Ep. 9: Ed Blight – CFO of the London Bullion Market Association (LBMA)

Ed: You know, we're growing quite considerably in terms of our membership. And only two years ago, it may not sound a great deal, but our membership is at the organizational level. And so we'll be at 180 members this year. That will grow again into next year as well. The appetite is very much over the last three years has been has been a lot higher than it used to be in the past.

Tarek: Welcome to Y'all Street. Today, we speak with Ed Blight, CFO of the LBMA, the London Bullion Marketing Association. Ed, would you like a cup of coffee? Oh, I'd love one, please. Got you this special gold cup of coffee. I thought that was fitting. That's very fitting. Being part of the LBMA. Coffee cheers.

Ed: Cheers it is.

Tarek: How was golf today?

Ed: Not as good as it could have been, to be honest. A couple of good shots, a couple of not so good shots. And I gave a couple of balls back to the course, which I thought was quite kind.

Tarek: Well, it was 106 degrees here in Phoenix at like nine o'clock in the morning. So that can that can play a role.

Ed: That's also slightly new to me, that temperature. It doesn't exist in England.

Tarek: Yeah. And where in England do you live?

Ed: I live just north of Bristol. Which is kind of the other side of the country from London. So very close to Wales.

Tarek: So I get into your background a little bit. We're here at the International Precious Metals Institute Conference in Phoenix. So we're in the new studio for those that that can recognize the backdrop change. Tell me a little bit about the LBMA. So for people that are listening, what is the LBMA? What's the history of the LBMA and what role does it play in the precious metals market?

Ed: Yeah, so the LBMA was formed in 1987, and it was at a time when the Bank of England felt that it needed to have a little bit of an arm's length from what was happening in the market at that particular time. And the LBMA was essentially formed to look after what was what's called a good delivery list.

Tarek: And let me interject quickly. So when they say when you say that the Bank of England wanted an arm's length, was it suggesting that it was too involved in the metals market?

Ed: The market was growing and expanding and it and it felt that the time was right for it to take more of a governing role from a from an arm's length, not a regulator, but more of a governing role from an arm's length, which is what led to us being formed. And we took it on. We ran the good delivery list for quite some considerable time. And then realistically, we were running that for, I would say, right up until until the financial crisis in around about 2012. And at that particular time, there were issues with the the prices in London. And we were invited to step in and and lead the process of setting up an independent benchmark for silver and then subsequently gold as well. And that was the start of LBMA taking on more of a sort of pseudo regulatory sort of function, essentially managing and looking after and overseeing some of the mechanisms that enabled the OTC market in London to function and operate and now globally. So then we moved on from there and then there was a fair and effective markets review that took place in around about 2014, 2015. And arising from that, we were given the opportunity to effectively lead the process of delivering transparent trade reporting. So the first time that the OTC market had data to demonstrate the volume of trading across the market and also the responsibility of leading the drafting and writing and owning of the Global Precious Metals Code, which is the code of ethics that underpins trading around the world right now. So since really sort of 2012, 2013, we've really sort of taken on more of these these elements that govern the way in which the market operate. And then on top of that, if you look at the the growth of responsible sourcing and the fact that we've moved from responsible gold guidance and responsible silver guidance as well, we're on version nine of our gold guidance. And that's an evolution and it's a growing process always guided by the OECD principles on responsible supply chains. And effectively, we're continuously growing. We're going our auditing management function. We now manage a number of audit assurance providers who go out and audit the the the sourcing of our refiners. And that plays an integral role in in us certifying every year our 101 good delivery list accredited refiners so that they can continue being listed and to source responsibly the metal that is then invested upon in the market.

Tarek: So when we think about the the network of businesses that the LBMA governs and the whole precious metals network internationally, it really starts with the mines. The mines are extracting metal from the ground, producing doré. That dory then goes to the refiners. The refiners are then producing, you know, three nines, four nines, silver, four nines, gold and producing these good delivery bars. Right. These these these LBMA refiners are beholden to the standards that you're setting. And then those good delivery bars are going into a marketplace. That marketplace is, you know, heavily traded through the banks. The banks are buying and selling these bars. They're using these bars to provide liquidity to the metals market. That metals market also includes mints who are producing coins, distributors who are buying in volume for retail dealers. It includes the vaults and the transport companies, depositories and so forth. So there's this entire ecosystem that is necessary to bring metal to the marketplace.

Ed: I mean, I just qualify it by saying we don't we don't accredit mines. So the one part of the supply chain that that doesn't fall under our standards, for want of a better phrase, is the mining sector. So we accredit the refineries and the responsible sourcing audit process audits their due diligence on their supply chain into the refinery. And therefore, the standards of the the raw materials going into the investment metal that can include mined material, it can include recycled material or reprocessed material.

Tarek: Right. So by extension, essentially, the the refiners are enforcing some of the policies that the LBMA is issuing to the mines or wherever it is that they're sourcing, because it's not necessarily the mines. It could be scrap material that they're that they're sourcing the metal from. And and so. Take us back then to 1987, because you use the expression good delivery bars. For those listening, what does it mean to have a good delivery bar and why? Why is that important? And was the first good delivery bar created in '87? Or was there some form of that prior to '87?

Ed: There was there was a form. So so the the good delivery list was operated by the bank, Bank of England before that. So it used to happen a long time before that. So we took it on in '87 and the management of it from that point onwards. Now, describing what a good delivery bar is and then what a London good delivery bar is, is quite intriguing for those who are into that kind of thing. So a good delivery bar is a bar that is produced by a refiner meeting the design specifications that are set out in the good delivery rules. The bar has to be of a certain weight, which is on average about 400 ounces, troy ounces, or about 12 1/2 kilos, if you were metric. And then it has to reach certain purity levels. So it's got to be 99.5% or above up to 99.99%, which is nine five or four nines metal. So to be a good delivery bar, that's what it has to be. Now, what's the difference between that and a London good delivery bar? Well, the vaults in London. So there's about 8,000 tons of gold in vaults in London, which underpin the liquidity in the London market. The vaults in London are the gatekeepers of the market. So their function is to inspect and make sure that the bars that come into the market in London and are held in those vaults are perfectly aligned to those standards. And if those bars have defects, those defects are raised and inspected. And that determines whether a bar remains as good delivery or it's non good delivery because it's a damaged or it's got signs of tampering or whatever that might be in there. And we operate something called a visual guide that helps the the vaults to understand exactly what what is acceptable and what isn't acceptable as far as a good delivery bar is concerned. Once a bar has been inspected and it's come into the market, and it's accepted by a London vault, then it becomes a London good delivery bar. And so there is a subtle difference. But it means that not only is it gone through the standard setting that's required by the refinery to maintain its accreditation as a good delivery, realistic refiner, it then goes through a second step of inspection to ascertain whether or not it meets all the specifications necessary for it to be in London, invested upon in the London market.

Tarek: OK. Now, what role does the Bank of England play in this? Is it the Bank of England's vaults that this metal is going into? Or when we, you know, many in the United States are trading London swaps. So they will you know, a bank might sell silver in London to buy silver in Italy and have that silver then shipped to the United States. And rather than exchange cash, they're just swapping metal into different locations. So, where is the metal in London living?

Ed: Yeah, so the the bank holds gold. It doesn't own all the gold that it holds. That holds on behalf of a number of owners of that metal, both international and also some of the clearing banks in London also have holdings in the bank as well. So it holds a large proportion of what metal is that's in London. But there are other clearing members of the London Precious Metals Clearing Limited. They're the organization that clears and settles OTC in London. And they as well have vaults and have their own holdings of metal. And then on top of that, there are a number of commercial vaults that are approved. They're approved weighers. So they've gone through an approved weigher qualification, which is operated by us at the LBMA. But they're also accepted by the London Precious Metals Clearing Limited as vaults that are they are willing to hold either gold or silver or both in those vaults. And there is a way in which that that is constantly monitored as to whether or not it is suitable for the metal to be held at any of the vaults that are considered accredited to be a London vault.

Tarek: Why is it important for the banks to have London good delivery bars on their balance sheet versus just any other gold product or silver product?

Ed: I think it's the standards that underpin the metal more than anything else. So the standards the LBMA deliver are—and I'm not saying it because I'm the CFO of LBMA— they're widely renowned as as being the global standard for metal. And the metal that's held in those vaults conforms to that that global standard. And our role is to make sure that our standards remain that global standard. And I know whilst that is the case, you're getting the highest level of provenance in the metal and the highest level of confidence that you can get to the investors in that metal.

Tarek: Talk about the provenance issue, because this seems to be becoming a bigger and bigger issue as time goes on: the origin of metal. You know, people might be familiar with black diamonds, stolen diamonds and how that gets into the diamond trade, but maybe not as familiar with how gold and silver are stolen and sold in the black market.

Ed: Yeah, I mean, there are we are aware that there are flows of metal which flow around the world that are outside of the investment market. And that's because the controls that are in that sector are not anywhere near as tight as they are in ours. No, no one is saying that everything is completely 100% tight, because you wouldn't have continuous improvement if that were the case. And we're continually looking to tighten and strengthen our standards. And that's one of the key messages we're delivering at this conference this week. But it's about the standards that we put in place that delivers a level of provenance. There are certain initiatives that we're doing right now to enhance that even further. So, I'm the operational lead in the LBMA for a project called GBI. It's "gold bar integrity," but it also covers silver as well. And it's it's starting by having a system that's capturing all of the country of origin and the responsible sourcing assurance deliverables under one system submitted securely, giving us a repository of all the data about what's coming in to each refinery and then the production volumes that they are are are producing annually. We'll move in the coming year to the refineries providing their production data at the bar level, which will then enable us to not only have the supply chain information relating to their production, but also the production against that supply chain. And having hard and fast data and evidence proving that heightens the prevalent provenance of the metal and that will heighten and maintain and sustain the provenance of the metal in the London market. That's what we're aiming to do. Of course, every time you bring new standards in, metal is then procured against that standard. Then that technically is is creating tiers in the market where you've got a heightened level of provenance for the newer at newer gold. So when four nines bars brought in, four nine bars were more were more sought after because they were deemed to be the highest purity and the best for the the client. Now we're running responsible gold guidance. We're on version nine right now. When we moved from version eight to version nine, people wanted version nine gold as it was it was produced to a higher audit standard. And there may well be something similar when we bring RGG10 in next year, and it's an inevitable consequence when you're when you can demonstrate that that investment metal has been produced yet to a higher level of audit standard and and rigidity in the supply chain, then it's going to have greater provenance. It's going to have greater appeal.

Tarek: So that raises another question, because—and you and I have talked about this before—where, you know, a country might produce LBMA good delivery bars that are, you know, sought after and on the balance sheet of all the different banks and held in vaults throughout the world and traded amongst distributors and dealers and so forth, and then, you know, we we go to war with that country or there's sanctions with that country, and all of a sudden, those bars are kind of persona non grata and in in the chain, as it were. Russia is a great example of this. A lot of Russian bars floating around the marketplace. And we were friendly with Russia for a long time, especially in the wake of 9-11. We were, you know, fairly collaborative with them on a lot of different things. And then now, all of a sudden, those bars are really no good. The banks don't want to trade in them. And yet they're sort of still living in the market. What is the LBMA's response to that and kind of how to handle that process? And, you know, it just kind of makes me think, you know, if, you know, one day you're you're walking along the beach in England and you're walking the dog and you run into a Russian silver bar, a 1,000 oz silver bar worth $35,000— what do you do with it?

Ed: Well, obviously it was a very difficult time. And and at the time we when the sanctions were announced, we delisted the Russian refineries, the Russian banks that were members of LBMA were and the membership revoked as was right and proper at that time. So we took action relatively quickly to do that. The other thing we did, which is very important at that time, is is any metal that existed in the market pre the date of the application of sanctions was perfectly legitimate metal. And we had to undertake a very lengthy process to identify what metal was in, what production levels were, what what was in transit and therefore was technically sanctioned material and so on. And we went through a massive effort to identify everything that was held and therefore whether or not it was pre or post the sanction date. And we got to the point where we clarified that we'd we produced several sets of guidance. We've worked with a number of jurisdictions, including our own in the UK, to to assist the customs teams on what to look out for and what was acceptable and what was not acceptable in accordance with the sanctions. We worked very closely to make sure that the government guidance coming out actually aligned to what was going on in the market, because our principal aim was to make sure the market could continue operating relatively seamlessly. And it took quite some time to to do that. But we acted quickly. We worked quickly. We worked well with the UK customs. We've worked with other jurisdictions as well to assist them in understanding what they can and can't do. You can't get away from the fact, though, that there are still some issues with metal, even though it predated sanctions and was procured perfectly legitimately and is, to all intents and purposes, good delivery, still represents a risk to some. And it creates that multi-tier system that you were talking about earlier. It does create a tier system in that respect, whether we like it or not. GBI will help us in in tracking bars and it will allow us to to conduct that exercise far more efficiently than we were able to do when the Russian sanctions came into place. But that said, we were still able to work very, very quickly and with all the players in the market to identify where the inventory sat and exactly what was happening. And we knew exactly what was legitimate and what was not legitimate at that time.

Tarek: I want to rewind the tape about five months to January, February of this past year. And all of the talk internationally was of the tariffs. And there was a lot of panic in the market because, you know, at the time there was a lot of uncertainty as to whether or not there would be tariffs on precious metals that was not explicitly articulated in any of the documents, at least in the early going. And very quickly, there was an escalating carry trade between England and the United States, where an inordinate amount of metal started moving from the London vaults to the New York vaults. Take me back to that time. And what was that like for you as the governing body of, you know, most of the participants in those trades? And what was the experience like? What was on your mind? Was it stressful? What was what was that all like?

Ed: Well, interestingly, whilst the the driving force behind it was different, we actually went through something very similar. A similar price dislocation process happened in during Covid. And so there was a dislocation because people didn't think that metal could fly or move around, and therefore it would be very difficult for futures on the New York market to settle because the gold wasn't there to be able to do. So part of what we would what we were doing back then is working out ways in which that could happen. So we worked with the CME at that point to to introduce the concept that CME futures could be settled on gold held in London to reduce the amount of metal that did have to move. Now, the circumstances in January were slightly different, and we always find ourselves in a position that we look at what is going on. We need to identify what. What what's the best way of putting it? We need to we need to recognize and identify those items that are in the press that perhaps need some qualification. So we say they're not quite as they as they should be. And there were quite a few things in January that that were not quite true. To say that London was emptying out at a rapid rate. There was a lot of metal moving. But what you need to settle in in New York is different from what to settle in London. So you may need to move a metal out of London for reprocessing. So it has to fly from London to a refiner wherever that might be reprocessed into the bars that can then be settled in New York and then fly up to to New York from there. So it was delaying the time frame in order to settle. And the the our pushback in the press has got to be driven by fact and it's got to be driven by data. So we we waited until we got the vault holdings that came in from all of the London vaults. And the net impact was slightly over one percent and the volume actually did move out of London. So there was inflows as well. But the net reduction in London stocks was about one point two percent.

Tarek: That's remarkable. I was actually in advance of this interview. I was looking and it said here that. Reuters reported that deliveries to Comex vault jumped 70 percent over two months, about twelve point two million troy ounces or three hundred eighty tons of gold. And it said that by the end of February twenty twenty five, London's commercial gold vault holdings fell to about eighty four hundred tons. Eighty five hundred tons of five year low silver holdings fell to twenty two thousand tons. So you're saying that was only one percent.

Ed: But if you look at when you've got inflows as well. So at the end of the month, when when you've got inflows coming in, well, you ended up with quite a low, a low change. So overall, overall, the volume didn't change. What what was good was that the market responded in it and it worked. There's probably more work that we need to do with the CME to to identify how we can potentially reduce the number of times we get such dislocations happening, because obviously what the market's responding to a concern that metal won't be there to settle the futures and the willingness to roll those futures in New York is perhaps reducing because of the concerns about whether the metal is there to settle on them. And that's what drives the dislocation or seems to drive the dislocation. And whether or not we can work out different ways to support the New York market, whether or not there's a closer way of operating between New York and London to to ensure we don't have these highs and lows in that particular way. We don't need to do it is, you know, we're going to have to work on that, of course. But we do have a close relationship with the CME. So we talk about these things all the time.

Tarek: Why why is London so important to the global precious metals trade? Is that just a function of history or is there something else that's driving that? Why is the global metals trade not just all in New York City?

Ed: And yet again, a very good, a very good point. I think it's OTC. It's not exchange based trading. It's bilateral. That allows people to work in volumes that they decide as opposed to a contract that limits the volume and so on and so forth. Add to that, that of course, the London market is underpinned by those standards and the provenance that I talked about earlier on. That's just maintains London as a place where people want to trade and they want to operate. COMEX, as I say, we've worked very closely with the CME. They are very much guided and sit alongside with our responsible sourcing guidance and our good delivery listed refiners and who produce the metal that is is traded on that market. And it's just the way things are going. And it is, again, it's to do with the provenance of the metal that is produced for the London market and then traded on them.

Tarek: So going back to the January, February timeframe with all of the headlines and, you know, the pundits talking about the challenges of moving this metal back and forth between these two jurisdictions, you know, from the perspective of the LBMA or those participants, you know, trading OTC was kind of a shoulder shrug. Is that how you describe it?

Ed: Well, there were those . . . some market participants were certainly saying, well that's, this is what happens in the market. You know, when there is an element of uncertainty in one area, then there will be price variation when people think that contracts are not going to be delivered on time, and so on and so forth. So that's going to drive that price dislocation. But inevitably, once the market starts responding and working to it, that settles down, and it will always normalize in due course. And the general feeling was that whilst an awful lot of metal had gone across into New York, at some point, holdings in New York would be too big to sustain what New York needed and the way it operated, and therefore metal would start coming back the other way. And to some degree, we are beginning to see a little bit of that right now.

Tarek: Well, the vaults were bursting at the seams.

Ed: Of course they were. Yeah. So because they had to be to meet the demand that was happening in that particular time. And eventually that will begin to settle down again and there'll be movement back the other way, because the capacity, the vaulting capacity and where that where the metal is traded is going to be back in London again. And there will be a volume that is required in New York. And it should settle back down. Most of the banks were were saying that they expected it to settle down. And and again, we had to listen to everybody. Everyone's thoughts that no doubt there were some that were on the wrong side of of what was going on at that particular time and some that were on, as they might have seen, the right side of it. But eventually the market settled, the prices came more aligned. And then that means at some point there will be a point where everyone's looking at where their inventories are and where they need to be and whether they need to be moved back to London or whether or not they just hold them where they are with the vaults bursting at the seams.

Tarek: Is London the world's only OTC market?

Ed: Well, London, maybe London is is the wrong term to use.

Tarek: And explain OTC for those listening. We're using industry jargon here.

Ed: Yeah, it is a bit of a. . . . So OTC means "over the counter." So, it's a bit like me trading with you across the table—is where the term originally comes from. But effectively, it means it's bilateral and that the terms of whatever the trade might be, whether it's forward or an options trade or even spot deals, they're determined between the two parties that are buying and selling. And that's how it works. And it uses the London benchmarks as the basis. And that's how daily trading is going on and how the volume happens. And the metal in London, the well, certainly an allocated metal can be traded on. The same ounce could be traded on two or three times in one day very quickly as it moves between and people are taking advantage of whatever positions they might have. So it's the way that works. And it is all about face-to-face bilateral. And there are many ways that can be. That can be a clearing member in London trading directly with another participant in London. It could be two independent trading organisations trading between themselves on metal held by a clearing member in London. Or it could be an Australian bank trading with someone in Hong Kong. But the trade is settled through London. So we see a lot of transactions in the global OTC market, which is probably a better term to use, that effectively is traded amongst parties internationally, but the trade is settled through the LPMCL in London and the trade is against metal held in vaults in London. And that happens almost every day. Every day that's happening around the world.

Tarek: And and this is obviously very different than the futures market, which people in the US are accustomed to for those that are trading. Obviously, futures contracts mean futures delivery versus an over the counter because it doesn't exist.

Ed: Yeah.

Tarek: Now, those trading swaps in the London OTC market also have the advantage of taking no currency risk either. Right. Because they're delivering, say, 100,000 ounces of silver local London and taking delivery of 100,000 ounces of silver in Australia. And it's just a like kind silver for silver swap, essentially.

Ed: Yeah.

Tarek: Good. So I want to actually get into your background a little bit. So I'm imagining, you know, six, seven year old Ed Blight in England, kicking the soccer ball around saying, I am passionate about the over the counter metals market in London, and this is where I want to be for the rest of my life. Is that how that went down?

Ed: Oh, that couldn't be so further from the truth. No. So I was born in a place called Plymouth in the West Country, which is renowned for being a naval town. So my father and my grandfather all worked in the dockyard and they worked on the on the ships, the aircraft carriers and the submarines that were based there. And that's where I grew up. But it was one of those places where you did. Two or three things were on the table for you to do, you could go into the dockyard, you could join the navy, maybe, or you could go into tourism because the West Country is all about tourism and things like that, or indeed the retail market, none of which really appealed to me. And the navy didn't appeal to me largely because I did get seasick. So that was one of the reasons I didn't want to do that. But at 16, I joined the army. And at 16, so you were still in high school. I left. So I did my we had back then we had O-levels. So I did my O-levels. At that time, I got nine O-levels. And instead of going on to do A-levels in university back then, probably around about six, seven percent of people actually did go to university in the UK at that time. And—that's how old I am!— so I joined the army. I was what's called a telecommunications mechanic, which is kind of a high-end sort of term for telephone engineer. I used to do lots of communications installations on RAF stations around the world. And I did that for a bit. But the army knew that I'd had all these O-levels and things like that. And in '85, I was approached to if I wanted to go to Sandhurst for commissioning. And which I went through the process. I passed RCB, the Regular Commissions Board in in 1986. And I started at Sandhurst in 1987. I was commissioned into the Royal Corps of Transport and deployed to Desert Storm, which was a rather interesting experience in 1990. Came back in the March of '91, after the land war.

Tarek: So what was that like?

Ed: Intense.

Tarek: Yeah. What was going on in your mind there? This is your first experience with war.

Ed: Well, no, not really. Well, yes and no. So I was serving. So I joined the army in 1979.

Tarek: OK.

Ed: And so I was serving in 1982 during the Falkland's conflict. But I was on standby. I was based in Germany at a place called RAF Bruggen. And I was on standby to go down and rebuild the communications at Stanley Airport had the communications been destroyed. As it was, they weren't. So we weren't needed to deploy. But we were on standby and readiness to go. So sleeping with all your kit next to the bed, ready to go and things like that. So that was my first sort of involvement in that kind of thing. But the the Gulf War was slightly different. And it was the first time we'd ever done armed conflict for quite some time. We trained a lot for it, which was fine. What was I? I was 28, probably 26, 28, something like that. And I was the operations captain of a bow field transport squadron.

Tarek: And so you had been moving up the ranks pretty quickly then.

Ed: Yeah.

Tarek: That time you're 28 being a captain.

Ed: Yeah.

Tarek: Seems significant.

Ed: So I so yeah, I did that. And I was we, went out there. I sort of worked with the the divisional staff to define what the fuel plan was, how we needed to divide up our trucks for the diesel, petrol, aviation fuel, and made sure we were able and equipped and configured to run an advance-to-contact war, armored warfare. And yeah, sort of on the on the day the land war started, I was queued up in a load of vehicles around about four miles back from the front line watching all the all the action in front. And then I ended up going through the breach, it was called, just next to a place called Hafar al-Batin. And I was paired up. I went through with the US, the first armored division, I think it would have been grade one.

Tarek: I was going to ask about that. So we're like the the armies segregated. So you were in a I don't know, a battalion of your of your, you know, fellow English soldiers. And then right next to you, you have the Americans. Or are you potentially put under the command of Americans and fighting side-by-side or how does that work?

Ed: It would kind of side-by-side. So when we first moved up from the coast near a place called Al Jubail, we moved up to Hafar al-Batin and it was a big, big spread of forces all over the place queued up ready for the land defensive. And the nearest unit to us was a US National Guard unit. And we spot—forgive me when I say this—but we spotted them because we saw this plume of smoke going up into the sky. And so our squadron sergeant major took his Recce team out to see what that plume of smoke was, went there and we discovered that they'd had a problem with their cooking trailer. And so we came back and took one of our cooking trailers across to them and fed them, which was great. We had a great a great time with them, to be honest. It was really good.

Tarek: What was the cause? Were they barbecuing and things got out of control?

Ed: Oh, but they were basically it was a it was a fuel burner. So as opposed to gas, it was a fuel burner. And they bit like anything when you put too much fuel in, it sort of burns with smoke and that's not good when you're cooking. So, yeah, we had to we also drained it down, maintained it, cleaned it up for them. And so they were able to use it going forward. But it was great. Yeah, it's brilliant. Really enjoyed it. And so we were sort of very close. We weren't commanded by Americans. We didn't command Americans. We were just very fighting side-by-side all the way through. So I was literally just behind our one U.K. armored division going up. But they were side-by-side with the U.S. first division as well, going up into Iraq and then across the Wadi and into northern Iraq, which was, it was quite an intense hundred hours, to be honest.

Tarek: Now, were you married at this time?

Ed: Yeah, I had one one daughter at the time.

Tarek: So was your wife just terrified every day that you were out in the front lines?

Ed: So I think every time when I asked her at the time, she was yeah, it was it was a difficult time. And the wives, the wives dealt with things in different ways. But what tended to happen, particularly the unit I was in was based in Germany. And so it was already relatively quite close knit for the families and the families used to do the wives clubs. And there were various things that would bring the families together. And so there was a network already there to support them. And they came together even more. And we had some people in our rear party that were left behind in the barracks who who supported them and made sure there was always something for the families to do. We were lucky the unit didn't— we didn't have any fatalities. We did have some injuries, some, you know, which was which was a concern. But we were fortunate enough we didn't have fatalities. I did. I did lose a colleague of mine who used to be in my troop when I—my first ever troop when I was commissioned— he was unfortunately killed. But yeah, it was, it was a different experience because it was very fast paced, very moving, forward moving. If you look at the stuff that was going on in in Afghanistan, which was much more fight a patrol base. So you move, you patrol, and you fight from base to base. This was an armored warfare sweeping across the desert. And you were constantly on the move to keep up with the frontline troops to make sure that they were resupplied and they could continue the advance into northern Iraq—northern Kuwait, sorry, I should say. But, there's been a lot said about the first Gulf War and then the second time in Iraq and the politics behind it. I felt comfortable with the mission of the Gulf War because the mission was to liberate Kuwait that had been occupied by the Iraqi forces at that particular time. And we achieved that. The Kuwait was liberated. We were able to stay and it's still liberated to this day. And that I think was the the whole purpose. It was a very clear mission, very clear goal. The end state was very clearly defined. And then when you're operating that clear military mission and you achieve it, then you know you've achieved all the goals. And once you've stabilized the area, you can then withdraw and leave it to the country to to settle. And that's what happened in Kuwait. Obviously, Iraq was a slightly different story. It remained unstable, and that led to the second Iraq War.

Tarek: And were you still in the military during the second Iraq War? And did you go back over to that theater?

Ed: No, I. So by then, by the time the second, we'd obviously had Bosnia and the Kosovo thing. So I did a tour as a squadron commander in Bosnia. And this was more a peace support rather than a peace-keeping mission. So there's different phases: there's peace keeping where you're trying to keep the opposing parties apart. And there's peace support, which is they're not fighting anymore. And what you're trying to do is make sure it stays that way. And that's that's what really what it was. So we went from I-4, which was really the the peace keeping to S-4, the stabilization force, which was more about stabilizing the theater and making sure that the parties didn't come to fighting again. So I was there at that particular time. And then I was promoted a lieutenant colonel in, when was it, 2002, 2002, 2003. And a couple of years later, I then went out and did a tour as a lieutenant colonel in the Joint Force Command in Naples, commanded by a US three star. And yeah, that was a good tour. That was that tour was largely looking after Bosnia and Kosovo. And also Joint Force Command at that time was also looking at Iraq and also operations in Afghanistan. So, and also Black Sea operations as well, which was quite interesting. Well, yeah.

Tarek: And any memorable stories from any of those experiences?

Ed: Um, there's there's always memorable. Some of them probably not the kind of story that I could say on on something like this, but there's always memorables. I remember— and here's a good thing, because the military is always about balancing sport with with military life, because sport is about team ethos and bringing the team together, and the military service requires you to operate and work as a team— but when I was in in in Bosnia, the British ambassador put a note around to the forces and said he wanted to run a cricket competition in Sarajevo, and there'd be a reception in the ambassador's residence afterwards. And we were all told to go around and bring together as many people who could play cricket. So I was part of a team from this split in Glamoč area in Croatia and Bosnia. So we took a six-a-side cricket team down to Sarajevo, played cricket in Sarajevo. And we were clearly told that one of the fields behind, if the ball went in there, you left it there because that was still mined. And then the comm S4—a three star U.S. general—turned up with his entourage and security guards. And I was batting with a good friend of mine at the time who hit this enormous six, which smacked into the general's car. And then his security detail were diving around all over the place, adopting fire positions, thinking they were under attack. But there we go. It was quite funny.

Tarek: It's great.

Ed: And all I was saying was good shot, but in a nice way.

Tarek: You almost started war with the Americans.

Ed: That would have been really bad. No, it was good.

Tarek: So what ultimately led to LBMA? I mean, the transition from military to the world of metals, finance, and governance is a big transition. I'm assuming you retired at some point from the military?

Ed: Yeah. So the last few years, about the last nine years of my time in the service, I was lieutenant colonel and I did a lot of senior roles in corporate finance. I also did a role working in supply chain optimisation, which got me working with a company called Raytheon Systems Limited, where I was doing Lean Six Sigma stuff with them. And we were looking at optimising the defence supply chain.

Tarek: So this is Raytheon, the defense contractor.

Ed: Yeah. That's right.

Tarek: Yes.

Ed: Yeah. A lot of working with them. And then, from there, I moved into corporate finance, where the job was really working with the frontline commands and the permanent joint headquarters to identify all the resources and fund the delivery plan for each of the frontline commands and then also balance the books on the on the procurement budget for new equipment. So it did all the base work on things like the new aircraft carriers we've now got and things like that. So there was me and a bunch of other people in the team. But we were all working on on those sort of projects, making sure the resources were in place to fund that.

Tarek: What did you enjoy the most about that work?

Ed: And I think it was working with the other services and the teams—the team I was in was commanded by a navy one star. And so, and we worked with the other services in our own team. And then you worked with each of the frontline commands, finding out what they what was important to them, what they wanted, needed to do within their formation cycles so that they could . . . You know, the navy was all about rotating the ships through line service, through maintenance, through overhaul and so on. The Army was all about formations, our cycles. The air force were all about five star hotels and flying their aircraft around all over the place. Sorry, that's a dig for the air force, but I'm going to do that aren't I.

Tarek: So then you transition from that role into do you go directly to LBMA from there or another stop along the way?

Ed: No. So I so I left the army in 2010 and I did a short stint doing some consultancy on Lean Six Sigma. And then I joined Amazon and I headed. . . . So I headed up their shoes and apparel business in the UK.

Tarek: And that's a big jump from the military to e-commerce.

Ed: But it's Lean Six Sigma. It's Lean Six Sigma. Amazon are very big into mini Kaizens and Kaizen and looking at process improvement, constantly looking at the constraints and bottlenecks on processes and improving them to deliver greater customer service. And so if you take what I was doing with Raytheon and defence inventory optimisation, it was the same kind of thing going in. And then looking to improve the output constantly to meet the demands of every, what they call, peak season, which is around the Christmas period and the holiday season and so on. So everything was geared around driving improvement, planning Kaizen events so that you could you could deliver the expected outturns that they wanted every year during their peaks. And everything was geared towards improving the way the business delivered every year. And so I did that for a couple of years. They moved the shoes and apparel business to its own fulfillment center in Rugeley, just outside of Birmingham. They wanted to move me on to customer returns in Glasgow, and thank you very much. I like Scotland for the Scottish that might be listening. [Laughs] But my family were down south, so I wanted to wanted to be close to them, which was the most important thing to me. So I then moved from there and I moved to G4S. So in Cash Solutions UK. But I moved across there deliberately because they were in partnership with Deutsche Bank in to build a new precious metals vault and also to integrate it with their clearing systems and allow it to integrate in with their role at that time in as a member of the London Precious Metals Clearing.

Tarek: Did you know anything about vaulting at that time?

Ed: Well, I knew a lot about warehousing. And to me, which a lot of people in precious metals vaulting in London would think is heresy. To me, gold bars are just another product that has a certain specification that needs to be handled in a certain way. It needs to be processed in a certain way. It needs to be stored in a certain way. And you need to be able to move it around in a certain way, which is the same as ammunition, which is the same as food, clothing or anything else.

Tarek: It's a warehousing process.

Ed: It's a warehousing process. And I took that into the design.

Tarek: Why do you think they would think that's heresy?

Ed: [Laughs] I moved into it as a newcomer into the vaulting, and vaulting, it's kept secret how it's done and where it's done. And how you do it and how they deliver it is a closely-guarded secret in each of the vaults. Now, I'm not saying that's right. I'm not saying that wrong. And it's, and, you know, and no one is saying for one minute that the London vaults are doing anything wrong because they're not. They are the guardians of the London market. And they have been doing that for quite some considerable time. My— of course, I was a newcomer coming in—I was introducing things like mobile racking into subterranean vaults that could move 220, 240 tons of metal at the push of a button. And I was introducing a warehouse management system into—with scanning capability and logging capability and the ability to transmit data from the moment you weighed or from the moment you stowed the bar in a location straight back to the bank—and then allowing them to forward that information direct to the owners via their autobahn. So we designed that process and everything in it was designed in the way that Amazon would run a warehouse. But it was all done with Lean Six Sigma.

Tarek: This is so fascinating to me because we haven't talked about this before. And you know that obviously we have one of the largest vaults in the U.S. And that is exactly how we built the business that we built it on a warehousing platform, warehousing ERP system, with warehousing robots, with warehousing RFID and bar coding. And that's exactly how we view it. It's the only way really to be hyper-efficient with the movement of metal. And I think the only way to really be as specific as possible as you can with the accounting and knowing, you know, where every bar is at any given moment. And if it gets traded, what the origin was of that bar, when it first came into the building. So that's interesting. And of course, Kaspar Companies, which is our parent company, is a lean company. And we have Kaizen events day in and day out.

Ed: So you know exactly what they're like.

Tarek: I know exactly what you're talking about. Yeah. So you're speaking our language here.

Ed: No, but that's that's what it was. And this is kind of where the the association with the LBMA obviously started. So not only was what was the vault I had to run, do the weighing test that the LBMA operate. And I had to go through the LPMCL vault inspection processes, both secure and non-secure processes. And the vault had to be accepted as a vault. I ran the weighing test as a mission in the removal of variability from a process. As you would . . .

Tarek: As you would.

Ed: as a Lean Six Sigma expert. Yeah. And that's what I did. And we got to the stage, passed the test. No real problems at all there and became a London vault with Deutsche Bank. And then the metal started coming in from all the parties. Of course, what the most important thing was recognizing you had to design the processes the way the LBMA had determined that weighing had to be undertaken. You had to understand and build in the rounding factors and what have you that they the GDL rules have. You had to understand their process inside out. You had to understand how the clearing processes were so that you could complete your processing in time to meet the T plus two settlement deadline of any physical trade. And you just combined all of that to design the processes to meet all of those customer expectations. So I got to understand a little bit how the clearing system worked. I got to understand the GDL rules as far as handling bars. I understand how to use the visual guide to detect whether or not a a bar was good delivery or not. And also the processes necessary to to raise a bar that we felt was defective and therefore shouldn't be accepted in the London market. The other thing I got onto was the LBMA's vault managers working group. So it's my first experience of an LBMA committee. So I was doing that until about 2014 when Deutsche Bank left the market. And at that point, G4S wound down the vault. So I left, and very shortly after that, the ops director role of the LBMA come up and I applied and got the job and I've been there ever since. And I became the CFO about a year after becoming the ops director there.

Tarek: Fantastic. I want to go back to something you just said about a bar. If if a bar came across the warehouse and you determined that it didn't meet the standards, what was the next stage of that bar's life? Where did it go from there? I mean, was it just traded, it went back to scrap or recycling or what would be some of the reasons why it wouldn't meet the standard?

Ed: It goes through an LBMA process first. So a vault would need to there would need to be photographs of the damage that was perceived or the issue that the vault felt that it was it was defective in some way, shape or form. And it could be it could be that the serial numbers got some hammering or indentations across it, making it difficult to read. Yeah, that kind of thing. Or it could be anything could be nodules in the metal that indicate it potentially could have been tampered with in some way, shape or form. And anything like that, you would photograph and you would send it off. And then the LBMA would lead the process of determining whether or not that is good delivery or is to be not good delivery. And then anything like that would became accepted would then need to be part of the visual guide as a known blemish that was still considered to be good delivery. And, but anything that was considered to be not good for delivery, you had to quarantine. And then the bank that owned the metal would then need to decide what it did with that metal, whether it went back to the the client that it got the metal from in the first place or whether or not it decided to send it away for reprocessing.

Tarek: Got it.

Ed: Yeah.

Tarek: So what is your role today? What I mean, what do you focus on as CFO of the LBMA? You walk in on a Monday morning and by Friday you've accomplished what?

Ed: Yeah. So the role is it's obviously primarily finance for for the LBMA. I look after the finances for the LBMA are subsidiary Precious Metals Prices Limited. I also look after the finances for LPMCL, the the clearing entity in London. And I'm also head of membership. So I look after membership and as you know, and so that's . . . the membership process also leads on relationship management for all of our key stakeholders. So we have a lot of people with key responsibilities in relationship management, both at the desk level and also at the senior level. I'm also the operational lead for the rollout of our GBI system as well. So I'm leading on that. I look after.

Tarek: Do you enjoy that that work?

Ed: I do. I do enjoy it because, you know, I find getting involved in new things that are being rolled out like that, it's not only about rolling it out and making sure that it's successful. And, you know, given the fact that we've introduced a system that launched in January—it's global, so all of our refineries from around the world got to be on it— the target this year was to have all the refineries on boarded and reporting their assurance deliverables in accordance with their reporting deadline. And so we had about 87 percent of them needed to report by the 31st of March, and 87 percent of them are on board, including the Chinese refineries.

Tarek: Really?

Ed: So we've got all of them on. Yeah. And that took a lot of work. And that took a lot of work. And we took a lot of time to run specific workshops in Mandarin so that they could understand precisely what was required. We have consultants that work for us in China. Yeah. And so we've got two that are based out there that work for us under a consultancy agreement. And then we have a senior advisor who's Jeremy East, formerly of Standard Charter Bank, who's our Asia-focused senior advisor. And between the three of them, they work on our behalf to to make sure that our relationship with Chinese entities works the way it needs to.

Tarek: So what are you excited about over the next year or two years about the the initiatives that you're working on with the LBMA? What are you most passionate about?

Ed: I'm passionate about all of it, to be honest. I mean, the the membership side is really blooming. So the last three years—in December last year, we had a three year strategy, which was to—the aim of the strategy was to set our position as the global authority for precious metals. And one of the successes—one of the measures that says we're probably doing that, we've probably achieved that is the appetite for membership. And, you know, we're we're growing quite considerably in terms of our membership. And only two years ago—it may not sound a great deal, but our membership is at the organisational level. And so we'll be at 180 members this year. That will grow again into next year as well. The appetite is very much over the last three years has been a lot higher than it used to be in the past. And that's nothing to do with us changing our standards. The standards are still high, very high. The expectations and the obligations of members is extremely high. And we maintain quite a rigorous due diligence process of monitoring constantly our members as we do our GDR refiners as well. There are annual reviews of due diligence. And if things are found that are not as they should be, then we will investigate. And if the need does exist for us to take steps, then we do and have taken steps to revoke membership in the past as we have done, delisted refineries as well. But it encourages me that there's an appetite for membership and working with organisations as they're coming in, learning more about how we operate and then getting excited about being part of the global market as well is a really encouraging thing to see, to see these organisations bloom as they as they become members. And I'm enjoying leading the GBI initiative. I'm already heavily involved in working with aXedras, who's the service provider for the GBI on some greater improvements to remove variability from the process and eliminate certain elements for human error. So they're very simple things that we can do. But we've also got some very clear objectives that we want, which makes—and again, it goes back to the me talking about the goal for clear objectives and exactly what you needed to do and the way you went and did it— and it's the same with GBI. We know what we want to do with custodians on GBI by the end of this year. We know what we want the system to be able to do at the end of this year so that we're ready to move into next year to the next level of transparency that we can drive through GBI. And all of that is being able to own a project like that and to deliver a project and to see it making a difference. If you can get into a role where you're doing that, how can you not enjoy what you're doing no matter how old you are?

Tarek: I can say from experience that you and your entire team do phenomenal work. And we've certainly been beneficiaries of your insights. And we had to work through some things ourselves and greatly appreciate everything that you do. Ed Blight, an officer and a gentleman. Thank you for joining me on Y'all Street.

Ed: It's been great.

Tarek: Cheers.

Ed: Cheers.