Gold Price Guide - Part 1

1. Gold Price Guide : I

2. Points To Be Discussed Today:
• Bid & Ask Price For Gold
• Is There A Gold Benchmark?
• Gold Fixes & Shanghai Fix
• What Is OZ, GRAM, KILO, TOLA, (Etc.)?
• Why Are Silver And Gold Prices So Different?
• What Is The Price Of The Gold And Silver
Ratio?

3. Bid & Ask Price For Gold
WHAT IS THE BID PRICE FOR GOLD?
• The bid price is the highest price someone is
willing to pay for an ounce of gold.
WHAT IS THE ASK PRICE FOR GOLD?
• The ask price is the lowest price someone is
willing to sell an ounce of gold.

4. What Does The Spread Mean For The
Gold Price Per Ounce Today?
• The spread is the price difference between the
bid and the ask price.
• Both gold and silver are fairly liquid markets
so traders can expect to see a fairly narrow
spread in these markets;
• However, other precious metals may have
wider spreads, reflecting a more illiquid
marketplace.

5. Is There A Gold Benchmark?
• Because there is no official closing or opening
price for gold or silver, market participants rely on
benchmark prices, set during different times of
the day by different organizations.
• These benchmarks are also referred to as fixings.
• The London Bullion Market Association (LBMA) is
the leading organization that is responsible for
maintaining benchmarks for all precious metals.

6. Is There A Gold Benchmark? - I
• The LBMA Gold Price, the LBMA Silver Price, and
the LBMA PGM Price are the widely accepted
benchmarks in the precious metals space.
• Kitco.com also provides a variety of benchmark
prices for gold and silver.
• The benchmark price is determined twice daily in
an electronic auction between participating
banks with the LBMA, which is administered by
ICE Benchmark Administration.

7. Gold Fixes
• For almost 100 years, the main gold benchmark
price was set by the London Gold Fix.
• The price was determined in a closed physical
auction among bullion banks.
• A price is determined after most buy orders
matched most sell orders.
• These auctions would take place twice daily, once
in the morning and once in the afternoon in
London, England.

8. Gold Fixes - I
• However, the London Gold Fix shut down in
2015 and the responsibility for maintaining
the process fell to the LBMA, which created
the LBMA Gold Price on March 2015.
• The association shifted the price matching
mechanism from a physical auction to an
open electronic auction among its
members.

9. Gold Fixes - II
• The benchmark is still set twice a day at 10:30
a.m. and then at 3 p.m. London time.
• There are thirteen participating banks, including
the Bank of China, Bank of Communications,
China Construction Bank, Goldman Sachs
International, HSBC Bank USA NA, ICBC Standard
Bank, JP Morgan, Morgan Stanley, Société
Générale, Standard Chartered, The Bank of Nova
Scotia - ScotiaMocatta, The Toronto Dominion
Bank and UBS.

10. Shanghai Fix
• Launched in 2016, the benchmark price
mechanism in China is known as the Shanghai
Gold Benchmark price.
• The price setting follows the same process as the
London Gold Price in that the price is set twice
daily.
• However, it is denominated in yuan (or renminbi)
rather than U.S. dollars.
• The price is also derived from a 1-kg contract. The
benchmark is listed on the Shanghai Gold
Exchange.

11. Are The Gold Prices Per Ounce The
Same Around The Globe?
• One troy ounce of gold is the same around the world
and for larger transaction are usually priced in U.S.
dollars as that is the most active market; however, the
value of an ounce of gold can be higher or lower based
on the value of a nation’s currency.
• Traditionally, currencies that are stronger than the U.S.
dollar have a lower value gold, price where currencies
that are lower than the U.S. dollar have a higher prices.
• While gold is mostly quoted in ounces per U.S. dollar,
OTC markets in other countries also offer other weight
options.

12. Are The Gold Prices Per Ounce The
Same Around The Globe? - I
• The Kitco Gold Index (KGX) is an exclusive
feature that calculates the relative worth of
one ounce of gold by removing the impact of
the value of the U.S. dollar index.
• The Kitco Gold Index is the price of gold
measured not in terms of U.S. Dollars, but
rather in terms of the same weighted basket
of currencies that determine the US Dollar
Index®.

13. What Is OZ, GRAM, KILO, TOLA, (Etc.)?
• Gold and most precious metals prices are quoted in troy
ounces; however, countries that have adopted the metric
system price gold in grams, kilograms and tonnes.
• Grams = 0.032151 troy ounces
• Kg = 32.150747 troy ounces
• Tonnes = 32,150,7466 troy ounces
• Tael = 1.203370 troy ounces
• Tola = 0.374878 troy ounce
• Though not as popular as kilograms and grams, Tael is a
weight measurement in China.
• The tola is a weight measurement in South Asia.

14. What Is The Difference Between An Ounce And
A Troy Ounce When Looking At A Gold Chart?
• A troy ounce is used specifically in the weighing and
pricing of precious metals and its use dates back to the
Roman Empire when currencies were valued in weight.
• The process was carried over to the British Empire
where one pound sterling was worth one troy pound of
silver. The U.S. Mint adopted the troy ounce system in
1828.
• A troy ounce is about slightly heavier than an imperial
ounce by about 10%.
• An imperial ounce equals 28.35 grams, while a troy
ounce is equal to 31.1 grams.

15. Why Is Gold Mostly Quoted In U.S.
Dollars?
• While you can buy gold in any currency in the world, it
is important to realize that ultimately everything is
based on the value of the U.S. dollar.
• Given that the U.S. is the world’s biggest economy and
one of the most stable, the dollar has become a
reserve currency, meaning that it is held in significant
quantities by other governments and major
institutions.
• Reserve currencies are used to settle international
transactions. Since the start of the 20th century, the
U.S. dollar has been the dominant reserve currency
around the world.

16. Why Are Silver And Gold Prices So
Different?
• The reason gold and silver prices vary widely
boils down to one simple fact: rarity.
• The less supply there is of a metal, the higher
the price.
• Therefore, gold prices tend to be much higher
than silver prices because it is much harder to
get.

17. Why Are Silver And Gold Prices So
Different? - I
• The reason supply is much larger for silver is
because it is an easier metal to mine and it is
often mined as a by-product to other metals
mining.
• The average occurrence of gold in igneous
rock is 0.004 parts per million. Silver shows up
at a rate of 0.07 parts per million.

18. What Is The Price Of The Gold And
Silver Ratio?
• The gold-to-silver ratio shows you how
many ounces of silver it would take to
buy an ounce of gold.
• If the ratio is at 60 to 1, this means it
would take 60 ounces of silver to buy one
ounce of gold.

19. What Is The Price Of The Gold And
Silver Ratio? - I
• Investors use the ratio to determine whether
one of the metals is under or overvalued and
thus if it is a good time to buy or sell a
particular metal.
• When the ratio is high, it is widely thought
that silver is the favored metal.
• When the ratio is low, the opposite is true and
usually signals it is a good time to buy gold.

20. Gold Price Guide : I

21. Thanks for listening
Gold Price Guide : I