As part of our goal to make gold acquisition simple and stress free, we’ve written a few articles to help you understand the complexities of the precious metals trade. We’re starting this week with an introduction to Asian, Australian, and European markets.

Asia/Australia
Hong Kong is the major gold trading center in Asia while trading in Sydney covers the Australian continent. India and China, with their rising numbers of upper-middle and middle classes want the same glittery consumer accoutrements (watches, jewelry and the like) that their Western counterparts have long enjoyed. Mumbai also helps keep the gold trade going in Asia because of the seasonal Indian market related to wedding calendars.

The Australian spot market opens in the early evening EST and overlaps opening hours with Hong Kong. The end of the Hong Kong day overlaps with the beginning of trading in London, which in turn overlaps with New York. So there is nearly the 24-hour possibility to trade gold on one exchange or another.

Europe
Gold is traded in all the major European stock markets (Vienna, Paris, Stockholm, etc) but the standard by which all other markets operate is the London Bullion Market. In fact, five members of the LBM meet twice a day to provide what is known as the “London Fix.” This is a price set by these members that informally serves as a benchmark rate for the rest of the world. Only metals that can legally be termed bullion are traded here (all the rest are on the regular stock exchange) and according to the London Bullion Market: “Records trace bullion transactions in London back to the 17th century with the formation of the oldest original member of the market, Mocatta and Goldsmid, in 1684. It was, however, the introduction of the London Silver Fixing in 1897 and the London Gold Fixing in 1919 that marked the beginning of the market’s structure and of the co-operation between members that has created the marketplace as it is today.

The five members of the London Gold Fixing dominated the UK marketplace until 1980 when, fuelled by oil price inflation and spiraling international tension, gold reached $850 per ounce and silver $50. The level of activity and profitability in the market drew increasing global attention, which resulted in an influx of international players to London and set the market on course to become the centre of the international arena that it is today.

The growth in the number and type of market participants in the early 1980s, combined with the introduction of the Financial Services Act in 1986, brought about the formation of the LBMA in 1987”.

Also, most banks in Switzerland offer accounts where gold may be bought and sold directly over the counter, just like any other foreign currency. Different accounts have different rules for holding the gold.