Everything You Need to Know About Fixing the Price of Gold

Since 2004, there has been no official gold price. It is now the London fixing which serves as an international reference to define the price of a gram of gold. However, the value of gold and silver coins and bars may differ from one market player to another. In this context, it is not always easy to understand how prices are set when investing in gold or selling antique jewelry.

What determines the price of gold and silver? Why can a coin have a different price from a gold bar? Follow the guide to get answers!

Who Sets The Price Of Gold?

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The fixing of the price of gold is established according to supply and demand. Supply is directly linked to world gold production, mining reserves, and central bank gold stocks. Demand is essentially made up of jewelry needs, with buyers representing mainly China and India.

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The fixing of the price of gold is established according to supply and demand. Supply is directly linked to world gold production, mining reserves, and central bank gold stocks. Demand is essentially made up of jewelry needs, with buyers representing mainly China and India.

Until 2015, A Gold Price In Troubled Waters

The gold market is currently based on the spot price, defined twice a day in London. More specifically, the London Bullion Market Association is responsible for this daily process. This organization brings together certain banks (Goldman Sachs, HSBC, Société Générale, etc.) and gold traders, representatives of gold mining industries, and refiners.

Before 2015, however, it was the London Gold Fix that was in charge of setting the price of gold. This group of professionals in the purchase and sale of gold established by conference call the fixing of the price of an ounce of gold, according to supply and demand on the world markets. These exchanges then kept secret, aroused the anger of investors and producers because of their lack of transparency. In the 2000s, the GATA (Gold Anti-Trust Action Committee) denounced several times the taking sides of the companies establishing the price of the ounce within the London Gold Fix.

At the center of the debate, we found in particular paper gold contracts and other ETPs (Exchange Traded Products, grouping financial products listed on the stock exchange linked to gold). Although based on the price of the precious metal, these assets are particularly volatile, as they are subject to the vagaries of the stock market. Until 2015, their value would have been artificially inflated or underestimated, to the advantage of banks and industrialists. The London Gold Fix price-fixing methods were therefore revised and cleaned up in 2015 by the World Gold Council, and several banks were condemned.

Until 2015, A Gold Price In Troubled Waters

The gold market is currently based on the spot price, defined twice a day in London. More specifically, the London Bullion Market Association is responsible for this daily process. This organization brings together certain banks (Goldman Sachs, HSBC, Société Générale, etc.) and gold traders, representatives of gold mining industries, and refiners.

 

Before 2015, however, it was the London Gold Fix that was in charge of setting the price of gold. This group of professionals in the purchase and sale of gold established by conference call the fixing of the price of an ounce of gold, according to supply and demand on the world markets. These exchanges then kept secret, aroused the anger of investors and producers because of their lack of transparency. In the 2000s, the GATA (Gold Anti-Trust Action Committee) denounced several times the taking sides of the companies establishing the price of the ounce within the London Gold Fix.

At the center of the debate, we found in particular paper gold contracts and other ETPs (Exchange Traded Products, grouping financial products listed on the stock exchange linked to gold). Although based on the price of the precious metal, these assets are particularly volatile, as they are subject to the vagaries of the stock market. Until 2015, their value would have been artificially inflated or underestimated, to the advantage of banks and industrialists. The London Gold Fix price-fixing methods were therefore revised and cleaned up in 2015 by the World Gold Council, and several banks were condemned.

The Fixing Of Gold By The London Bullion Market Association

Since 2015, the LBMA has set the official gold price twice daily, at 10:30 a.m. and 3 p.m. This is the spot price, which serves as a reference for international traders. The price-setting process is both physical and electronic, settled in dollars and communicated to the public in real-time. The information on which the fixing of the price is based is now accessible to everyone: quantity of physical gold and silver held in the vaults of London, order books listing the details of the purchases and sales of the precious metal. The gold fixing is thus established based on an agreement between the stakeholders of the LBMA, to buy or sell at a fixed price by controlling market conditions.

London concentrates 90% of the world’s gold trade, and the price established there is therefore considered the international benchmark. But other places like New York, where mainly gold derivatives are traded, and Shanghai, with the growth of the Asian market, also provide reference prices to local players. The majority of gold traders rely on the London course; but some prefer quotations representative of their market, based on the observed average of gold exchanges and adjusted according to the international daily rate. Unlike stocks, which are subject to official trading hours, precious metals are traded worldwide in multiple markets at once, 24 hours a day. There is therefore nono official gold closing price.

The Silver Price Fixing

As with gold, the price of the silver metal was determined until 2014 by an organization made up of major banking institutions, during a daily conference call. Suspicions of price manipulation have led to more transparency. Silver price fixing is now set by the LBMA, as the London Silver Price, daily at noon.

Price Of Gold Coins: A Special Case

Gold bullion and coins may be worth more than their precious metal content alone. In addition to the value of the precious metal, defined by the spot price, some pure gold bars can benefit from a small percentage of additional value thanks to their premium. In the case of gold coins, the premium can be much higher.

The prime

The oldest gold coins or ones loaded with a strong symbolism can benefit from a higher quotation than their only value in gold. Prized by numismatists, sometimes reserved for museums or auctioned off for private collections, the value of certain coins produced in just a few copies can be close to several million dollars. If all are not as well rated, it is nevertheless possible to take advantage of a nice capital gain on resale if you own a rare gold coin. This component of the final price of the coin is called the premium.

The premium of a coin is defined according to several elements:

  • The value of gold on the day of the purchase-sale
  • International supply and demand
  • The collection bonus for rare, old, or vintage products
  • Manufacturing and logistics costs, in the case of a new part
  • The seller’s margin

In numismatics (study and collection of coins and medals), the collection bonus is the most important: it is this which defines the rarity of a coin and which therefore has the greatest influence on the purchase price and the price of sale.

What To Know Before Investing In Gold And Silver

A successful investment in physical gold or silver involves having some knowledge before getting started. Here are the most important points that you should know before buying, especially if it is the first acquisition.

Preparing for your investment in gold and silver

Terms of purchase

Transactions in precious metals are only authorized for adults, upon presentation of their identity card.

Payment is made only by check, bank transfer, or credit card; cash payments are prohibited by law for any purchase or sale of precious metals, to combat money laundering.

The delivery of investment gold purchased from a professional can be made freely, according to the conditions of the seller. However, the purchase of gold abroad (or on a web platform located abroad), and its transfer are subject to customs conditions.

Storage

From the moment your decision to purchase precious metals is made, the question of their storage arises. At equal value, the storage of silver metal requires a little more space than gold, the latter being a denser metal. To the eye, a silver ingot of 100 grams will therefore be larger than a gold ingot of the same weight: the silver one will therefore take up more space. Something to consider before buying!

Solutions exist depending on the volume to be stored.

  • The home safe: this option is the most common among individuals. It may be suitable for an investment of less than 5000€, bearing in mind that burglaries can occur at any time. You will also have to take care to declare to your insurance the goods hosted, otherwise, you will not be able to claim compensation. Some insurance companies also require the use of sealed safes, the cost of which is not negligible.
  • The safe in a bank: it is a simple solution to set up; your valuables are protected from burglary or damage, but they are not safe from bank failure or confiscation. Fewer and fewer banks can keep physical gold because the creation and maintenance of safe deposit boxes represent a significant cost for banking establishments. Storage costs are therefore generally high. The last drawback, banks can take up to several days to provide access to a safe, which is not practical for making a sale quickly by taking advantage of a gold price at its highest.

Precious metal prices fluctuate

Despite significant variations, the prices of precious metals are appreciating upwards. The ounce of gold has increased by 430% in 20 years, going from €310 in 2000 to more than €1,600 in 2021. Over the same period, silver has increased by 355%.

However, investing in silver presents a real challenge in the short term, as silver is a more volatile asset than gold. This volatility is due to the strong increase in demand for silver from the industrial sector in recent years; Added to this are the demand from the jewelry sector and the smaller demand from investment in metals, while silver deposits are depleting.

Because it duplicates industrial and precious metals, the price of silver is therefore strongly impacted when the economy and industry are doing well but is just as much so when the economy slows down. Buying at an inopportune time can lead to negative short-term repercussions or a low return on investment.

Gold appreciates over the long term

Physical gold is an asset to consider over the long term to fully benefit from its qualities. In a hyperinflationary environment, stock markets fall and bonds lose value. This configuration benefits gold thanks to its countercyclical functioning and helps to smooth losses in a diversified portfolio.

Investing in physical gold is therefore an excellent way to protect your savings against the instability linked to uncertainties about the future. However, as said before, it appreciates over the long term. It is therefore ideally necessary to ensure that the sums invested can be invested over time, and should not be released quickly. The idea is to keep your physical gold for the exceptional situations you may have to face, by selling urgently.

Taxes on the resale of investment coins and bullion

Investment gold benefits from appropriate taxation: the purchase of physical gold is exempt from VAT, and taxes are levied on resale. On the other hand, VAT must be paid for the purchase of investment silver.

There are two resale tax regimes.

Taxation under the capital gains regime

To benefit from this tax on the capital gain, gold coins and ingots must always be sealed intact: you must present your purchase invoice in your name (or any element making it possible to link the ownership of the gold to you: donation document…), and the number of the seal must correspond to that of the invoice.

If the resale takes place during the first two years of ownership, the seller must pay a tax of 36.2% on the realized capital gain, including 19% tax and 17.2% charges. social.

From the third year of ownership, you benefit from an annual allowance of 5%.

After 22 years, physical gold or silver is completely exempt from capital gains tax. The reseller must however prove that he is indeed the owner by presenting proof of nominative ownership; this document can be a purchase invoice or a notarial deed if the property was acquired following an inheritance or a donation; the traceability documents, serial number of the ingot or part under seal, must be attached.

Flat rate tax on precious metals

The flat-rate tax on precious metals does not take into account the existence of a capital gain or a loss: in both cases, the tax authorities levy a flat-rate tax of 11% on the amount of the sale, to which is added 0.5% of CRDS. In addition, there is no proof to provide.…

Successful Investment In Gold: The Key Steps

Faced with uncertain economic growth, without forgetting the risk of a possible crisis, it is important to invest your savings well by diversifying your investments, to benefit from a satisfactory rate of return while protecting your assets. In this respect, buying gold is an interesting alternative to consider to better face economic uncertainties. Discover the crucial steps to invest in gold in compliance with the regulations in force.

Investing in gold, an investment in the future

If you plan to carry out projects in the future, saving in gold will allow you to protect part of your savings from inflation. Gold is historically considered a haven that deserves your full attention, regardless of your profile.

Why choose gold as an investment force?

Considered a haven by professional investors, gold has been reassuring with its upward trend for over twenty years.

When you buy gold, you are building wealth that you can keep at home. If necessary, you do not expose yourself to a blockage, a limitation of the amount to be withdrawn, or even the bankruptcy of the financial institution that manages your savings.

Gold remains an internationally recognized pledge of value, which will generally allow you to hedge in times of crisis. This is a secure long-term saving. Indeed, gold is not correlated, even negatively correlated, with the main classes of financial assets (equities and bonds in particular).

Also, gold generally appreciates when other financial products experience a drop in performance. In this, gold is considered a good tool for diversification.

Furthermore, gold is an accessible investment and anyone can invest, regardless of their profile. Students, employees, executives, self-employed, seniors, or even retired elderly people, can easily buy a gold coin or a gold bar. No restrictions are imposed on the gold market. In addition, you do not pay VAT (Value Added Taxes) on the purchase of gold, and there is no tax on the possession of physical gold.

To be taken into account before the purchase, gold can be easily stored. Just a few tens of grams are enough to have solid and lasting savings. You can invest in a safe to store your gold so you don’t have the hassle that comes with storing it in the bank.

Buying gold: how to choose between coins or bars?

The purchase of physical gold for investment requires the choice between gold coins and ingots. These two forms of investment are complementary and each has advantages.

The terms gold coins and ingots refer to a wide variety of products: 1 kg ingots, ingots whose weight varies from a few grams to several hundred grams. It is for this reason that everyone can now invest in gold with their savings.

Ingots and ingots, in bar or wafer form, are popular because they are easy to store. In the case of pure gold at 995 thousandths and more, the ingots benefit from great liquidity. They are a little less cumbersome than gold coins, which require special preservation; bullion, therefore, represents a low cost of storage compared to the store of value represented, whether in a banking establishment or your safe.

On the other hand, you will benefit from a more attractive bonus when you sell your gold coins. Indeed, some gold coins like the Napoleon allow you to take advantage of a premium based on supply and demand. Their selling price can therefore sometimes be higher than the price of the gold they contain alone. In a crisis, premiums rise dramatically because investors turn to real, tangible assets like gold.

When it comes to price, smaller bars like the 5-gram bar are more affordable than most gold coins. Experts recommend combining the two products to bet on diversification to protect your wealth and your savings.…

Storing Physical Gold: All Our Tips For Safe Storage

Have you decided to acquire gold? This an excellent idea, because the price of gold remains stable over time, which makes this yellow metal a haven.

Investing in gold thrives to do in times of crisis – or inflation. Thus, the purchase of a few gold coins can quickly turn out to be profitable. Even in times of crisis, the low volatility of gold on the stock market ensures a successful resale.

But the question of storage can remain a brake on the purchase of physical gold. If banks and other private companies offer facilitated storage solutions, the cost of the service must be considered. So how do you invest in gold and easily protect jewelry, coins, and gold bars?

Assure your gold of a vault

The safe is the most secure solution for storing your gold at home. Incurring a cost to purchase, they are generally less expensive in the long run than monthly storage offers from private companies.

How to choose it?

Choose it homologated and well-fireproofed. The security standards are established in 4 levels, which define the resistance of the material against burglary attempts.

Three types of closure exist the electronic code, the combination, and the key. Considered the safest, the combination lock is also the most common. There are also models of connected safes which can be locked remotely, and trigger an alarm in the event of forcing.

Insurance is essential, and the trunk model will be taken into account to determine the contract. Theft, damage, and burglary, there are many varieties adapted to all needs and scaled according to the value of the objects to be insured.

Some insurances only cover sealed safes: make sure you have it fixed to the floor or wall by a specialist, preferably by a worker from the company where you bought your safe. Declare the real value of your goods in the safe by having them estimated, and don’t forget to notify the insurance company of any added objects.

Where to install a safe?

In hotels, safes are generally placed in cupboards and wardrobes. Avoid repeating this habit for home storage – bedrooms and bathrooms are among the most visited places in the event of a robbery.

Prioritize less frequented rooms than living areas, while installing your safe away from the plumbing: in the event of a water leak, a skilled worker could come face to face with your installation.

Private safe specialists thus tend to recommend spaces that are little visited, such as well-maintained cellars for example.

Alternatives to the safe

For a pure gold coin or a few grams of gold bullion, the purchase price of a safe can be expensive. As an investor, you have to find your way around. If your investment in gold is a low to medium sum, you can always resort to a good hiding place!

Avoid living rooms

The easiest tip to implement is to avoid holding gold in living rooms. Storing your gold away from your hands and eyes is essential to keep it well.

A damaged gold coin or one whose engravings have been erased by dint of handling loses its value.

Protect your gold from heat

A malleable metal, gold liquefies quickly: its melting point is 1064°C, and a fire can go up to 1500°C.

In the absence of a safe, a small fireproof container will suffice to protect your investment for several minutes in the event of a fire starting.

Discreet attic: a good idea

If you are lucky enough to have an attic that is not easily accessible, or whose access hatch blends into your ceiling, this room may be ideal for hiding your investment, or even installing a fireproof safe.

As always with home storage of gold, avoid heat sources and proximity to plumbing.

A flowery hiding place

In the garden, flower beds can be a good hiding place over time!

You can check the correct location of your gold coin hoard from time to time with a metal detector, which can detect gold up to 1 meter deep. To find it easily, mark the hiding place with a unique plant hidden among others.…

Gold Price: The Precious Metal Is Performing

Volatile, the price of gold? The conflict in Ukraine, which began at the end of February, proved the haven nature of the yellow metal: the price of gold rose in one month by 10% in USD and 13% in Euro, reaching a peak of 2039 on March 8. $ and 1870€. On the same day, the CAC 40 recorded its worst weekly fall since the announcement of the first confinement in March 2020, at minus 10.3%. The countercyclical system of gold contributes to valuing it as a safe investment against risks and crises.

A counter-cyclical development

The price of gold evolves in a way that is generally uncorrelated, even negatively correlated to equities and bonds. After a calm start to the year, the worsening of geopolitical tensions raises fears of a real economic shock and instability on the side of the European stock markets. Investors, therefore, fall back on one of the only assets that perform well in times of crisis: physical gold for investment fears neither inflation nor issuer risks. And faced with the rise in key interest rates, gold fully finds its place as a haven asset by allowing diversification of its exposure to the market. Gold is useful for not putting all your eggs in one basket.

The rise in the price of gold goes hand in hand with that of raw materials, which also experienced a general surge during the first two weeks of March.

An accessible and liquid product

Even if the price of gold has recently peaked, coins and ingots remain accessible to small wallets. This tangible asset cannot go bankrupt: its continuous and real-time quotation is based in France on the London fixing, which allows it to be resold at any time. Nevertheless, physical gold for investment proves its interest over the long term. In the space of 20 years, its value has been multiplied by 4. Special mention for gold coins, which can be resold with a premium of up to 50% of their precious metal value. Universally recognized, the value of gold appreciates at all times and everywhere on the planet.

The gold specialists recommend diversification of the heritage up to 5 to 10% in the physical gold of investment. A few coins or ingots can make all the difference in a savings management strategy: in times of financial crisis, there will always be time to sell to benefit from a price increase.