Ruth Crowell is modernizing the precious-metals industry. She oversaw the update of the silver fix, which had been around since 1897. Shortly thereafter, she was on to changing the way the world sets the gold price, which had been done the same way for 95 years. The 34-year-old American, who had spent seven years at the London Bullion Market Association after coming on as a temp worker, has become the international trade group’s first female chief executive.
“When something that’s been around for over a century decides to stop, it’s going to catch people by surprise,” Crowell said in an interview Oct. 1 at the LBMA, which sits across the street from the Bank of England. “We were going to be on the time line pass or fail, and I was damned if it was going to be fail.”
While the LBMA does not set prices, its 77 members and 69 associates from 30 countries comply with standards on physical delivery and vault storage. One of Crowell’s biggest concerns is ensuring buying-and-selling velocity remains strong despite stricter regulations in Europe and the US on cash transactions.
Frankfurt-based Deutsche Bank AG and London-based Barclays Plc are decreasing their commodity activities due to scrutiny by regulators on how the market’s benchmarks are set.
“There are entities, particularly on the physical side, big refiners and industrial players, who see the liquidity and advantage of trading in London, who wouldn’t be able to afford to get at the same level of compliance that you have at the large banks,” Crowell said. “That could be a game changer.”
The LBMA is also adapting to the role Asia has played as late in the precious metals-market, according to Crowell. China has recently overtaken India as the world’s top buyer of gold. The Shanghai Silver Exchange started bullion trading and then the Shanghai Gold Exchange began trading in the city’s free-trade zone in September and exchange have added or plan more Asian gold contracts. The volumes for the benchmark spot contract on the Shanghai GOld Exchange surged sixfold from 2008-2013.
“We’re not done with Asia,” Crowell said. “It’s a long-term story. It’s not about dividing up the pie, it’s about trying to grow that market.”
The most recent banks overseeing the 117 year old benchmark were HSBC Holdings Plc, Bank of Nova Scotia and Deutsche Bank. Deutsche Bank tried to sell its daily gold and silver fix seats, and from there the fixes began falling apart. Nobody would buy the German lenders price-setting seats, and then the three banks gave 13 weeks’ notice for the silver market to find a new method of pricing.
The new electronic silver auction, administered by CME Group and Thomson Reuters Corp came online August 15.
“Given three months to reorganize a major benchmark was fairly difficult and I don’t know that many people thought it could have been done in such a short space of time,” David Gornall, the head of metals trading at Natixis SA in London and LBMA chairman from 2011 until 2014, said. “Most people in the market hold her in high regard for protecting the daily silver price. She was very focused on it and was never going to be derailed.”
Before Crowell’s time of the LBMA, she worked with United Nations Watch. According to the organization’s website,
UN Watch is a non-governmental organization based in Geneva whose mandate is to monitor the performance of the United Nations by the yardstick of its own Charter. UN Watch was established in 1993 by the legendary civil rights activist Morris B. Abram, the former U.S. Permanent Representative to the United Nations in Geneva. UN Watch participates actively at the UN as an accredited NGO in Special Consultative Status to the UN Economic and Social Council (ECOSOC) and as an Associate NGO to the UN Department of Public Information (DPI). It reports regularly to both.
What are some of the main differences between the silver fix and the new way of doing?
“The major differences are that there is an independent third-party administrator as well as additional price participants and increased transparency. The information, which is displayed across multiple platforms, shows the live auction rounds, which mirrors what an actual participant sees while taking part,” said Crowell in an interview.
Since the change, not much has changed in the precious metals market. Silver has flirted with the $15 handle numerous times in recent months. Nonetheless, there is much detailed information hinting that demand from gold and silverbugs is robust. Silver has definitely tightened not only in the US, but in Germany as well, where coin dealers have sold out of silver inventory.
Justin O’Connell is the Chief Executive Officer of GoldSilverBitcoin. He is also the author of the bitcoin book, Bitcoinomics, and administrator of the Bitcoinomics website. Justin is also a co-host at Our Very Own Special Show, a lifestyle podcast about music, news, life and other topics, and head researcher at The Dollar Vigilante. He lives in San Diego, California.