Who decides the price of gold? The procedure is called gold fixing and has been practiced since 1919, when the Rothschild family, together with four powerful gold merchants, Pixley & Abel, Mocatta & Goldsmid, Samuel Montagu and Sharps & Wilkins, agreed on its value twice a day, in the morning and then at tea time in their London home. In an environment, one might assume, similar to the solo room of a sophisticated gentlemen’s club in the City. Over the years, much has changed; in 2004 the Rothschild family sold its seat to Barckays Bank and prices are decided via telephone or telematic conferences between Deutsche Bank, Barclays Bank, HSBC (Hongkong & Shanghai Banking Corporation, one of the largest banking groups in the world), Bank of Nova Scotia and Société Générale. This circle of power, the London Bullion Market Association (LBMA), is represented by five authorized brokers, who at 10 am and 3 pm, based on an opening price, relaunch, as sellers or buyers, offers on behalf of the bank and their clients. And it continues until supply and demand balance, that is, when the number of buyers and sellers is equal.
The price is still set with the British unit of measurement, the ounce (equal to 28.34 grams). Of course, London is not the only market, but it is certainly the oldest and the one that deals with the largest quantity of precious metal: 670 tons per day. Another thing to know: the metal traded on the London market is considered the one that offers the most guarantees. Each ingot, according to the London Good Delivery status, corresponds to 400 ounces, or 12.4 kilograms. «Good delivery» is instead the most used commercial method by large investors: the official gold market never stops, it is possible to trade gold 24 hours a day, five days a week. The price of the yellow metal derives from the exchange of 400-ounce bars in London, as well as that of 100-ounce bars which are instead used by the Comex market in New York, the second most important market after London. But there are also the lists of Zurich, Tokyo, Hong Kong and Singapore.
Who sells gold? Mainly the large mining companies. Then there are 55 refiners authorised by the LBMA. These official suppliers put about 150 thousand 400-ounce bars on sale every year. Can you buy gold? Yes, it is possible to buy gold, especially in the form of small bars weighing a few grams, or minted into coins. You should know: the most expensive bars are the one-gram ones, usually purchased as gifts. They are covered in plastic, and are 2% to 4% more expensive than the current value of gold. But coins are the most expensive overall. The most used system for investing in gold, in fact, is to purchase financial products linked to the price of gold, such as ETFs (Exchange-traded funds), which are funds linked to a specific basket of goods or shares, in this case the metal. Large investors, such as banks, can instead purchase gold on the OTC market (Over The Counter, which deals with securities not listed on the stock exchange). London is the largest OTC market.
