Randgold Resources Ltd., the gold producer that has used the London fixing for 18 years, is open to consider an alternative to the benchmark used to set prices.
“There is always no harm in reviewing any business,” Mark Bristow, chief executive officer of the Jersey-based gold producer, said in a phone interview yesterday from Kibali, Democratic Republic of Congo. “The nice thing about the gold fixing is it takes into account the market. It’s a logical process.”
The U.K.’s Financial Conduct Authority said on May 23 it fined Barclays Plc 26 million pounds ($44 million) because one of its traders sought to influence the price-setting process two years ago. The gold fixing dates to 1919 when representatives from five dealers met on St. Swithin’s Lane in London’s financial district.
“It’s possible” the Comex gold closing on CME Group Inc.’s futures exchange in New York could be used instead of the gold fixing, Bristow said. “I’d have to consider it.”
Gold as per the London 3 p.m. fixing climbed 5.4 percent this year to $1,291.50 an ounce as of May 23. Gold futures on Comex advanced 7.5 percent to $1,291.90 an ounce. The metal for immediate delivery as per Bloomberg generic pricing rose 7.6 percent to $1,292.61 an ounce over the same period.
Randgold can elect to use the next day morning or evening fix after shipment or on arrival for pricing of its production. The company will produce more than 1 million ounces of the precious metal for the first time this year, Bristow said.
“Personally I believe it’s never a bad thing to review something and see if it still applies in any market,” Bristow said. “We’re a great believer in the Nasdaq. It’s worked well for us. Our stock trading in London is now almost equal to what it is in New York.”
Asked if consumers will be discouraged to invest in gold because of stories such as Barclays paying a fine for one of its traders manipulating the gold fixing, Bristow said: “People are always going to find ways to own gold. In the U.S. it’s hard to own physical gold. In Asia, they can always own gold.”