LONDON — For those who deal in it, gold evokes emotions like no other financial asset.
Ross Norman, CEO of Sharps Pixley and a 30-year veteran gold trader at Rothschilds and Credit Suisse, says he’s “had a strange relationship with gold.”
“It’s a bit like having an older brother, where you sit down for a drink and think ‘Godammit if he wasn’t my brother, he’d be my friend.'”
Norman’s own relationship with gold comes from an Italian uncle, who was lost and dying of hunger in Russia during the Second World War. The soldier had no possessions left apart from the gold cross around his neck, which he sold for enough food to save his life.
Sharps Pixley, which opened trading last year in the plush St. James area of London, is the UK’s only high street gold bullion shop.
The Sharps Pixley name originates from the 18th century — the company began as a diamond trading firm in 1778. It quickly moved to gold trading and thrived in the gold rush of the 1850s but had fallen into disuse by the 1990s. Norman bought the name in 1998, and the company was acquired by German bullion retailer Degussa in 2013.
Anyone can walk in and buy as much gold and silver bullion as they want. Customers can get it to go or leave their purchase in a safety deposit box which holds up to £500,000 of the yellow metal, for around £250 a year.
Sharps Pixley checks the gold bullion for weight, conductivity, and size. They say they see around one fake bullion bar a month, usually purporting to be a PAMP (a major Swiss refinery, with the full name Produits Artistiques Metaux Precieux) one-ounce bar. While an ounce of real gold costs about £1,000, a fake can be purchased on eBay for £12.
Norman says that last year the shop turned over £40 million, and is on course for a turnover of £100 million, or 3.3 tonnes of gold, this year. Sharps sells gold at a 1.5% premium and buys at 1.5% less than the spot price, earning a 3% spread.
His clients range from Russian and Brazilian millionaires, seeking to protect their assets and earnings overseas, to senior UK bankers and passers-by.
Norman says the question he always asks to determine how much gold a client will need is based on their fear of another financial crisis.
“There have always been incidents in financial markets, how will the next 16 years look? You now have to work quite hard to find safe harbours,” said Norman.
“What used to be considered a bunch of scaremongers and conspiracy theorists is now quite a large group. You have to take a view: What chance do I think there will be a significant economic or financial crisis in the next five years? That percentage is your allocation to gold,” said Norman.
“We’re selling life jackets to the Titanic, why wouldn’t you buy one?”
One of the main uses of gold is wealth preservation, rather than speculation about where the price will go in the future.
One of Norman’s clients is a wealthy Italian family that has managed to maintain its riches for more than 900 years with a simple investing maxim: “They allocate a third to land, a third to art and a third to gold. They say ‘It’s served us for 900 years, why change it?'”
It’s a tougher sell in the UK, where Brexit provided a noticeable but short-lived bump in demand. Norman says fear isn’t a great motivator for UK buyers, partly because the pound is one of the longest-lasting fiat currencies of the more than 3,000 or so in world history.
Get the latest Gold price here.