“And you say Americans can also do this?”
“Why not? Of course, lots of people think that it’s not very nice to speculate against your own currency, and in recent years it’s the dollar that has always been getting into trouble. But I’ve been told that American multinational corporations cleaned up about $3 billion profits on their foreign exchange contracts made prior to the last dollar devaluation in 1973. I guess a lot of people figure, correctly, that what’s good for General Motors must be good—period.”
“Do you also speculate for the bank, Mr. Zimmerer?”
“Well, we’re actually not supposed to talk about that. You know, then it starts that ‘gnomes of Zurich’ thing all over again. Better ask your uncle.”
“Zimmerer!” Another interruption came from across the vast trading circle.
“Foreign Trade Bank Moscow. On the Telex again. They’re offering to sell $50 million three months forward this time. Shall I give them a rate?”
“No. First, I want the positions. Tell them we’ve stopped trading for an hour. They should come back then.”
He turned back to the young lady.
“Miss Rogers, would you mind taking a chair. I have to get some figures together for your uncle. I’ll be with you in a few minutes.”
And he was. “Ready to go? I’d like to talk a lot longer to you, but I think your uncle is probably waiting for us.”
“That’s all right. I think some of this stuff is getting a little too complicated for me anyway.”
They began walking toward the door when Zimmerer took Mary’s arm. “Say, would you like to look at just one other place real quick?”
“Sure,” she replied. “What is it?”
“Well, it’s another part of our department—the gold bullion trading section.”
“Oh yes, that would be just fascinating.”
“Don’t expect to see any gold bars or anything like that.”
They entered another room. It was not nearly as large as the foreign exchange trading centre. Only three men were at telephones and three others were obviously doing clerical work.
“What’s the morning fixing?”
“74.25 an ounce.”
“How much volume this morning?”
“Quite a bit. Somebody’s stirring things up, but we don’t know who yet.”
“Well, we’ll have to stir it up a bit more. Kellermann just called me. He’s got a very big order for a private client—to buy $200 million in bullion.”
“Wow. Who is it?”
“Don’t know. A numbered account. Kellermann said he would send down the written order after lunch, but we can start now. There are no limits. Just buy at the market. But for God’s sake, be careful. We don’t want this to get around. Say, I’d like to introduce you to Mary Rogers. She’s Dr. Hofer’s niece. Maybe you could explain what this is all about.”
Zimmerer turned to one of the other traders while the explanation was going on. As usual it started with the prices chalked on a big blackboard. They indicated the so-called morning and afternoon fixings of the gold bullion price, in London and in Zurich, during the past days and weeks. The world gold bullion price is set in a most peculiar, in fact, unique, fashion. In both financial centres, at almost exactly the same time of day—ten in the morning and three in the afternoon—the world’s chief gold dealers sit down, four in Zurich and five in London, to compare the buy and sell orders which have come in prior to the meetings. Then they “fix” a price at which all the deals are made. If there is an excess demand, they bump the price up and meet the excess from their own stocks of gold. If an oversupply of sell orders results, they mark the gold price down and replenish their own inventory. They act as the middlemen in all gold transactions. And, of course, they always rig a nice spread between what they buy at and what they sell for. Often, as a result of five minutes’ work, between ten and ten-five they will make millions of dollars in profits, by just matching large buy and sell orders and taking their slice in the middle. In London it is a clan of venerable merchant banks, who control this market. Of course, Winthrop’s was one of them, and in fact, it was said that since many years they have really controlled things in the London gold pool. In Zurich it was the General Bank of Switzerland who called the shots in the gold game, due to the fact that it was they, and especially their clients, who accounted for the largest part of the volume. Not that they ever revealed what the volume of gold trading was on any day, or even during any month or year. Among themselves, the banks in London and Zurich had decided that such knowledge would contribute nothing to orderly trading, and that the speculators of the world should be protected from any unnecessary worries which might arise from their having anything better to go on than rumour. But Mary didn’t know this.
“How much gold do you buy and sell here each day?”
“I’m afraid I can’t tell you. It’s one policy of this bank which is totally ironclad,” was the gold trader’s answer.
“Can you give me a hint?”
“Well, in recent years the amount of new gold, coming from the mines in South Africa and sometimes Russia, amounts to about 40 million ounces. At recent prices, that’s almost $3 billion a year. But then you must remember that there are about another 200 million ounces in the hands of private speculators—in Switzerland, or France, or the Near East especially—and they are constantly buying and selling. So that might give another ten billion changing hands each year. Some put it a lot higher—a whole lot.”
“And all that business is done from this little room?” was Mary’s response.
“No. But let’s say this: we do more than our fair share, by quite a bit. And that’s thanks to your uncle. He probably knows more about gold than anyone in the world today. He knows everybody in the business too—from South African mine operators to the big smugglers who run gold by the ton into India from Dubai on the Persian gulf. By comparison, that fellow Goldfinger in the James Bond book was nothing.”
“I didn’t know that.”
Zimmerer now broke in. “Please, Miss Rogers, for goodness sake don’t mention any of this to him. He doesn’t like publicity of any kind—especially where gold is concerned.”
All of a sudden Zimmerer seemed to be in a hurry. He said a few words in Swiss German to the men at the gold-trading desk and then left with Mary. After taking the elevator up three floors they entered a quite different world. The clatter and confusion of the foreign exchange department was suddenly replaced by the complete silence of a deeply carpeted, soundproof corridor. A uniformed guard rose to greet them after they had taken just a very few steps.
“Dr. Hofer is expecting us,” said Zimmerer. The eyebrows of the guard rose just slightly.
“This is his niece.” They fell back to normal.
Dr. Hofer’s office was immense and impressive: the oak panelling, the soft paintings, the huge rugs, and even the very faint scent of cigar smoke which must have represented the lingering memory of Cuba’s best. They crossed the room toward Hofer’s desk—he never greeted anyone at the door to his office but merely signaled them in by means of an electric “Please enter” signal outside his door—and were waved toward a group of chairs that was about twenty yards away, on the other side of the room. The two young people waded through the rugs and sat down. Neither dared to talk at first, but it seemed that Mary’s nature could not stand that for long.