What are the gold market's trading service models?
2023-05-29
Summary:
Explore the various trading service models available in the gold market that cater to different investor preferences and risk profiles.
Gold is a global investment product, and the institutions and venues that provide services for gold trading in various regions of the world are actually different. Specifically, it can be divided into intangible markets without fixed trading venues and physical trading markets.
Represented by the London and Zurich gold markets, it can be called European style; There are also gold trading businesses within commodities/exchanges, represented by the New York Mercantile Exchange and Chicago Mercantile Exchange in the United States, which can be referred to as American style; Some gold markets trade on specialized gold exchanges, represented by the Hong Kong Gold and Silver Trading Ground and the Singapore Gold Exchange, which can be called Asian style.
1. European style gold trading
There are no fixed venues for gold trading in this type of gold markets. In the London gold market, the entire market is composed of interconnections between major gold merchants and affiliated companies, and transactions are conducted through telephone, telex, etc. between gold merchants and customers. In the Zurich gold market, major banks act as agents for customers to buy and sell, and are responsible for settlement and settlement. Buyers and sellers in the London and Zurich markets are relatively confidential, and transaction volume is also difficult to accurately estimate.
2. American gold trading
This type of gold markets is actually based on a typical future market, and its trading is similar to other commodities traded in that market. As a non-profit institution, futures exchanges do not participate in trading, but only provide venues and equipment for trading. At the same time, relevant regulations are formulated to ensure fair and just trading, and strict monitoring of trading is carried out.
3. Asian gold trading
This type of gold trading generally has a dedicated gold trading venue, which simultaneously conducts spot and futures trading of gold. The transaction adopts a membership system, and only companies and banks that meet certain requirements can become members. There are extremely strict quotas on the number of members, and although the number of members entering the trading market is relatively small, the reputation is extremely high. Taking the Hong Kong Gold and Silver Trading Fair as an example, its member transactions are conducted through open bidding and verbal bidding. Due to the strict integrity of the gold merchants in the venue, there are few violations.
In fact, the various exchanges mentioned above are only different from gold merchants, banks trading on their own or on behalf of customers in terms of specific forms and operations. The essence of their operations is the same, all of which strive to meet the needs of different gold traders around the world and provide convenience for gold trading.
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