Spot Gold: Things to Know About It


The golden metal has been a matter of attraction for ages. People have been investing this metal for a long time. It is a trusted and tried asset that investors choose for diversification. Another fun about spot gold is that it is not necessary to deal with any physical metal. A paper is enough to seal the deal. The spot price refers to the current price at which the metal can be bought or sold. This value defines gold’s value in the marketplace.

The fact that spot gold is popular among investors is true and there are reasons for that. Trading spot gold is not tough but it requires one to have proper knowledge before venturing into this field. While there are chances of profit, the chances of running on the opposite direction are also there. It is necessary to have knowledge of the marketplace before investing in gold.

Spot Exchange

Spot exchanges or spot markets are not physical store to walk into. Though gold is bought and sold here with almost immediate settlement, you cannot find one in the physical world. There are bullion market traders who are scattered all over the world and they work under a common guideline setting. Gold is sold and bought through these bullion traders. The spot exchanges are marketplaces in an electronic mode. Commodities in large quantities including steel, oil and precious metal is traded here. The commodities are stored in exchange managed warehouses which are maintained by the commodity sellers. A receipt is issued against the quality check of the commodity. This very receipt is put up on the exchange platforms where buyers can buy the commodities. Possessing this receipt means entitlement of the commodity. Sellers get a chance to sell their products to a wider market than just being stuck to a physical store. Buyers submit the receipt at the warehouse and own the mentioned commodity.

Spot gold trading

Trade spot gold (เทรดทองคำ, this is the term in Thai) if you want to diversify your portfolio and stay safe against market volatility and inflation. Gold has been one of the most preferred modes of diversification. Spot exchanges have allowed them to achieve their goal. When gold is bought from the exchange, the buyer has a chance of gaining profit as the prices go up.

But downward prices do not necessarily mean loss. The person at possession of the gold can hold the receipt for longer until the price goes up again and it is profitable for that person. The settlement of the gold can be accomplished by selling it to another investor or by getting the gold in physical gold from the warehouse. The term ‘good faith deposit’ refers to the amount one pays as an initial margin to possess a certain amount of gold. One can buy gold even without paying the whole price.

Spot gold comes with many other benefits that have contributed to its popularity. There is also the option of customization of the trading techniques to suit risk preferences of the buyers and sellers.

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