The Bullion

By: enj

Gold price is determined by supply and demand, including hoarding and disposal. Gold is very different from other commodities, the hoarding and disposal plays a much bigger role in affecting the price, because most of the gold ever mined still exists and is potentially able to come on to the market for the right price. Given the huge quantity of hoarded gold, compared to the annual production, the price of gold is mainly affected by changes in sentiment, rather than changes in annual production.

The most traditional way of investing in gold is by buying bullion gold bars. Several investors may buy gold bullion for a variety of reasons: among them include a desire to diversify their assets to hide wealth from tax authorities; for reasons of political belief (e.g. libertarian); or out of fear of an economic depression or other serious crisis.

The usual benchmark for gold price is known as the London Gold Fixing, a twice-daily (telephone) meeting of representatives from five bullion-trading firms. Furthermore, there is active gold trading based on the intra-day spot price, derived from gold-trading markets around the world as they open and close throughout the day.

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