Gold price in general
The price of gold in the global market is determined in large trade centres, such as in London, New York and Shanghai. Like currencies, gold is traded around the clock, and it exchanges 100–200 billion dollars every working day.
Gold price is often quoted in US dollars and troy ounces. The dollar is used, since it is the most common currency in the world for gold trading. The dollar is also the primary currency in the big gold markets of London and New York.
The price of gold in euros is calculated by dividing the US dollar gold price with the euro / US dollar exchange rate. One troy ounce equals 31.1034768 grams, and troy ounces are used commonly in precious metals trading. Globally, it is also common to refer to the gold price per gram and kilogram.
At Voima, the price of gold is quoted in euros per gram, since the majority of Voima's Customers use euros, and grams are familiar to most.
Gold price development
Since 2000, the price of gold has on average risen 8.8% per year when measured in euros. In the 2000s, the gold price was at its lowest in January 2000, when it was approximately €8.8 per gram, whereas in March 2022 the price was €59.96 per gram at the highest. What drives the gold price development in the long run is, above all, the amount of money in circulation, which is increased annually as a result of the actions of central banks. If the central banks continue to do this, it is expected that the euro price of gold will continue to climb. This view is supported by history.
At the same time, the price of euros measured in gold has dropped over 85% since the currency was introduced. Gold has been used as money for over 5,000 years, so there are good grounds for measuring euros in gold. Compared to gold, the euro is a young currency and it has not stored its value well.
Definition of investment grade gold
According to the definition of the European Union, investment grade gold refers to gold in the form of bars or wafers of a purity equal to or greater than 99.5%, and whose weights are accepted by the bullion markets. An EU regulation has ruled investment grade gold exempt from VAT throughout the Union. The exemption is also applicable to investment grade gold related gold accounts, such as Voima Account, and agreements and claims regarding investment grade gold.
Global market price of gold
When people speak about the global market price of gold, they primarily refer to the gold price in London. London Bullion Market Association (LBMA) maintains the world's biggest gold market in London. Twice a day at 10:30 and 15:00 GMT, the LBMA members determine the price of gold through an auction mechanism; this in turn is reflected in the prices of other markets around the world. These prices form the LBMA Gold Price benchmark prices that used to be known as LBMA AM Fix and LBMA PM Fix. In addition, the LBMA members trade with each other around the clock.
In practice, the LBMA gold price refers to the wholesale price of gold in London, where single transactions are often great in volume. In total, the LBMA members trade approximately 50 billion euros of gold per day with each other. Though the marketplace is physically in London, the LBMA has members around the world. In addition to physical gold, LBMA markets also trade gold forwards, gold options and other gold contracts.
Another big gold market is the COMEX derivatives market in New York, maintained by CME Group. There gold and other precious metals are traded through futures contracts. Compared to the London market, only a small percentage of the gold futures contracts ends with a so-called physical delivery, i.e. that the gold buyer really withdraws the gold for themselves. The reason for this is that gold futures are derivative contracts, which are used above all for companies' hedging—i.e. when companies want to protect themselves against gold price fluctuation.
The biggest, fully physical gold stock market in the world is the Shanghai Gold Exchange (SGE), which was founded in 2002 in cooperation with the central bank of China. In 2016, SGE introduced the Shanghai Gold Price benchmark price, which is partly a competitor to the LBMA benchmark prices. The physical gold trade in SGE is supported by the active futures trading in the Shanghai gold futures exchange. What makes the SGE gold market stand out is that individuals participate directly in the Shanghai gold market distinctly more than is the case with the other gold markets.
Other gold markets
Other noteworthy gold markets are Dubai, India, Japan, Singapore and Hong Kong. Each of these markets has gold stock exchanges that offer different trading options. However, these markets are small compared with the ones mentioned above, and their role is mainly to offer local markets for gold, with the aim of serving the local demand.
Voima's role in the gold markets
Voima trades gold both in Finland and in the global markets around the clock. Voima offers its Customers an opportunity to exchange euros and gold 24/7. In addition, Voima is trading gold continuously with its trading partners, who are located in the UK and Switzerland. Voima has an opportunity to participate in the global gold markets throughout the day, which means that Customers can buy and sell gold 24/7 through Voima Account.
Voima creates value for its Customers by giving them a chance to exchange euros for gold and gold for euros around the clock and by providing them with easy-to-use and secure gold accounts. In addition, Voima has for a very long time had the best gold price in Finland and the Nordics.