How Is Gold Spot Price Determined?
Posted By | November 29, 2016
You’ve heard the phrase “the fix is in, the system is rigged,” especially if you followed the American election. In some cases, a rigged system is more than just a paranoid conspiracy theory. For example, when it comes to determination of gold’s spot price, the fix is definitely in—the London gold fix. If you are an Augusta Precious Metals’ Augusta™ Gold IRA customer, you’ll be interested to know how this scheme works.
It happens twice every business day at 10:30 a.m. and 3:00 p.m. local London time. The gold fix is a secret conference call attended by a shadowy group of London-based international bankers who work for banks in the UK, China, North America and Europe. These unrecorded phone calls are surrounded by a thick wall of secrecy, but their purpose is clear: to set the benchmark price for selling gold contracts in the London bullion market. This price has worldwide implications for the selling price of most gold-related financial instruments all over the planet.
This process, which has been the subject of lawsuits claiming the bankers are manipulating the price of gold, was begun in 1919 by five huge gold bullion traders and refiners. The process has evolved somewhat over the years, but it is essentially the same: banks that make markets for gold trading arrive at a new spot, or current, price. They factor in the current spot price of physical gold and gold contracts, such as gold futures. The members then announce the new spot price, which ripples through gold markets around the world. Of course, this spot price can change quickly after the fix due to fluctuations in supply and demand, but nonetheless the London fix has a profound effect on international gold prices.
You might ask, why did the Lord descend from heaven and bestow the right to set gold prices upon these giant financial institutions. Well, unless you pray to banks, the answer is that heaven had nothing to do with it. We at Augusta Precious Metals don’t like price fixing—we believe in free and unfettered markets. So do a huge number of our APM gold IRA customers who place their faith in physical gold to help them withstand inflation, devaluation and disruption from economic and political crises.
We are reassured by the fact that, ultimately, supply and demand determines gold’s price, notwithstanding whatever manipulation the London fixers have in mind. If you’d like to add to your supply of gold, open an Augusta™ Gold IRA from Augusta Precious Metals and begin making tax-deductible contributions. You can use your gold IRA to purchase qualified gold coins and bullion, a prudent way to diversify your wealth in today’s uncertain world.
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