Learn All About Gold as an Investment and a Commodity
Gold as an Investment
Investing in Gold is a way for investors to protect themselves against the devaluations of the dollar and from unstable stock markets. Gold is an investment available in the form of bullion and certificates. Physical Gold bullion is produced by mints from around the world, sovereign mints or privately owned. Gold bullion is primarily minted in coins, bars and rounds with various sizes available for each.
An alternative to owning Gold bullion is purchasing Gold certificates. A Gold certificate is essentially a piece of paper stating you own a specific amount of Gold stored elsewhere. Gold certificates differ from Gold bullion in that the investor never physically takes ownership of the Gold or has to store it themselves. Some investors may want to physically see their Gold bullion while others prefer the convenience of buying Gold certificates.
What is the Gold Spot Price?
The spot price of Gold is the price a raw ounce of Gold can be bought and sold on the Precious Metals market. The price of Gold per ounce is typically listed in USD but can be converted to local currencies around the world. The Gold price per ounce changes constantly based on the world market conditions, affecting the buying and selling, making it vital for investors to watch current prices daily and any other performance indicators. To stay up to date on world market news, checking market reports and assessments from experts can keep investors involved with the Precious Metals industry.
The Gold price per ounce is always measured in troy ounces, which differs from an avoirdupois ounce – the standard American kitchen ounce. A troy ounce is a unit of measure first used in Troyes, France during the Middle Ages. One troy ounce is 31.103 grams, which is equal to 1.097 avoirdupois ounces.
APMEX provides customers with several ways to remain current with the latest price of Gold and updates on their investments. With a free APMEX account, you can set up alerts for any change in Gold prices or market movements to assist in any investment strategies or purchasing decisions. Download the APMEX app on Google Play and the iOS App Store today to keep track of the spot price of Gold.
Understanding the Price of Gold Charts
Monitoring the price of Gold per ounce is made easy with APMEX’s live Gold Spot Price page for investors who want to check on prices once a day or once an hour. The live spot price pages are updated throughout the day as the world prices shift to bring our customers the most current information available. APMEX also offers historical price charts for those who like to study the supply and demand involved in Gold prices. The historical price chart dates back decades and can detail any period that you wish. Understanding long-term trends can explain short-term spikes or losses with the full history of information at your disposal.
Gold futures contracts, or commodities, are a large topic of discussion relating to the price of Gold per ounce. Commodities are raw goods such as Gold, Silver, Platinum, crude oil, cocoa, coffee, soybeans and cotton, just to name a few. Each of these commodities has futures contracts traded on various exchanges throughout the world. You have certainly heard of a few of them—COMEX, NYMEX, LBM, CGSE, etc. Gold futures contracts provide commodity producers, end-users, and speculators the means to attempt to manage price risk, buy and take future delivery of real-world goods, or simply bet on Gold prices’ rise or fall, respectively.
Most futures exchanges represent many 100s of ounces of “on-paper” Gold futures contracts traded for every single ounce of Physical Gold that is ultimately delivered in the real world. This kind of leverage means many Gold investors, including the governments of China and Russia, believe that true price discovery for Gold bullion remains impossible in today’s market.
Is the Price of Gold Per Ounce Constantly Changing?
Yes, the price of Gold per ounce changes regularly during world market hours. The world market Gold prices update Sunday through Friday, from 6 PM EST to 5:15 PM EST. While Gold may experience time periods of consistent prices, the price of Gold per ounce also can change rapidly at a moment’s notice.
Changes in the price of Gold occur over various influences taking place around the globe. These influences are factors such as currency inflations, political events, supply and demand and countless other world events.
Why Can’t I Buy Gold at the Spot Price?
When purchasing Gold, the product may cost more than the price of Gold per ounce due to bid/ask prices or any added premiums which all increase the cost of Gold.
- Bidding Price – The bidding price of Gold per ounce is the price a dealer is willing to buy Gold.
- Asking Price – The asking price is the price of Gold the dealer sells that same ounce of Gold.
- Spread – The spread is the difference between the bidding and asking prices. For example, if the ounce of Gold was bought by the dealer at $1,750.00 USD and then sold the same day at $1,770.00 USD – the spread is $20.00 USD.
- Premium – The premium over spot price is an additional cost associated with the production and distribution of the Gold, meaning any overhead costs the dealer generates during the Gold transaction.
Gold to Silver Ratio
The price of Gold per ounce is frequently used in the discussion of Silver prices. The supply and demand of both Precious Metals are compared often using the Gold to Silver Ratio. The formula is used to determine how many ounces of Silver it takes to purchase Gold per ounce. You take the price of Gold at any given time and divide it by the price of Silver to determine the ratio. Investors use this ratio to decide which Precious Metal they should purchase versus the other depending on the results of the formula. If the Gold to Silver Ratio is high, the market is more Silver friendly and vice versa.
Whether this ratio is incorporated into your buying strategies is a decision every investor needs to make for themselves but understanding this often-referenced ratio may be useful to a new investor.
Gold Spot Price in Review
In short, the fluctuating Gold spot price is a combination of the world’s futures markets and the underlying real-world Gold price per ounce. The market for physical Gold, such as the bullion items available for purchase at APMEX, tracks the Gold spot price consistently, and Gold bullion product prices tend to hover just over the spot price of Gold. This is a way to be aboveboard with buyers.
So how does the open Gold market play into how you purchase Physical Gold for your personal investments? It looks like this:
- Futures traders make leveraged derivative bets on worldwide futures exchanges.
- Miners extract mixed ore from the ground and then sell it and Gold doré bars to fine bullion refiners, typically pricing their goods just below the world’s Gold spot price.
- Refiners then melt and purify the ore into fine Gold bullion, which is then sold to mints or bullion dealers at just above the spot price of Gold.
- Private and government mints strike bullion coins or pour bullion bars, selling them to Gold dealers at bidding prices typically just above the Gold spot price.
- Retail bullion dealers, including APMEX, offer Gold bullion products to the public for an asking price competitively close to the spot price of Gold. Any necessary premiums will be added to the final price as the Gold is ready to be sold to the public.
We hope this helps you understand how the spot price of Gold is determined. It is decidedly complex, but the savvy personal investor does well to have at least a working understanding of such an important and impactful part of buying Gold.
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