Ounce or Gram? How should you express the value of Gold? Table of Contents

The value of gold is usually expressed in terms of its exchange rate with the U.S. dollar. It is often heard that “gold has risen, gold has fallen”. The value of gold is calculated in US dollars and judged on the basis of “how much is an ounce of gold worth in US dollars”. This is called the “London Gold Spot Price”. Domestically, it is calculated in yuan/gram.

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Gold is paired with USD

The value of gold in the world is usually expressed by “the exchange ratio of 1 ounce of gold to the US dollar”

The value of gold is expressed in terms of how many U.S. dollars can buy 1 ounce of gold, that is, the exchange ratio of 1 ounce of gold to U.S. dollars. The ounce is the unit used when calculating precious metals such as gold, platinum, silver/silver, palladium/palladium, etc. One ounce is approximately equal to 31.1035 grams. It is troublesome to have a decimal point, but if you are interested in gold, please remember this value. Precious metals are based on ounces.

After World War II, the world economy revolved around the United States, and the U.S. currency, the US dollar, became the benchmark for measuring the value of the currencies of various countries. Similarly, the value of gold is also measured in U.S. dollars. Gold and U.S. dollar transactions are conducted 24 hours a day around the world. For example, what we heard about “gold will break through/breakthrough $2,000”, “gold will fall out of $1,500” and so on, all refer to the dollar of 1 ounce of gold price.

The 5 Factors of Gold Market Price

London Gold Spot Price

Historical sources call it the London gold spot price.

The price at which 1 ounce of gold is exchanged for US dollars is called the “London Gold Spot Price”. In the origin of the term Loco London, Loco is a joint word for a place. Some believe that it comes from English, and some believe that it comes from Latin. There are different opinions. If the gold is transferred to Tokyo, it will be “Loco·Tokyo”/Tokyo Gold, and if it is changed to Hong Kong, it will be “Loco·Hong Kong”/Hong Kong Gold.

Gold has no nationality. When the United Kingdom was still in the British Empire, London became a gathering place for gold and still serves as a place for gold delivery. In fact, buying gold converted into U.S. dollars is paid in New York, and the money is credited to an account in London. This process/regulation/technique/structure is universal in the world. Companies engaged in gold trading have opened gold accounts in London and settled there.

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The price of gold is in principle one price

London gold spot prices are traded in most countries and regions around the world. The day of the gold trading market starts with Australia and New Zealand, then Tokyo, Hong Kong, Singapore, Zurich, London, and finally ends in New York. At almost the same time, the second day of trading in Australia and New Zealand started again. In other words, the gold market is operating 24 hours a day. The market mentioned here does not refer to the place where transactions are conducted, but refers to a one-to-one structure of transactions such as banks, securities companies, and trading companies in the region. For example, when it is called the Tokyo market, it refers to transactions in Tokyo. The most active time period.

For gold, in addition to the real-time price (spot price) transaction, there are also stipulated future prices and futures transactions on the settlement date. Moreover, gold is in principle one price. That is, as long as it is in the same time zone, the price will be the same no matter where you buy it. why? Because there is arbitrage trading.

Arbitrage trading, in theory, things that should be at the same price, because of some reasons, the price is different, such as buying at a low price and selling at a high price to increase profits. In the gold market, securities firms that are experts in buying and selling gold continue to carry out arbitrage transactions. Different countries have different currencies and interest rates. Based on this, calculate the theoretical price of gold in the future, find price differences, and conduct arbitrage transactions. That is, there will be a difference in price for a while, but the cheaper will be bought and the price will rise, the expense will be sold and the price will fall, and it will eventually end at the same price.

The content of this section is taken from part of the “New Textbook of Gold Investment” written by Mr. Yuichi Ikemizu. We have adapted some of the content on the basis of the original work.

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