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The Downfall of John Gruen

January 10, 2017

Chapter 58 in the exclusive series for Dynamic Commodities- becoming a commodities trader

John Gruen had been with Philipp Brothers since gold trading on the New York Commodities Exchange (COMEX) commenced in the mid-1970’s. John was a brilliant man with an engineering degree who always loved a healthy debate. John was always happy to take any side in an argument and would revel when he crushed his opponent verbally. Sid Gold was not the kind of guy who appreciated John’s love for debating or his often condescending attitude during a discussion, Sid took everything to heart. Therefore, the two managers rarely saw eye to eye. When Ray Nessim departed the company and John Gruen took over Sid was determined to undermine the new boss at every opportunity. John viewed Sid as a joke but as time went on he realized that Sid had done a great deal of damage to his standing within the company.

Sensing a great deal of animosity within the precious metals department, Marty and Henry the Chairman and President of the company, decided that something had to change. They began a search together with Manfred Koppelman for a new boss for the department that had been the crown jewel of Philipp Brothers. With the oil department off on its own in Greenwich, Connecticut, precious metals was supposed to be the company’s cash cow.

The interview process was kept very quiet, but I got the feeling that Sid knew something was happening. Sid had a nose for political change and he knew that the bosses were having a problem with John who was argumentative to those who were below and above him in rank in the company. One day out of the blue a new manager appeared on the scene. Chris Linen had been the President of Samuel Montagu in New York. Montagu was an old school precious metals dealer and a member of the daily gold and silver fixing in London each day for an eternity. The fixing occurred twice each day in London and Sid would joke, “Why does gold and silver have to be fixed? Are they broken?” The fixing consisted of the five members coming together in a room and putting their buying and selling orders together to arrive on a fair market price for the precious metals. When there was more buying than selling, the fixing price would move higher. When there was more selling the fixing price would move lower. The process went on until the five dealers in the room reached an equilibrium price and the group “fixed” the price of gold and silver. Montagu along with Sharps Wilkens, N.M. Rothschild, Mocatta & Goldsmid and Pixley & Abell were the original five fixing members who performed the first gold fixing on September 12, 1919 at 11:00 AM London time.

At first we were told that Chris Linen would join the department as co-manager with John. However, every trader in the room knew that Mr. Gruen’s days with Philipp Brothers were coming to an end at that point. Sid was overjoyed.

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Post Series: Origin Of A Commodities Trader

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