How The Gold Market Works

The Popularity of Gold Investment in the Global Population

Gold markets have been coming and going, refining and changing on a daily basis for around 60 years now.

Many potential markets have crashed and burned, some have yet to be initiated; yet only a select few markets are noted in stock exchanges or gold market discussions.

While Shanghai, India, Japan, and Dubai all house respective, well-known gold markets, none are top runners for very long.

Current Top Four Gold Markets (in no specific order)

• London (England/UK)

• New York (United States of America)

• Zurich (Switzerland)

• Singapore (Asia)

The Fixed Price of Gold

Often referred to as the London Fix, the Gold Fix, or the London Gold Fixing is a meeting that takes place twice a day consisting of leading minds from five firms known for bullion trading. This is where the standard for gold prices is set at that point in time.

The ultimate decision of these figures is up to The London Bullion Market Association or LBMA for short. The LBMA is an association comprised of over one hundred of the largest financial institutions, metal stakeholders, and banks in the world.

Their task is to define standards for silver and gold, implement positive trading practices, and supply the standard documents that are important and necessary to price discovery.

Participation in the London Gold Fixing

Each fixing must have five members present, all of which must be there to represent the London Bullion Market Association. These strict stipulations were implanted and since have been adhered to since the very first fix meeting took place on September 12, 1919.

At the time, the principal gold refiners and traders that made up the group were five leading members from Pixley & Abell, Mocatta & Goldsmid, Samuel Montagu & Co, Sharps Wilkins, and N M Rothschild & Sons. Incredibly, almost all of the companies are still manifested in the representing entities that comprise the fixing today.

Current Representation in the London Fixing

• Barclays Capital: After N M Rothschild & Sons abdicated, Barclays Capital wasted no time filling their shoes. Naturally, this makes Barclays the newest addition to the Fixing, though their initiation was not that recent.

• Scotia-Mocatta: A notable part to the Bank of Nova Scotia, Scotia-Mocatta is the popular successor of Mocatta & Goldsmid.

• HSBC: The notably giant company of HSBC is the proud owner of the late Samuel Montagu & Co., amongst many others.

• Deutsche Bank: The result of a beneficial merge with Pixley & Abell and Sharps Wilkins birthed the currently active Sharps Pixley. Deutsche Bank owns and operates Sharps Pixley.

• Société Générale: The fifth chair in the current London Fixing, Société Générale happily replaced CSFB and Johnson Matthey.

What Comes Next

While the fixed gold price is set at 10:30am and 3pm GMT at the Fix meeting in London, it is only a guideline for the spot prices to come. Following the two daily times, typically almost immediately, a whole new set of factors come into play that fuel the general market’s reactions – just like stock trading.

These buying and selling impulses throughout the markets lead to the overall price fluctuation for the rest of the day.

About the Author: Doug Young

Doug is a highly experienced professional and widely trusted authority in financial investing, commodity trading, and precious metals. With over 20 years of expertise, he helps others make informed decisions by sharing a combination of personal experience, extensive knowledge and meticulously researched information on gold IRAs, precious metals investing and retirement planning. He regularly writes news items on these topics. He has considerable experience of evaluating Gold IRA and Precious Metals Companies, gained over a period spanning more than a decade.

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