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Where is Gold Traded?

August 16, 2010615 view(s)

Unlike stocks and bonds, gold is normally traded over-the-counter, also known as OTC or off-exchange. This means that it is traded directly between two parties and away from a place built specifically for trading (known as an exchange). However, that doesn't mean there aren't centers of gold trading in the world.

The primary center of gold trading is in London in a place known as the London bullion market. It is overseen by the London Bullion Market Association. This is in turn overseen by the Bank of England. The London bullion market is the central place for most wholesale trades of gold and silver.

To illustrate just how much trading goes through the London bullion market, it only takes about four and a half days for as much gold to be traded through the market as is mined every year in the world. It takes just over six days for enough silver to be traded through the market to reach the world annual silver production. In total this works out to be about $14 billion worth of gold and $1 billion worth of silver every day.

Although London is the center of the over-the-counter world gold trade, trading is done all over the world. Other cities that see large volumes of gold being traded include New York, Tokyo, and Zurich. Gold Futures While London is the primary place for bulk trades of gold and silver, futures trading(What is precious metals futures?) is centered elsewhere.

Commodity and mercantile exchanges all over the world allow for gold, silver, and other precious metal futures to be traded, but two cities take the lead when it comes to volume. These two cities are New York and Tokyo, whose New York Mercantile Exchange and Tokyo Commodity Exchange respectively are the primary players in precious metals futures. Securities Another form of gold trading is done through securities known as gold exchange-traded funds.

These are relatively recent financial instruments and weren’t proposed until 2002. It wasn’t until 2003 that they were first traded. Gold exchange traded-funds are traded on the major stock exchanges, which include New York, Mumbai, Zurich, Paris, and London.

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