The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1921-05-26
LONDON SILVER MARKET
HOW PRICE IS FIXED"
FOUR BROKERAGE FIRMS MEET
DAlLY-FACTORS THAT IN
FLUENCE PRICE

greatest i'm the world Its import
ance is so firmly established as to
have given rise to the impression
that the brokers boy whom the daily
changes are recorded operate under a
patent from the crown, all others be-
ing prohibited from participating in
| these transactions
The suggestion is made that there
is no actual open market either in
London or i'm New York for trading
ina silver. that is to say. there is no
competitive bidding among brokers
and no market place open to all in
terosted, and, further, there are no
opening and closing quotations" The
main suggestion that the London sill
yer market is in the hands of four
particular concerns lis undoubtedly
true but it is not fact that this
practical monopoly has been legalized
by the government in any manner
and there is no reason in law why
anyone who wishes to do so should
not set up as a broker in silver in
London if he can find clients willing
to employ his services.
For several generations four firms
have formed the London silver mar
ket namely Mocatta & Goldsmid,
sharpe & wilkins, Pixley x Abel and
Samuel Montagu & Co
Mocatta & Goldsmid started bust
ness in 1895 as bullion brokers on be
half of the Bank of England, and had
their Office in the present Bank of
England. They were practically the
bullion department of the bank and
bullion in those days represented coin,
bars being seldom seen. After about
1875 years of this monopoly a large
constituent of the firm started one of
the firms clerks i'm business outside
the Bank of England: this undertake
ing developed into the firm of Sharpe
& wilkins At a later date Pixley &
Abel appeared in the same business
and more recently. somewhere about
80 or 80 years ago Samuel Montagu
& co. began to include bullion trans
actions along with the details of their
banking business. which they had
carried on for long time.
1t is said on behalf of these four
firms that their position is due to
their own high standing and the con-
hdence arising from methods and
practices adopted to protect the in
terests OF buyer and seller alike.
What is called fixing the price of
silver is London operation which
controls the price of the metal in sew
eral important financial centers
throughout the world The official
quotations are cabled abroad by each
of the four firms named to their for
eisn clients. The great bulk Of the
daily business transacted is based
upon the price which is determined
by 1:45 p. m. every day in the week
Con Saturday the hour is 11:45 a. M.
when the representatives Of the re-
spective firms meet at the Office of
one of their number.
Each of the four brokers is permit
ted TO disclose the excess of his own
position as a buyer or seller at a Civ
en- price while conserving the anony-
nifty of his client It viii thus be seen
that while one of the firms may do
an enormous business on any one
day the difference between purchases
and sales may be extremely small; |
and carrying this idea through the !
four firms it will be seen that while |
the total volume of trade may be
enormous the amount changing hands |
between the four concerns may be /
rifling.
In an interesting work entitled |
Silver its history and romance" by |
benjamin White the following para
sraphs on the price fixing method |
appear:
1.-THE method of fixing the price is
,ery simple The first step is usual
Y to ascertain if there is occasion to
alter the price of the day before. If
supplies prove insufficient to satisfy
)uying orders higher prices are sug-
,ested until the offerings balance the
demand. Should offerings at the pre-
.eding days price exceed the amount
If buying orders the price is lowered
until equipose is obtained. Usually
number of orders at different lin
is have been left in hand by clients,
o buy or sell; with the assistance Of
hese orders the price can be adjust
ID to a nicely. BY this method of fix
ng the quotation the scale is evenly
ield between the buyer and the sell
n for whom the brokers act
"As rule two prices are agreed
ipon at fixing. one for a cash deliv-
Try, which implies delivery within
ieven days-at the option of the SELL
rand the other for delivery in two
months time; that is to say, exactly
lfter two calendar months interval.
\ period of two months is selected
because it is found the most conven-
ent interval at which smelters can
Undertake to deliver the silver which
hey have purchased in the form of
re"
From a high authority in the Lon
lon financial world the writer has OBJ
aimed some further interesting de-
ails about the technique of the bust
less: