How does the gold market operate?
A Global Market
There are many different ways to invest in gold. Buying it physically whether as jewellery or coins is one way but this method is only a small proportion of the actual gold traded globally on a daily basis. Gold is traded continuously around the clock across the globe. There are many different venues, different bar standards, local restrictions and taxes that mean the gold market is fragmented. That said, London remains the major global trading hub. It is where auctions take place twice daily to determine the price of gold that is used as a reference point for the rest of the market.
Physical vs Futures
Gold remains a predominantly physical market. This means that the gold traded is physical and is usually for immediate delivery (though as an OTC market this is all customisable). There also exist futures markets that create standardised contracts, on exchanges, for settlement at a pre-determined point in the future, usually monthly. The majority of these contracts are rolled-over or hedged with the following month, or netted at expiry and so only a small proportion of them eventually settle physically.
OTC market (over-the-counter market) means that the market is decentralised in which participants trade an instrument or asset directly between two parties, without a central exchange or broker. OTC markets do not have physical locations – instead, trading is done electronically. The three most important gold trading hubs are London (physical), New York (futures), and Shanghai (both significant physical and futures). These markets comprise more than 90% of global trading volumes, with physical gold and Gold-backed products trading at over $200 billion a day. That’s a lot of gold – and just goes to show how liquid the Gold market really is.
Generally speaking, OTC markets are typically less transparent than exchanges and are also subjected to fewer regulations. The London bullion market is an unregulated market and has been since the mid-1980s.
In an unregulated market, gold buyers must be aware of the following:
· How pure is the gold I’m buying?
· How do I know the gold is safely stored?
· Am I paying a fair price for this gold?
Finding a gold dealer you can trust in an unregulated market can take a lot of time and effort. So that’s where Goldex comes in.
Goldex – the first global gold marketplace of its kind
At Goldex, we’ve done all the hard work for you. We’re not a gold provider ourselves – but a centralised marketplace where only the most reputable gold dealers who meet our list of strict requirements can post their best prices. Goldex brings exchange – like qualities to the gold market, and in our marketplace, we ensure that only the highest quality gold and the best quality dealers can participate on the platform. That means things like price, quality, storage, and insurance – all important factors to consider when investing in physical gold – are all guaranteed.
To be approved by Goldex, dealers must offer the following minimum requirements:
· LBMA investment grade gold
· Safe storage
· Full insurance
· Regular physical audits
· Right of ownership
We connect you to the world’s gold suppliers to discover the best prices. Our trading also finds you the best execution prices, from a 24/7 global marketplace. You own your gold. 100%. It’s fully insured and held in trust, legally safe from creditors. Whatever the global situation or our corporate status is, the security of your gold is absolutely guaranteed. So wherever and whenever you choose to buy gold, Goldex will save you money, every time.