Investing in Gold or Silver? You’ll want to keep an eye on the “Spot” price to know when to buy and sell! But what exactly is a “Spot” price? And where did it originate? Keep reading to learn more!
What Is a “Spot” Price?
A “spot” price is “the price at which an asset can be bought or sold for immediate delivery of that asset.” Regarding precious metals, the “spot” price is the price at which one ounce of that precious metal -like gold or silver- can be bought and sold at any given time.
Who Determines the Spot Price?
The spot prices of precious metals are determined by supply and demand- and are constantly changing. A team of several banks, an oversight committee, and a panel of internal and external chair members, calculate the figures based on supply and demand in the precious metal futures derivative markets and establish averages for the spot price. Comex (CME) in the United States, and the London Bullion Market Association (LBMA) in the UK, operate these major derivative markets.
What Impacts the Spot Price?
Multiple factors impact the market price of a precious metal. Royal Mint, the world’s leading export mint, lists “Six Key Factors” that influence precious metal prices:
“Economic Indicators, like Global Economic Health, Interest Rates and Monetary Policies, and Inflation Trends. Political Factors, like Political Stability and Trade Policies and Tension. Supply and Demand Dynamics, like Mining and Production Rates, and Market Demand Trends. Investment Market Trends, such as Investor Behavior and the Role of ETFs and Other Investment Vehicles. Environmental and Social Considerations, like Climate Change Effects and Sustainable Mining Practices. Lastly, Future Trends and Predictions, such as Technological Innovations, and Economic Forecasts.”
How Does the Spot Price Differ from the Retail Price?
It is important to consider dealer fees called “premiums” when buying or selling precious metals. These “premiums” often fluctuate with spot price and demand and are in addition to the spot price. At David’s Jewelry and Coin Exchange, we use multiple sources for our premiums, such as other retail sources like Apmex and market demand trends.
Start your Precious Metal Investment Journey at David’s Jewelry and Coin Exchange
At David’s Jewelry and Coin Exchange, we pride ourselves on low premiums and an always accurate spot price. With over 30 years of experience in buying and selling precious metals, we guarantee a great experience and a large selection! Stop by to add to your collection of precious metals!