Nowadays, one often hears terms such as “market gold price” or “world gold price”. Let's now attempt to figure out their exact meaning and why we rank and file investors and buyers can never purchase gold at market price. To play the devil’s advocate for just a minute, could there perhaps be some kind of deep, dark conspiracy playing out against the interests of investors and gold buyers?

To begin with, market prices are primarily driven by the interplay of supply and demand. This correlation, in turn, is impacted by various economic, political, military, climatic and demographic factors and sets of factors. A large number of other market manipulations are also at play and exert a powerful influence on this index.

It is not our intention to delve deeply into the details of London Gold Fixing or COMEX trading as a plethora of data about these issues is readily available on the Internet. Our goal is merely to answer one simple question: Why can't we buy gold at market price?

The most obvious reply is this: it can’t be done for the same reason that traders can’t purchase wheat, beef, coffee or other goods at market prices. Tradable commodities are always sold in bulk. In order to buy gold at market price on the stock market one would have to be an extraordinarily rich person. Gold is sold on the open market in the form of moulded unsightly bars with ragged edges. During the cooling process, the metal in gold bars is subject to deformation. Each bar weighs about 400 oz. In accordance with the standards adhered to by the London Bullion Market Association (LBMA), this amount is equal to 12 kg of gold with a purity of at least 99.5% fine gold.

However, even if you have enough money to buy one or more gold bars, this gives you neither the right nor the ability to purchase gold at market price. You not only have to be rich enough, you also need to become a full-fledged trader. If you want to purchase gold online on the open market personally, bypassing exchange brokers, it will also be quite an expensive option.

Direct participation in gold exchange trading does not come cheap, so only serious and large traders, such as central banks, mints and leading global gold miners, can afford it.

If you are just a regular businessman who can sometimes purchase a couple of 12 kg golden bars after breakfast, even in this case you will have to deal with an authorized commercial agent. Of course there will be an additional charge for his services. Gold trading is a specific type of business, not some kind of altruistic hobby or charitable activity. Of course you can pay for direct participation in trading, like any other businessman would. First of all, though, if you only plan to buy gold occasionally, these expenses would be unjustified, to say the least. In the second place, the final cost of gold would be affected by the right to participate in commodity trading.

Now let us consider the investment process for gold bars and coins. Unlike bank gold bars, most investment gold bars are cast rather than moulded. It helps to produce smooth bars with a plain surface and no distinctive moulding defects or imperfections. Moulded investment gold bars are also available on the market, but they usually weigh 0.5 kg or more. Futhermore, investment gold bars have a purity of at least 99.90% or 99.99%, while bank gold bars have a minimum purity of 99.5%.

In order to fashion an investment gold bar out of a bank gold bar, it needs to be refined. Due to purity, you will inevitably get a slightly lighter bar. Weight loss can easily reach 0.5% (99.99% to 99.50%). The production process for investment coins is largely the same. During the minting process, base metals (ligature) are added to precious metals in order to harden them, while gold is always preliminarily refined in order to reach a 99.9% or even higher purity.

All of the above-mentioned operations are energy-intensive and entail logistical, industrial and power expenses. Risk insurance and maintenance of security also come at a considerable cost. All of these factors affect the final price of gold bars and coins. Otherwise, gold manufacturers would be forced to declare bankruptcy.

Buyers purchase investment gold bars, not bank bars, so they are the ones who need to cover all of the above-mentioned expenses: minting coins, designing their appearance, casting dies, numbering bars, maintaining equipment, paying wages, and providing in-house packaging.

This is quite obviously the reason why people will never be able to buy gold at market price. More precisely, nobody in the world can buy gold at market price. As noted above, the final price is affected by trading expenses and a number of other factors. So what is “market price” and who needs it if nobody can buy gold at this price anyway?

Market price is nothing more or less than a benchmark that can be used as a basis for further negotiations. It is sometimes called “spot price”, while all the extra charges turn into a premium above spot.

As you can now see, there is no deep, dark conspiracy lurking behind the price of gold investment products. There are only inevitable expenses required to make investment gold bars out of rather ugly bank bars.
In summary, we would like to add that gold is both a tradable commodity and a form of currency.

Compared to other tradable goods, additional charges for gold are negligible. The price of beef or coffee on the exchange market is twice the final retail price of these goods or even higher. The differential between the exchange price of gold and the retail price of investment bars and coins is usually capped at 5%. Given the steady uptrend in gold prices it makes these purchases economically feasible and provides excellent opportunities for capital investment.

If your gold coin or bar is kept in good condition and has no defects, the world market price of gold will be closely aligned with the selling price of your product.

We endeavour to observe and maintain the confidentiality of our clients and their investments. For this reason, you are kindly requested to call us and agree on the time of our meeting in advance. This will allow us to avoid any problems in case other appointments have been already booked with other clients. It will also allow us to provide top-notch service tailored to your personal needs and in total confidentiality.