France Goes for London’s Gold Market Amid Soft-Brexit Hopes

France Goes for London’s Gold Market Amid Soft-Brexit Hopes from Wolf Street

In the feverish reshuffling of financial services for a post-Brexit world, London still comes out ahead, but less so.

By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.

As two years of Brexit negotiations finally come to a head and all eyes are on British Prime Minister Theresa May’s frantic efforts to get the draft deal passed, France is making a big move on the City of London’s gold market. As Reuters reported Monday, the Bank of France has partnered with mega-bank JP Morgan Chase, one of the world’s largest bullion trading banks, to offer global central banks and sovereign wealth funds the full gamut of swaps, leases, and gold deposits.

Sylvie Goulard, the Bank of France’s deputy governor, recently wrote in The Alchemist, the in-house journal for the London Bullion Market Association (LBMA), that Paris is looking to reestablish itself as a mover and shaker in the international bullion market. “While these gold investment services have until now only been offered from London, it recently became possible for the Banque de France to offer them also from Paris,” she said.

France is already the world’s fifth biggest sector gold holder, carrying around 2,435 tonnes of gold in its official reserves. But until now central banks holding gold at the Bank of France had to go through London, home to the world’s largest commercial bullion trading pool, if they wanted to perform market transactions.

But the Bank of France has been expanding its gold services. It has also refitted its bullion vaults to allow heavy forklift trucks to operate within their confines, and upgraded the quality of its gold reserves so they can trade on the international market. Its newly consummated partnership with JP Morgan, a member of a select group of global banks that settles trades in the LBMA, is the clearest sign yet that Paris wants a piece of London’s $25 billion-a-day gold bullion market.

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Wolf Richter

In his cynical, tongue-in-cheek manner, he muses on WOLF STREET about economic, business, and financial issues, Wall Street shenanigans, complex entanglements, and other things, debacles, and opportunities that catch his eye in the US, Europe, Japan, and occasionally China. WOLF STREET is the successor to his first platform… TP-Title-7-small-200px …whose ghastly name he finally abandoned in July 2014. Here’s the story on that. Wolf lives in San Francisco. He has over twenty years of C-level operations experience, including turnarounds and a VC-funded startup. He earned his BA and MBA in Texas and his MA in Oklahoma, worked in both states for years, including a decade as General Manager and COO of a large Ford dealership and its subsidiaries. But one day, he quit and went to France for seven weeks to open himself up to new possibilities, which degenerated into a life-altering three-year journey across 100 countries on all continents, much of it overland. And it almost swallowed him up.