When it come to gold there are a few simple things that you should know about, these are the basics of getting the best out of the precious metals that you own. Firstly you have to understand the karat system in order for you to realize the actual value of your gold based on market prices. Market prices follow the spot gold price at any given time of the day; these prices are not set by the gold traders, but are set by the London Gold Fixing, that is executed by four members from the London Bullion Market Association.
These four are (current) Barclays, HSBC, Scotia – Mocatta and the Société Générale. The process is relatively simple from a distance, but it gets a bit more complex as one move closer. So how an individual is affected when they attempt to exchange cash for gold in Melbourne depends on what happens in London each day. The primary participant in the gold price fixing process (who is usually a part of the five participating banks who are also known as the ‘market makers’) starts off by offering a price to the gold buying market that is close to the current spot prices.
As an example let’s say gold prices closed at 1 dollar an ounce the previous day, the lead participant may offer to sell a certain volume of gold at 1.01 per ounce, the dice has been rolled, and then the market traders come into the picture to factor the volume of physical gold as well as trading contracts which are otherwise known as ‘paper gold’ – the ultimate goal of the entire move is to set the overall net amount to a neutral state after which the chair will state that the prices have been fixed without any red flags.
Thus, those who trade cash for gold in Melbourne can be rest assured that Melbourne gold buyers follow the prices set by the gold fix constantly. These prices are even listed on these traders website. The only difference that usually arises is the service fee that comes in the form of the cost for assaying the items intended for exchange.
These difference are usually insignificant as most of them use the same procedures and techniques and the variance between their offered prices hardly differ. Another interesting factor about the fixing process is that gold buyers are actually charged 20 cents for each troy ounce that they buy as a premium to absorb the cost of fixing the gold price, which the average Jane and Joe will not be affected by when they buy or sell gold in Melbourne.