Gold is a consistently valuable metal, originating from rare and dramatic events like colliding neutron stars. Its scarcity extends from the universe to Earth. Before diving into spot gold trading, it is essential to understand the basics, just as you would when considering an oil price forecast.
Understand the market
The spot market is where professional bullion dealers conduct immediate gold transactions, but it is not a physical location rather, it is a global network of participants following standardized rules for gold trading.
For successful spot market investing, it is crucial to have a solid understanding and confidence in navigating this marketplace, akin to any other form of investment.
Those who purchase and sell gold on the spot market base their decisions on the following set of presumptions:
- The price is always stated as US dollars per troy ounce.
- Purchaser shall make complete payment within 48 hours.
- The gold will not have a specific use at the time of trade. The option to allocate later without incurring additional costs exists.
- 400-ounce bars will always be the delivery unit.
- Bars produced by refiners on the Good Delivery list will be Good Delivery bars.
- The cost of sending a reputable, expert courier to the seller’s vault door will be covered by the buyer.
How to get spot gold?
Typically, one of the gold trading tips is that participants in the spot gold market, primarily gold dealers, do not engage with private individuals. This business approach is driven by practicality, as the spot market thrives on high-volume, low-margin transactions.
- The process of establishing accounts, conducting identity checks, and performing credit assessments is both costly and time-consuming. Private buyers tend to purchase only a few gold bars, which they hold for extended periods, making it unprofitable for professional dealers who prioritize larger transactions. Consequently, private business is not sought after by these dealers.
- Individual buyers seeking access to spot gold pricing may explore options through banks, although with certain cautions. Banks may initially encourage clients to buy unallocated gold, potentially diverting their investments into this form.
- If buyers insist on allocated gold, some banks might find it impractical to accommodate them. Banks often conduct unallocated transactions to avoid involvement in the physical gold market and to sidestep the complexities associated with allocation, settlement, and storage.
Use a few popular platforms
Fortunately, the accessibility of the spot market has improved over time, thanks to a few platforms available now. This development is significant because it negates the historical challenge of accessing the spot market directly.
In contrast to the traditional 400-ounce gold bars, a few platforms enable individuals to trade close to spot prices with properly allocated physical gold, even as little as one gram.
Such a platform can facilitate spot market dealings on your behalf, utilizing its own trading and vaulting facilities. Investors can purchase gold directly on the spot market with minimal commissions and benefit from cost-effective storage options in reputable professional bullion market vaults.
Insurance coverage is included, enhancing the appeal of this accessible approach to spot gold investing.
Gold, with its enduring perceived value, has occasionally defied conventional trends, though infrequently. Incorporating gold into your investment portfolio, alongside existing assets, can provide diversification. Monitoring fundamental trends can offer insights into gold prices, aiding informed investment decisions.