John Coley – ‘From the Rock in the Ground to the Ring on Your Finger.’

John recalled that he remained a trainee dealer’s clerk for six months, then worked in the back office for the next two years learning the ropes, before heading back to the dealing room as a proper dealer’s clerk for a year. John and his fellow trainee, Mike Jennings, were both taught to run the book, waiting and biding their time before filling “dead men’s shoes”. People did leave though, and John and Mike must have shown sufficient initiative as they were bumped up to the position of dealers and ran the silver book together.

Reflecting on his time as a trader in the silver market of the mid-1970s, John described the trading desk as:

“Busy, but it was rather a different type of busy to 10 years ago, which was different to being busy today; however, there was enough to make you worry about it. The amount of money in the market wasn’t the same. There were fewer people trading in those days, no brokers. There were mad days, there were always mad days, and you never knew when they were coming and that was the beauty of it, and that has always been the case. You can’t let your guard down at any time. That burst of adrenalin must be there just below the sur face for when it is needed, because if you don’t react quicker than the last person, you are dead! So, you need to be just bubbling under the sur face.”

The happy partnership continued until Mike left Sharps Pixley, which gave John full responsibility for the book. He gained more exposure and became senior silver trader as people retired or left. Neil Newitt went to Hong Kong, Graham Kendall left, and Alan Baker joined and took on the gold book. Nigel Munt came along and worked with Alan, then Ernie Watkins joined John on the silver book. John spoke of his rise through the ranks as:

“A natural progression. After that we had a lot of very good young traders come through, but there was this thick crust at the top of old guys who wouldn’t get out of the way. There was Les, Nigel, Alan and myself. A number of people who had learnt the ropes at Sharps Pixley left and became very senior elsewhere in the market, because there was no prospect of getting rid of us old lot.”

The close knit team of the dealing room forged a strong bond. At busy times, the bullion desk would be really noisy and the atmosphere electrifying. People on the other trading desks would stand up out of interest to see what we were doing. During these busy periods, the team drew closer together.

The Sharps Pixley Management team circa 1977, John is pictured second from the left.

John shared his experience of the trading room as being one of:

“Highly organised chaos. Within that organisation, you had certain people responsible for different products. You would all deal in those different products, but only under reference to the person running that particular book. If somebody wanted a gold price, you didn’t put him on to the gold dealer, you referred to the gold dealer. If the gold dealer needed the silver price, he referred to the silver dealer. Equally with platinum, coins or whatever. You were all part of the team and all quoting everything, and if you were worth your money, you would know exactly where the others were with their position and what they were looking to do, and be totally aware, because it could very well be that if your market was manageable, you could really throw your weight behind busier colleagues. If the gold dealer wanted a gold price, he would just yell out ‘Get me gold’ and everybody jumped to the phones, or the Reuters machines in those days, and got the quotes. He was like the conductor and you were the orchestra.”

Knowing what rival firms were doing and staying ahead of the competition was essential. John spoke of the friendly rivalry in the market: “You needed liquidity, you needed their pricing and they needed your pricing, so you had to keep good relations… It seems funny to talk about this in today’s regulatory society. It was incredibly proper but friendly.”

Annual cricket matches were one way of reinforcing this friendship, although one match in June 1983 particularly stands out in John’s mind as eventful, but for all the wrong reasons. At the time, both Sharps Pixley and Mocatta and Goldsmid had coin rooms and would sell up to 1,000 krugerrands over the counter without any problem. John shared his memory of an incident where both firms were conned out of gold coin:

“We wouldn’t accept payment by cheque, but we would take a banker’s draft. When the banker’s draft was received, we would always phone the bank to confirm it. Unbeknown to us, as we rang the bank and Mocatta rang the bank, somebody answered from a hole in the road or something, and said ‘Yes, we are the bank and that is ok’, and they walked away with 1,000 krugerrands and of course they were false bank drafts. Somehow, we spotted the problem. My recollection was that it was a high street bank and we had to convince them that there was a problem. That all happened and blew up the same evening that we were both playing cricket. It was even mentioned in The Sun!”

Thankfully, the loss was not borne by either firm.

Mocatta and Sharps Pixley both had good reputations as family firms that took care of their people. Both managed to keep their respective owners at arm’s length for a time. Mocatta had Hambros then Standard Chartered, which then became Scotia, while Sharps Pixley had Kleinwort Benson, which in the mid-1990s sold to Deutsche Bank.John noted that this was “the corporate way of doing things in those days – getting bigger and bigger”. Trading systems became more sophisticated. John joked that it moved from“the back of a cigarette packet to fully online”; however, “dealers still liked their paper trails… everything was still recorded on paper and then input [by a clerk]… We claimed in the dealing room that we were too busy dealing to input as well.” With information at their fingertips for stock control and credit control, daily reports were generated; it allowed dealers to accurately pinpoint their liquidity position.

John left the dealing room at Sharps Pixley in 1997. After a short stint at Mitsui, he took upa very unusual offer from Brinks. It didn’t want him to drive a truck, but it did want someone who could talk to its customers and who knew the business. After some considerable negotiations with his new employers, John thought that “this might be rather interesting”. He described his new role as:

“Absolutely fascinating. I don’t know anybody else who has been in the market, who has been an active trader and then was suddenly able to see what everybody else was doing. I remember my first week there. There was a whole load of gold coming in, from a part of the world it came in from occasionally, and I remember thinking: ‘It’s you! I wondered what it looked like!’ People would come along and talk to me knowing that I was no longer a threat to them. So, for 27 years, I had been wondering who was doing what and, suddenly, not only did I find out what was going on, but they would talk openly about it and I couldn’t tell anyone!”

One of the early editions of the LBMA Newsletter which John edited. This was edition number 17, from June 1991, and was published to co-incide with the FT Gold Conference in Vienna.

Because John knew the market, he would be in a position to anticipate when there might be a chance for arbitrage business between New York and London regarding silver. He often called his clients ahead of competitors and gained the extra business. The job was unique because it gave John a terrific insight into the market. There were a lot of people there who were dealing with the movements of metal, but they didn’t understand why it was moving and what the traders were thinking. John could see both worlds and found that intellectually very interesting indeed.

The rare insight John gained from working on a trading desk and for Brinks meant that he was able to tell his new employers what it was really like to be a dealer and, equally, he could tell the dealers what it was really like on the shipping side:

“Fog does exist, strikes happen and planes are delayed. It’s the real world! In the dealing room [the commodity] is just numbers but to other people it’s real… From the rock in the ground to the ring on the finger, there is a big supply chain. It goes from commodity to financial product to commodity. At the start, it is only traded and physically moved once at each stage of the trade. It’s in the middle that it is traded hundreds of times in this ‘cloud’. Then it comes out the other side as a commodity again… Trading people should never lose sight of the fact that they are a small part of a big process.”

One of the early editions of the LBMA Newsletter which John edited. This was edition number 17, from June 1991, and was published to co-incide with the FT Gold Conference in Vienna.

The LBMA Biennial Dinner at the Natural History Museum, June 1994, which John organised.

During his time in the market, John was heavily involved with the LBMA. On one occasion, while sitting on the Public Affairs Committee, he made the mistake of pointing out that the newsletter could do with updating. Unable to make the next meeting, he later learnt when reading the minutes that he was now in charge of the newsletter, which was the forerunner of the Alchemist. John reflected on how much fun it was to produce the newsletter and how he “tried to make it a bit more user- friendly. It had cartoons, it had an editorial comment, written tongue in cheek by Gold Bug, which I called myself.” He also organised the biennial dinners for 10 years. The one that stood out was at the Natural History Museum, with Sir Eddie George as guest speaker. John described the venue as “a wonderful place with smoke and a huge dinosaur and the grand steps. It was very impressive, a wonderful evening.” Although having drawn up a seating plan for more than five hundred people, he had to rejig it and reorganise the top table when a senior banker turned up unexpectedly as everyone else was drinking champagne. It was a bit hair y! At the end of the evening, John didn’t want to leave. Along with the owner of the catering company and his contact at the museum, he sat and polished off another bottle of champagne, not wanting to go straight home as he had lived and breathed the event for such a long time.

John was also part of the organising committee for the annual cricket and golf days hosted by the LBMA. He recalled how these events brought the market together and that “the market was close knit, in the right way. There was nothing that broke any confidentialities, but you all needed each other because you were all in the market together and you depended on each other’s liquidity.”

Looking back on his career, John shared that the most outstanding thing from his time working in the market was the camaraderie: “It’s the people that one remembers.”