Gold market participants
Gold markets have different participants in the transaction, and they participate in the gold market trading according to their own needs. Different gold market participants will have different effects on the gold market and gold prices.
Gold production company
Gold production companies will sell the gold bullion in the market after mining gold ore and refining into gold, so from the perspective of market participants, these gold companies are playing the role of sellers, to provide gold supply. However, with the expansion of the gold investment market and the emergence of derivative products, the trading activities of the gold companies have become diversified, they not only sell gold, but also have the buying gold trading activities. Although the transactions of these gold companies have become diversified, they never departed from the original aim, these transactions are carried out to sell their own gold that have been generated or will be generated.
Spot market sellers
This kind of transaction is the easiest to understand, that is, the gold companies have sufficient production funds and capacity, firstly, they refine the ore into gold bullion, and store bullion in warehouses, banks or clearing houses, and then wait for changes in the price of gold. When the price of gold reaches the price in the mind, they sell it, and hand over the gold bullion on the day of the settlement to collect the payment. If the gold market does not have the financing function and lack of gold derivatives to hedge, the traditional gold production companies will operate in this mode of spot trading.
Futures market seller
If the production capacity of a gold mining company is limited, or it has just started production, according to the above spot trading method, it must complete the gold production process firstly, cast gold bullion before selling. However, it can also make transactions through the gold futures contracts of the futures exchange, after selling the gold futures contracts, no matter how the price of gold fluctuations, the gold company has hedged the gold that it will produce, when the gold bullion is completed the real delivery at the expiration of the futures settlement, it can recover the amount sold at the hedged price.
Borrow gold firstly and sell it in the spot market
What a gold company can do is to borrow spot gold from a bank or bullion house firstly, getting the physical gold from the bank equals to holding the spot gold in hand, sell the gold at the market price or the right price to hedge and lock the sale price of gold, and then make the real delivery and collect the payment, which can be used for the production, finally, return the produced gold to the bank or bullion house.
As one of the most important participants in the gold market, individual investors can be divided into phisical gold investors and gold contract investors in terms of the current market structure. These individual investors have a very obvious influence to the gold price (especially short-term influence) , because the gold market is actually supported by these individual investors, plus the gold contract is processed in the form of cash deposits, when the market fluctuates, some investors will be eager to close the position, which will increase the fluctuation. Although the trading scale of these individual investors is relatively smaller, their influence to the market is no less than super investors and central bank when they enter the market all together.
Bank and Bullion House
Gold was decoupled from the dollar in 1971, making the gold standard a history, the gold price began float freely and became a popular investment instrument. During a considerable period of time before and after the abolition of the gold standard, most gold trading, especially gold spot trading are finalized over the counter, the key players in this over the counter market are banks and bullion houses who owe gold business.
Bullion house means the company who specializes in gold trading as the name suggests, most of them specialize gold trading for very long time, the most powerful one are those who are active in London fix trading.