Does the Paper Gold Market or the Physical Gold Market set the Price of Gold?

When navigating the gold market you will discover that there are two markets the gold market and physical gold markets. The question many ask is who sets the price. In most markets, the price is established in the areas that have the highest volumes. In the gold market the parts with the highest trading volumes or are the most liquid are the COMEX gold futures market and the London over-the-counter markets. Trading in these markets sets the gold price internationally. The price you end up paying when you buy gold Brisbane dictated by what happens in these markets.

What exactly is paper gold and should it matter to you?

Paper gold refers to claims that provide exposure to the price of gold without any ownership of any physical gold. These claims would include future contracts traded on COMEX and unallocated gold traded on the London gold market. Paper gold products are settled with cash and they have no direct connection to physical gold. Paper gold products are sometimes referred to synthetic gold alluding to the fact that they are not real gold.

Gold buyers are more concerned with the LBMA (London Bullion Market Associations), a global bullion trade association located in London. The association was founded in 1987 by the Bank of England and various other banks that deal with precious metals. This association has become a global trade association with membership made up of refineries, bullion traders, commodity market traders and various other companies involved in the bullion trade. The LBMA maintains the Good Delivery list, which sets a quality standard that precious metal refineries are required to meet.

What is the “Good Delivery List”?

The Good Delivery List is a term used by the LBMA to refer to gold refineries which are accredited as having the highest quality standard in refining gold. There is a good delivery list for silver and the platinum group of metals also has its own good delivery list.

Good Delivery lists are used by commodity exchanges as well as gold exchanges as a benchmark for which bars from which refineries can be accepted for settlement of contracts. The list is also used by regulatory bodies and government entities as a benchmark for defining or identifying brands that qualify as investment grade gold brands. When you buy gold Brisbane, you should check whether the producer of that bar is on The Good Delivery List or not. This will become important when the time for you to send your gold comes.

Is there price manipulation in the gold market

Price manipulation in the financial markets including the commodities market is defined as a deliberate intervention into that commodity market with the intention to alter the price or interfere with the free operation of that market. This is illegal under the securities laws. There are different ways to manipulate the gold price. They could involve secretive interventions by governments, central banks as well as groups of traders within specific investment banks operating in a cartel-like way.

There is evidence that Central banks have had a hand in intervening in the gold trade. These actions could have been done to stabilise the gold price but the bottom line is that they end up affecting more people in more ways than one whilst unfairly benefitting others. There is documented evidence of banks and individuals manipulating the gold price and class-action suits that investors have launched against banks and traders who participated in price fixing. You might consider yourself too small an investor to worry yourself about price manipulation but they here is no such thing as an insignificant investor in the gold market. Price manipulations will affect and disadvantage you as much as it would a big investor with tones of gold stored in a vault.