What are the businesses in the international gold market? Is it just buying and selling?

Precious metal investment

Investors who speculate in gold are certainly familiar with the gold market, because gold can only be speculated in the gold market, so does the gold market simply provide a platform for gold trading? Obviously not. Besides gold trading, there are many other businesses in the gold market

(1) Gold trading business

Gold trading business generally refers to spot gold business, that is, spot gold trading, which includes gold broker trading and proprietary gold trading. Gold broker trading is an intermediate business in which commercial banks accept the entrustment of non member legal person and natural person to participate in gold trading according to their own conditions of having financial membership of gold exchange. According to the margin received by clients, agency trading can be divided into firm offer agency and virtual offer agency. Self operated gold trading refers to the trading activities of commercial banks to buy or sell gold for themselves in the international market. It is a kind of intermediary business of commercial banks with their own risks and profits. The self operated gold trading of commercial banks can be carried out either in the exchange or in the OTC market.

(2) Gold derivatives business

1. Forward gold trading business

Forward gold trading business, referred to as gold forward, refers to the gold business in which the buyer and the seller handle the actual receipt and payment at the agreed price, the agreed quantity, the agreed quality and specification, the agreed delivery place and delivery method on the agreed date after the transaction. Forward gold trading business can be divided into pure forward gold trading and gold swap (the combination of spot trading and forward trading). It is generally traded over the counter through commercial banks or large gold brokers, which has the function of preserving value and avoiding gold price risk. The insured directly enters the market to engage in on-the-spot trading activities, and can also intervene in off-the-spot brokerage business, that is, become a futures commission merchant.

Gold option refers to an option fee paid by the buyer to the seller to obtain the right to buy or sell a certain amount of gold at a predetermined price on the maturity date. Gold option has both on-the-spot trading and off-the-spot trading. It has the same hedging function as futures. Commercial banks are mainly engaged in trading broker and self operation of options, arbitrage and risk management.

(3) Gold cross market trading business

Gold cross market trading, also known as gold arbitrage or gold import and export business, is a kind of gold buying (selling) transaction in the international market and a gold selling (buying) transaction in the domestic market for commercial banks with the authority of gold import and export business. If gold cross market transaction is real gold delivery, it is for the purpose of regulating the supply and demand of domestic gold market.

(4) Gold project financing business

Gold project financing is a financing business mainly aimed at gold production enterprises, gold jewelry production and distribution enterprises and gold import and export enterprises, including capital lending and gold lending. It is characterized by the combination of gold financing, gold trading, gold production and gold market.

1. Gold lending

Gold lending, also known as gold leasing, gold lending or borrowing for repayment, refers to a financing method in which large gold holders such as commercial banks and precious metal companies lend their gold stocks to gold mining companies or gold jewelry companies, which sell the borrowed gold in the gold market to obtain funds and return the gold produced (or purchased) to the lender at maturity.

2. Gold pledge loan

Gold pledge loan is a kind of financing way that enterprises use their gold as a pledge to apply for loans from commercial banks. Gold pledge loan generally occurs when the gold market price is too low or the gold price is bullish, and the holders are unwilling to sell gold but are in urgent need of financing.

3. Gold lending business

Gold lending business is a common short-term gold lending behavior in the gold market. The term is one day, three days, and the longest is no more than seven days. In the gold market, the empty side of gold trading, the ground and the empty gold, can not get the gold delivery on the day of clearing and delivery due to various reasons, so they have to borrow gold from commercial banks for delivery on time.

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