Dr Michele Blagg

By Dr Michele Blagg
Research Associate at the Institute of Contemporary British History (ICBH)

Dr. Fergal O'Connor

By Dr. Fergal O'Connor
Senior Lecturer in Financial Economics in Cork University Business School

Fergal is joined by Michele Blagg to deliver the fourth and final instalment of his series of articles on the academic analysis of the 100 year old gold price. This instalment focuses on the period following the reopening of the London gold market in 1954 until 1968.

For 14 years after the outbreak of World War II, the sterling gold price changed only twice, moving to 172s/3d in 1945 and 248s in 1949. These were official revaluations as the market remained closed until 22 March 1954.

In early 1954, the Bank gathered the members of the old Gold Fixing together and proposed that plans should be made for a grand reopening of the London gold market in March. News of the impending event was reported by The Times. In announcing the Government’s decision to allow this, the UK Treasury laid out that the market would work on a restricted basis, under the general supervision of the Bank of England, and that it would afford no additional element of convertibility for sterling.

A working committee was formed and suggestions were made on how the daily meeting might be updated. After a lapse of almost 15 years, one of the members suggested that it was an opportune time for a revamp of the post-war pricing mechanism and a possible move of the daily meeting to neutral ground, with all members jointly contributing to the cost of renting suitable premises. Another suggested a rotation of the Chair, which thus far had been the sole preserve of N M Rothschild & Sons.

The decision on the future vision was overtaken by events when the Bank announced that it was keen to bring forward the date of reopening. It was decided that the format of the previous daily meeting was to be replicated. Of course, those members that continued to raise objections received a gentle reminder from the Bank that if they were not interested in taking part, the market would manage without them.


The reopening in the United Kingdom of internal markets provided growing opportunities for traders, merchants and bankers, so that they could make the fullest contribution towards the increased overseas earnings, which the UK and settling areas needed. This marked the return of London as the international market for gold trading again and The Times said that “from Monday the price for gold… will be the current London market price”.1 However, citizens of the sterling area and UK were still not allowed to buy gold, though they were allowed to sell it.

Buying was to be allowed, firstly, by those who could pay for the gold on ‘American Account’ or Canadian sterling – that is, residents of the dollar area – and, secondly, by those who could pay for it with ‘registered sterling’, a special brand of sterling acquired by people outside the sterling area against the sale of dollars or gold. Anybody was at liberty to sell gold. All dealings were still to be in terms of sterling. It was also decided to unify all sterling belonging to residents of countries outside the sterling and dollar areas.

The Return Of The Fixing

At New Court, the home of N M Rothschild & Sons, at 10:30 am in the traditional wooden panelled room set aside for the daily meeting since 1919, the representatives from the six leading bullion firms gathered.

Alongside Rothschild, which retained the position as a broker to the Bank, gold dealers from Johnson Matthey, Mocatta & Goldsmid, Pixley & Able and Sharps & Wilkins, together with Samuel Montagu & Co, each took up their places for the continuance of the daily pricing ritual.

Harvey suggests that the resumption of the daily meeting was an almost stately scene: “Bullion dealers, bankers, and refiners in striped trousers and black jackets this morning gathered in the market’s traditional home, a richly panelled board room, in [New Court] the premises of the 150 year old private banking company of N M Rothschild & Sons… The room was newly decorated with eighteenth-century paintings of the German princes who originally sponsored the Rothschild family.”2

The first meeting went without a hitch. The six men proceeded to negotiate the price of gold based on their buy and sell orders. It took just 10 minutes before a price of 248s/6d (£12.425 modern), a little over $35, was agreed, which compared to the last price returned in 1939 of 160s (£8.00 modern) showed an increase. The spread between the buyers was only 1d and a “reasonable turnover” was reported. To the relief of the Bank and the Treasury, despite a few small adjustments made by the working committee, the mechanism worked “quietly and efficiently”.3

Commenting on the reopening, Tim Green, in Precious Heritage, noted that the reopening was set to succeed for: “The prestige of the market as the international clearing centre for gold was assured from the start, for the Bank of England had been appointed the sales agent of the South African Reserve Bank, who had taken the decision to sell all ‘industrial’ gold through London. The Bank of England was the prime seller through Rothschild, in their capacity as chairman. Rothschild had the responsibility of picking up the gold from the Bank and distributing it to the other members of the market.”4


In addition to the sale of South African gold, large volumes of Russian gold found its way into the market. This, together with smaller offerings from Rhodesia, Ghana and the Philippines, whose gold continued to be sent to London to be refined, ensured London’s pre-war eminence was restored, albeit if only temporarily.

The 1954 Mocatta & Goldsmid annual circular captured the mood of the successful reopening when it reported: “London is the centre of gravity of the European free market… The re-establishment has brought here much of the business hitherto carried on abroad and the official London price has provided a much-needed register of its fluctuations.”5

The general improvements in the newly reformed gold market continued into 1955; however, a general downward trend and slump ensued for the remainder of the decade and into the 1960s, mainly due to increased competition from the US and European markets, together with the effects of decolonisation and the independence of African states, which impacted performance.

1968, The Year It All Changed

1967 saw the London markets’ largest-ever turnover since reopening in 1954.6 The brewing international monetary crisis led to sterling revaluing in November, with the gold pricing rising 15% to 290s/10 ¾d (£14.55 modern).

The liquidation of the Gold Pool in March 1968 spelt the end of the sterling-denominated London Gold Fixing. The London market was closed on 14 March 1968 with the final price fixed at 294s/6 ¼d (£14.726 modern), but London dealers continued to execute orders for foreign principles.7 The London market began the recognisable twice daily Fixing on 1 April 1968 and was quoted in US dollars from then on. The market reopened to a Gold Fixing price of $38.00 (£15.806 modern).

1. The Times, p.6 Mar 20, 1954. 2. Harvey, R, ‘Duty to the Firm’, p.83 [extract from, The New York Times, “London Gold Market reopened for the First Day’s trading Since ’39”, Mar 23, 1954]. 3. Harvey, ‘Duty to the firm’, pp113-117. 4. T Green, ‘Precious Heritage’, p. 553-4. 5. Mocatta & Goldsmid, Annual Circular, 1954. 6. Samuel Montagu Annual Bullion Review, 1967. 7. Samuel Montagu Annual Bullion Review, 1968.

Dr Michele Blagg (BA, MA, PhD)
In 2013 Michele completed her PhD thesis ‘The Royal Mint Refinery, A Business Adapting to Change’ at King’s College, London, charting the history of the London Bullion Market through the operation of the Royal Mint Refinery, owned and operated by N M Rothschild & Sons between 1852 and 1968. In 2014 she was engaged as a Research Consultant for the London Bullion Market Association, heading the oral history project ‘Voices of the London Bullion Market’. Returning to the Rothschild Archive in 2015 she worked as a Consultant and Researcher across a variety of projects.

Her areas of interest are in financial and business history, with special regard for the actors and networks located in the London Market.

Fergal O’Connor is a lecturer in Finance at Cork University Business School and was previously a lecturer at the University of York. His research on Precious Metals began when he was awarded the 2011 LBMA PhD Bursary for the study of the London Gold Market and he has gone on to publish a range of research on the topic. Currently, his research focuses on building a clear picture of the operation of London Bullion Market from its inception in 1919, as well as a daily price series for gold and silver.