#23 Who Actually Sets the Gold Price?
A gold bar can sit motionless in a London vault while billions of dollars decide what it is worth. Somewhere beneath London, a 12-kilogram gold bar is sitting in a vault.
It carries the stamp of an approved refiner and is worth hundreds of thousands of dollars. Somewhere else, a trader in New York is buying a futures contract representing 100 ounces of gold without ever expecting to see a bar. A bank in London is quoting a client a price for gold that will settle two business days later. An investor in Britain is ordering a one-ounce Britannia from a dealer at several percentage points above the number appearing on Bloomberg. All of them are trading gold. None of them is necessarily trading at exactly the same price. Ask which of them sets the gold price and none can quite claim it. There is no official sitting in London deciding that gold should be worth $4,000 an ounce. There is no single exchange with authority over the world market. London bullion, New York futures, institutional derivatives and physical metal trade alongside one another, tied together by arbitrage.
