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February 9, 2017

Chapter 80 in the exclusive series for Dynamic Commodities- becoming a commodities trader

It did not take long before Philipp Brothers began to pile the work on my plate. While I was still getting my feet wet, I got a call from Marty Kaufman early one morning. “Andy, as you get comfortable with the business in London I’d like you to take a look at what is going on in the nickel department and see if you can help.” I was running the businesses in gold, silver, platinum, palladium, and options trading and now the company added nickel to my portfolio.

Involvement in nickel was a natural match. The world’s largest nickel producer was the Soviet Union and the Siberian nickel producer Norilsk, produced platinum and palladium as a byproduct of nickel output. In fact, when it comes to palladium, Russia produces about 80% of the world’s annual supplies so the connection was clear. Marty was positioning the firm in Russia. As the old communist regime was falling apart under Glasnost the nation was interacting with the rest of the world and business ties with U.S. and European trading partners became a strategic imperative. As Chris Linen and Marty became closer to Almazjuvilirexport, the Russian government agency responsible for exportation of platinum group metals, it was a good idea to have their man on the spot in London close to developments in the firm’s nickel business with the Russians.

Nickel trades on the London Metals Exchange and it is the second least liquid metal on that exchange. Nickel was a big business for Philipp Brothers; the firm always maintained close ties in Russia even during the darkest days of the cold war. Nickel is a very volatile market and the Russians controlled prices because of their position as a dominant producer. The trader on the desk in nickel was a young Indian fellow, a very bright recent graduate of the London School of Economics. I was young at 28 but he was younger, which was a pleasant departure as I was in charge of precious metals and the youngest person on the trading desk. I spent a lot of time sitting in the nickel area which was a long walk from the precious metals department. For a couple of weeks, I split my time between the two areas and began traveling to Russia on both precious metals and nickel business for the firm. Marty offered lots of encouragement always telling me that, “the synergy between these two businesses will pay off for the firm in spades.” He was right about that one; Philipp Brothers was in the process of developing an amazing relationship with Almaz.

Nickel was a losing business for Philipp Brothers when I arrived on the scene but that changed over the following months.

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Post Series: Origin Of A Commodities Trader

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