science

Gold fixing

Gold fixing is a science topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand Gold fixing rather than just read about it. In short: The London Gold Fixing (or Gold Fix) is the setting of the price of gold that takes place via a dedicated conference line. It was formerly held on the London premises of Nathan Mayer Rothschild & Sons by the members of The London Gold Market Fixing Ltd.

Key takeaways

Gold fixing belongs to science; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect Gold fixing to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of Gold fixing from memory before moving on to harder problems.

Reference excerpt

The London Gold Fixing (or Gold Fix) is the setting of the price of gold that takes place via a dedicated conference line. It was formerly held on the London premises of Nathan Mayer Rothschild & Sons by the members of The London Gold Market Fixing Ltd. The benchmark is determined twice each business day of the London bullion market (the exceptions to this being Christmas Eve and New Year's Eve when there is only one fixing in the morning). It is designed to fix a price for settling contracts between members of the London bullion market, but the gold fixing informally provides a recognized rate that is used as a benchmark for pricing the majority of gold products and derivatives throughout the world's markets. The LBMA gold price is set twice every business day at 10:30AM and 3:00PM, London time, in United States dollars (USD). Prices are available in sixteen other currencies—including British pounds, Canadian dollars, Chinese renminbi, and euros—but they are indicative prices for settlement between LBMA members only. The current 14 participants in the fixing are the Bank of China, the Bank of Communications, Coins 'N Things, the Industrial and Commercial Bank of China, INTL FCStone, Jane Street Global Trading, HSBC Bank USA, JPMorgan Chase, Koch Supply and Trading, Marex Financial, Morgan Stanley, Standard Chartered, the Bank of Nova Scotia, and the Toronto-Dominion Bank.

History On 12 September 1919 at 11:00 am, the five principal gold bullion traders and refiners of the day (N.M. Rothschild & Sons, Mocatta & Goldsmid, Pixley & Abell, Samuel Montagu & Co., and Sharps Wilkins) performed the first London gold fixing, thus becoming the five founding members. The gold price was determined to be £4 18/9 (GBP 4.9375) per troy ounce. The New York gold price was US$19.39. The first few fixings were conducted by telephone until the members started meeting at the Rothschild offices in New Court, St Swithin's Lane. In 1933, Executive Order 6102 was signed by U.S. President Franklin D. Roosevelt, requiring US citizens to turn in their gold for $20.67 per ounce. Afterwards, the price of gold was set at $35.00 per ounce. Due to wartime emergencies and government controls, the London gold fixing was suspended between 1939 and 1954, when the London gold market was closed. On 21 January 1980 the gold fixing reached the price of $850, a figure not surpassed until 3 January 2008 when a new record of $865.35 per troy ounce was set in the a.m. fixing. However, when indexed for inflation, the 1980 high corresponds to a price of $2,305.18 in 2011 dollars, thus the 1980 record still holds in real terms. The fixing historically took place at the London offices of N M Rothschild & Sons in St Swithin's Lane, but since 5 May 2004 it takes place by a dedicated telephone conferencing system. This was necessary as some banks moved their London operations away from the Bank of England towards areas such as Canary Wharf. Until 1968, the price was fixed only once a day, when a second fixing was introduced at 3 p.m. to coincide with the opening of the US markets, as the price of gold was no longer under control of the Bank of England, a result of the collapse of the London Gold Pool. In April 2004, N.M. Rothschild & Sons announced that it planned to withdraw from gold trading and from the London gold fixing. Barclays Capital took its place on 7 June 2004 and the chairmanship of the meeting, formerly held permanently by Rothschilds, now rotates annually. On 28 June 2012, an employee of Barclays manipulated the gold fixing process to prevent a derivative product previously sold to a client from leading to a payout. The employee, and subsequently Barclays, self-reported the incident. In January 2014, Deutsche Bank withdrew from the panels setting the gold and silver fixings. On 23 May 2014 the Financial Conduct Authority announced it had fined Barclays £26 million for systems and controls failures, and conflict of interest in relation to the gold fixing over the nine years to 2013, and for manipulation of the gold price on 28 June 2012.

Process

… excerpt ends here. Continue reading the full article.

Worked examples

Example 1 — a first encounter with Gold fixing

Start with the simplest possible case. Write down what Gold fixing claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In science, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to Gold fixing before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about Gold fixing ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of Gold fixing

In research: Gold fixing appears in science research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses Gold fixing in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: Gold fixing is common in secondary-school and first-year university syllabi. It links to neighbouring topics Barclays, Gold, Gold standard, so understanding it makes those chapters shorter.
In everyday life: Look for Gold fixing outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

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How to study Gold fixing in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what Gold fixing means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain Gold fixing out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is Gold fixing in simple terms?

Why does Gold fixing matter?

Because it connects several science ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study Gold fixing?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on Gold fixing.