ME IN THE BULLION MARKET IS NOT ACTUALLY A PERSONAL ONE BUT THE METHOD CHOSEN WHEN THE UK DECIDED TO SELL THE MAJORITY OF THE COUNTRY’S GOLD RESERVES
Taken at the JP Morgan client event at LBMA’s 2012 Conference in Hong Kong. Front row left to right – Mike Camacho, Frederic Panizzutti, Cherry, Peter and Mehdi Barkhordar Back row, left to right - Allan Finn, Kevin O’Connor and Grant Angwin.