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Thursday, September 21, 2006

Spot Gold Price

What is the spot gold price? The spot gold price is that price which the market is buying and selling spot gold.

Spot gold price is the twice a day setting of the value of gold against the British Pound as a commodity by the five members of the London gold pool. This rate, then translated into US dollars and Euros, is used as a benchmark for the pricing of gold, gold products and derivatives world wide.

It is set twice a day based on an apparent supply and demand basis. Once set the rest of the world uses these prices to determine the price of gold bullion and gold related products.

This then affects what you pay at the mint or dealer for your gold coins or gold bars.

It is the figure you see in the charts at the top of this website.

The spot price moves daily. You can watch and check trends and this may be useful for people who like to buy and sell gold on a regular basis such as with Exchange Traded Funds.

However when purchasing gold bullion such as coins or bars then the spot gold price is not as important as these are usually purchased more for the long term or as a hobby rather than a way of protecting one's assets although this can be important as well.

Some people worry that if the spot gold price drops then their coins or bars will be worth less and to stop buying. In fact that is usually a better time to buy. When the spot gold price drops then the price of gold coins and bars drop also so you get them for less. Provided you do not sell your coins and bars when the price drops you do not make a loss. If you want to see a profit then you wait until the spot gold price rises again, before selling them, and your coins or bars are worth more.

Buying gold coins and bars on a regular basis is a good idea. Here you are not particularly worried about the spot gold price as any fluctuations are evened out over the long term when you buy, say a few coins a month.

The spot gold price really only affects the short term buyer seller who is interested in making a profit over a few days or perhaps even hours.

For the majority of us, Collecting gold coins and bars and keeping them is a lot more fun that frantically watching the spot gold price by the hour!



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