Gold (3 page)

Drew shivered. He had gone to South Africa on assignment with the idea and hope that this country, like his own, could find a reasonably peaceful way to resolve its race problem. He sought out the businessmen, mostly Anglos, of English descent, reputed to be liberal. They railed against the stupidity of apartheid, the stubbornness of the Afrikaners—descended from Dutch, German, and Huguenot settlers—but were optimistic that good sense would prevail. One man, one vote? Well, that was going a bit far. Perhaps in a generation....

He had met as well with black trade union leaders. There was a distrustful edge to their encounters with an American business journalist, but the message was clear. “Unless we have one man, one vote in two years, there’ll be a bloody revolution.” Rhetoric?

That had been three years ago. In the meantime, the reactionary white government in Pretoria had reinforced a system of repression that had reduced South Africa to a state of siege. A year ago, complete martial law, suspension of parliament, the summary execution of dissidents. Eight months ago, the news blackout. Revolution or not, events in South Africa had gotten very bloody. The hope of an entire subcontinent, the country was rapidly deteriorating. The intractable conflict threatened to turn it into a ruin as desolate as Lebanon. Many of those liberal Anglo businessmen had emigrated, to safety nests in the Bahamas or Argentina. The Afrikaners stayed and circled the wagons.

“They can’t have another general election without black participation,” a bright South African black raised in Europe had told him. He turned out to be right. Elections were suspended indefinitely.

The Cape, with its glistening white-gabled estate homes, gentle Mediterranean atmosphere.... Idyllic Stellenbosch, intellectual heart of the Afrikaner Republic. ... Port Elizabeth, Johannesburg, Pretoria, Durban, Bophuthatswana, Soweto—Drew had spent nearly a month traveling around this country at the tip of Africa. The assignment from
Money Manager
had been the highlight of his brief stint as a freelance business writer. In fact, it had been his South Africa cover story for this specialized but very influential financial magazine that had brought him to the attention of Sun Belt Communications. Two months after his pessimistic story appeared, South Africa was forced to suspend all debt payments abroad and gradually seal off its economy from the rest of the world.

Landing at Heathrow after the fifteen-hour flight from Johannesburg, Drew had felt relief. His first thought was that he would never return to the country until it was called Azania. His second was just gratitude that he had not been born a black South African—or a white South African....

Drew signed off his screen and told Tom to turn around any further Pretoria reports at top priority.

His phone buzzed. “Drew, are you holding back? How bad is the damage?” It was Morgan Preston, swollen fat with his gold profits and greedy for more. Drew bit his tongue.

“I really can’t say more until I get the details from my man, and I can’t reach him right now.”

“Maybe we should have lunch tomorrow,” Preston countered, sparring.

“Sure, sure,” Drew said. He needed to know what was going on in the market.

“One o’clock, Savoy Grill?”

Drew assented, rang off, and punched another line to call MacLean again. Still no answer.

Preston wasn’t the worst of the lot. Drew had known him nearly twelve years. Freshly arrived in the forbidding headquarters of the Financial Times on Cannon Street, one of the few American journalists hired by that venerable British paper in the days before it started publishing in the States, Drew’s first assignment had been to cover the precious metals beat. His three years with a wire service in Zurich had made him familiar with the gold markets. Drew had known Preston by reputation even before coming to London, as the rising star at Morgenthorpe & Co. Accustomed as Drew had been to the dissimulations of Zurich’s urbane and cynical gold chiefs, he was surprised, meeting Preston for the first time; the British merchant banker was straight, friendly, almost human. The same age as Drew, Preston had already been chief trader then; now he was managing partner for the merchant bank’s trading activities.

He had to find that telex. Drew searched more carefully through the clipboard file and examined each piece of paper in the wastebasket, which had not been emptied yet. No original, no copy. Had it even arrived?

He had to talk to MacLean. As far as he knew, the Canadian lived alone. But he didn’t really know the fiftyish deskman too well. There were rumors that he had been chased out of Canada because of trade union activities, but he had a solid reputation on Fleet Street. He’d been with WCN since its inception six years ago. He was always civil in the office but never went beyond polite superficialities.

MacLean’s sudden departure this afternoon had been out of character, but Drew had not paid much attention to it at the time. The slotman was ostentatiously punctilious, as though defying anyone to find fault in his discharge of his duties. Except for today, with his curious need to see a dentist immediately.

“Comex and IMM are going through the roof,” Tom said, referring to the New York Commodities Exchange and the International Monetary Market, the two main markets in gold futures. “There’s rumors that the market will be closed early.”

Drew came into the slot and started calling up pages on the market screen. The dollar was up 30 pfennigs against the deutsche mark.

“Central banks intervening?” Drew asked.

“Haven’t seen anything,” Tom replied.

Market operators were liquidating assets in European currencies to buy dollars so they could buy gold. Four fifths of all gold transactions were denominated in dollars. The U.S. Federal Reserve, the American central bank, and the European central banks should be selling dollars against the market trend to keep the American currency from rising too quickly. “Disorderly market conditions” was their quiet term for the mayhem in the foreign exchange markets that accompanied these billion-dollar waves of speculation.

It was the simplest market rule. Whatever reduces supply will raise the price, presuming demand remains the same. If frost hits the orange crop in Florida, the price of frozen orange juice goes up. If terrorists bomb South Africa’s gold mines, the price of gold goes up.

But gold was a funny animal. It wasn’t like orange juice or coffee or cocoa. You don’t eat gold for breakfast. Industry uses gold, but that demand is steady and predictable; it doesn’t account for the fluctuations in the gold price. The greatest economist of the century, John Maynard Keynes, had labeled gold “a barbarous relic,” but the centuries of greed clinging to the yellow metal maintained its role in finance. Even the central banks, which had officially eradicated gold from the world monetary system, still stacked ingots in their vaults.

New York stocks were up. Political uncertainty abroad always drew money into U.S. shares. Bonds were off, as the flow of money into the dollar pushed interest rates down. The market was like one big heaving beast trying to swallow the huge morsel Drew had just rammed down its throat.

He called Sam Peters downstairs. “Hey, great beat, Drew,” the chief of sales said when he answered the phone. “Thirty-seven minutes, and what a whopper. You broke the story.”

In the arcane world of wire services, careers were made on a two-minute beat. If you got the news ahead of the competition, your salesmen had something to sell. They kept logs and listed all the stories with beats. Of course, so did the opposition, and their lists had the stories missing from your list.

A beat of just minutes had been important when only newspapers subscribed to wire services. A newspaper up against a deadline needs to rely on getting the breaking news as soon as possible. At any time, some newspaper somewhere is having a deadline, which gave rise to the old saw that wire service reporters have a deadline every minute.

The growth of financial news in the past two decades and the new demands of trading-room screen services magnified this premium on speed. The size and volatility of the markets meant that a trader with a sixty-second head start could make millions. Drew wondered how much Preston had made from acting on his questions.

“Thanks, Sam. It was a hard call, but we got it right.”

“You sure as hell did. I’m already calling some of the big traders who haven’t bought us yet. They can’t afford to be without us now.” The salesman’s enthusiasm was infectious. Drew felt better.

“Look, Sam, I’m going to have to stay on top of this, so I was wondering if I could take a rain check on our lunch tomorrow.”

“Sure, sure, no problem. That’ll give me more time to sign up customers,” Sam said. “But let’s get together soon, and I’ll buy the champagne.”

Champagne. One man’s poison is another’s champagne. Those forlorn silhouetted figures in downtown Johannesburg flashed through Drew’s mind.

“Right, real soon,” Drew said. He hung up and punched the switchboard number. “Are you still trying Johannesburg?” he asked the operator.

“Oh, yes, Mr. Dumesnil, Shirley left a note and I’m carrying on,” a voice with a slight Irish accent answered. The new girl was on the switchboard.

Drew returned to the slot and peered over Tom’s shoulder into the screen. The dollar was up 45 pfennings as
CLOSING FRANKFURT FOREIGN EXCHANGE
flashed across. He doubted if Frankfurt was closing down this evening. They headed the table “closing” only because it was the end of the business day. The currency markets never closed. The center of activity just followed the sun around the globe—London, New York, Tokyo, Singapore, Hong Kong, Bahrain, Zurich, Frankfurt.

“Still no sign of intervention?” he asked Tom.

“Brown said he’d be filing a reaction story soon.”

Hank Brown, the Frankfurt correspondent, was all right. Lots of enthusiasm. Of course, when you’re twenty-three you live on enthusiasm. Drew cast a sidelong glance at Bart, who appeared to be daydreaming.

“Bart, why don’t you call around and put together a little reaction story from London too.”

“Sure thing,” the young man said, picking up the receiver in front of him.

“Here comes Brown’s piece now,” Tom said.

Bundesbank Intervenes Heavily
in Market

Frankfurt [WCN] — The West German central bank sold as much as 500 million dlrs in late trading to counter the dollar’s sharp rise in currency markets after the report of sabotage in South Africa’s gold mines, according to dealers here.

—More—

“Looks clean, send it out,” Drew said. “Drew,” called Bart, hanging up the phone, “is there anything there about closing down currency trading? Butchard said there’s a rumor the Fed will announce suspension of trading this afternoon.”

Half a billion dollars in an hour. Not even the Bundesbank, which had the biggest currency reserves of any central bank, could sustain that type of intervention for very long.

“Makes sense,” he said. Sense? The currency markets hadn’t been shut down since the early 1970s, when traders failed to keep up with the new phenomenon of floating exchange rates. He felt a brief flash of fear. Were the authorities going to be able to handle this market?

With a bound, he was at his phone, putting through a call to Chicago. “Bob,” he said to Bob Johnson, his counterpart at U.S. Commodities News in Chicago, “I got a rumor here the Fed may shut down currency markets this afternoon.”

“We’ll get on it.”

The Fed had been on an unsteady course since Peter Wagner had been forced out by the administration two years earlier. Wagner, a colossus intellectually and physically, had held a firm hand on the markets in the first half of the decade. His successor, Hugh Roberts, was widely perceived as being under the sway of whichever administration authority had the upper hand in the constant debate over economic policy. But it was the Federal Reserve Bank of New York, still under Wagner appointee Mark Halden, that would have the decisive say on currency markets. Drew had met Halden at a couple of European conferences, but there would be no chance of getting through to him now. Better to let Chicago handle it.

“Any more on this rumor?” Drew asked.

“Seems pretty widespread,” Bart said over his shoulder as he punched out another number on the phone.

Maybe the Bank of England was calling around to the big British clearing banks to calm the market. Geoffrey Butchard at the Norfolk didn’t pay attention to just any rumor.

“Better lead with it,” Drew said, getting a nod from Bart as he listened to the phone.

Bart swiveled around to face his screen and began typing on the keyboard, keeping the phone receiver cradled on his shoulder.

“Fed has called a press conference,” said Tom, who was keeping at it like the pro he was.

“Want me to spell you?” Drew offered. Tom had been in the slot more than two hours without a break, which meant as many as one hundred fifty decisions on news items.

“No, I’m all right.”

In the movies, now would be the time the editor sent the copy boy out for coffee and sandwiches. But copy boys had long since disappeared from newsrooms, along with keypunchers, proofreaders, and news assistants. Through the miracle of computers, journalists had taken over all these functions. In his cynical moments, Drew sometimes wondered how much longer journalists themselves would be in the newsroom.