Take a moment and imagine that your best friend has been keeping a very important piece of information from you. A few months later, you get to find out what he or she has been hiding from you.
And you also get to know that he knew about the information months ago but did not bother telling you. How would you feel? You would probably see him or her as a dishonest person or someone who does not trust or believe in you as a friend. In short, your friend is not exercising transparency.
Transparency is an important concept not only in friendships but in businesses and financial markets mainly because it encourages informational and market efficiency. Transparency means openness or honesty.
A gold market is a place where gold buyers and gold sellers meet. A transparent gold market is also accountable for all the information it gives to the market participants such as gold price investing periods, supply and demand of gold at each price level and transaction records.
Such a market makes its data available and open to independent verification by investors and financial analysts.
Trust is a product of transparency. A market cannot exist if the buyer and the seller do not trust each other. For a gold market to exist and run efficiently, transparency between two or more parties in the deal is crucial. The buyer has to clearly understand what the seller is offering and the relative price.
You can never buy a precious commodity such as gold from someone you do not trust. And you can never sell your gold to someone who is not totally open or honest with you.
The physical gold establishment remains unfair, opaque, and old-fashioned. Gold providers that own their own gold inventory have by definition an incentive to manipulate prices; increase spreads and even front run their clients’ orders by mixing their own stock with them.
Gold bullion is not a financial asset, so whilst all financial investments are regulated, gold is not. In other regulated investments, customers are protected because financial providers are enforced to always provide the best possible price to their customers. This is not the case with gold.
Transparency enhances gold market liquidity. After successfully buying or selling gold to an individual or institution you trust, you are obviously more likely to do more business with that party in future. You can help each other in finding prospects to either buy or sell gold, which ultimately leads to increased market liquidity and it’s efficiency.
Creativity and innovation
Creativity and innovation can boost transparency. How? A few years ago, when there were no online companies dealing with gold, the gold market lacked basic transparency.
The Fintech revolution brought new challenges – if you might not trust someone who you were dealing gold with directly at the local store, how can you trust someone who wants to buy or sell gold to you from the other part of the world? New technologies and innovative approaches have enabled creative minds to start up online companies such as Goldex, allowing investors to deal with gold in a fully transparent and safe environment.
Goldex is the first gold provider that does not own its own gold, built from the ground up to operate as an agency. By adopting this business model, Goldex is not only un-conflicted and fully aligned with its customers’ interests but also brings pioneering “best execution” practices to a market where investors do not benefit from the fairness and transparency that regulators impose in all other investment asset classes.
In fact, this business model makes Goldex the first “ethical” provider in the market: prices are never manipulated or inflated; clients have the certainty that they always receive the best possible execution price; any chance of committing market abuse, front running or price manipulation by Goldex is instantly removed from the equation.
Earning your client’s respect
As a gold provider, a basic operational cornerstone in the way you conduct your business should be to implement and ensure transparency. You shall earn more trust and be respected if you are open, honest and communicate effectively with your clients and colleagues in the market.
Important disclaimer: this document is not an official research report and the views expressed in it are those of the authors. The authors are not registered research analysts and there is no assurance the trends mentioned will continue or that the forecasts discussed will be realised. Gold as a commodity is not a specified investment for the purpose of giving advice under the Financial Services and Markets Act 2000, therefore, this it does not give rise to rights to claim compensation under the Financial Services Compensation Scheme.