On March 20th, 2015, the LBMA Gold Price replaced the historic “London Gold Fix.”
The LBMA is an independent, electronic auction, conducted in USD
They meet daily at 10:30 AM and 3:00 PM London Time
Consists of multiple banks, ICE Benchmark Administration, a panel of internal and external chair members, and an oversight committee
Gold price is adjusted based on financial review in real-time:
45-second anonymous auction rounds Price fixed when all buy/sell orders and imbalances are within 20,000 troy oz
Real-time traders rely on various pricing models to estimate gold’s potential investment value.
A purchase price that represents future value expectations, not the current price of physical bullion.
Typically electronic, potentially volatile trading contracts that set the price of gold at a certain amount to be bought or sold in a particular time.
Spot Pricing is priced for immediate settlement in a specified currency
Spot Price changes daily, sometimes minute-by-minute
Future Pricing is increasingly higher over time, as compared to spot price
Future Pricing considers risks posed by the uncertainty of future supply and demand conditions
COMEX is the primary market for trading metals such as gold, silver, copper and aluminum, as well as the world’s largest physical futures trading exchange.
In addition to the LBMA pricing process, these external conditions influence how gold prices are determined:
• Gold Supply • Changing Markets • Currency Devaluation
When gold consumption increases, so does the price
Decrease in demand drives prices down significantly
Even in struggling markets, gold’s proven value can bolster investment portfolios
As demand for gold rises during tough economic times, prices increase
When currency loses value in relation to other currencies, investors turn to gold
Increased demand drives prices up
With an abundance of available gold investments, understanding these distinctions will secure a strong portfolio for your needs:
• Gold ETFs & Stocks • Bullion Coins & Bars • Numismatic Coins
Backed by physical gold (ETFs)
Electronic/paper, no physical storage
Quicker transaction, short-term hold
Unredeemable for physical gold
No protection against market volatility or company earnings (mining stocks)
Potential to lose all value (bankruptcy)
Purchases & sales must be reported to the IRS
Backed by physical gold
Hedge against market volatility & inflation
Some coins & bars eligible for self-directed IRA
Preserved or increased value
Tend to be more volatile due to speculation
Only worth market price of metal content
Potential for government confiscation
Not a private asset
Financial privacy
Never worth less than spot value
Potential to appreciate in strong or weak precious metal markets
Possess value beyond precious metal or bullion
Not eligible for self-directed IRA
More expensive upfront investment than bullion
Investment knowledge learning curve
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