Moving precious metals into to the modern world
The rapid rise in the gold market's infrastructure in Asia in the past decade is now being followed by increasing technology, aimed at driving efficiency and transparency within the bullion sector, as well as making the purchasing and storage of gold more accessible.
Gold is a global business, so clients considering investment in physical gold should seek out firms that provide a full-service precious metals trading capability and universal access to the related financial markets through centres such as London, Singapore, Shanghai, Dubai and the USA.
The gold industry is a remarkably diverse and fascinating business, with precious metals firms dealing with clients from mining companies to jewellery makers to HNW individuals. Therefore, the ability to provide follow-the-sun, seamless, and continuous service to clients across the whole of the precious metal sector is increasingly essential. Such global precious metals businesses are set up to cater for the varied needs and orders of bullion wholesalers, traders, refiners and smelters, government agencies, banks and financial institutions, jewellery manufacturers and other industrial users of precious metals. And of course, individual HNW investors.
A specialist global physical bullion company might, for example, buy gold in raw material form from mining companies, especially in major producing regions such as China, Australia, Russia, Africa or North and Latin America. It may then send the raw material to LBMA accredited refineries around the globe that convert it to gold bars that can then be marketed and delivered to institutions, or to HNW individuals. Or it might be turned into jewellery and other fashion accessories.
These global precious metal companies act as reliable and competitive wholesale suppliers of gold, silver and platinum group metals in the form of London good-delivery bars, other bars, grains, sheets, dore, wafers and wire.
For many decades, the buying and selling of gold have been labour intensive, non-transparent and convoluted, with numerous steps and modes of communication and transportation. This becomes especially unwieldy across the world’s time zones, opening the door for private companies to provide a more seamless, technology-enabled array of services.
Historically, the opaque character of the physical gold market was preferred by many within the industry, who liked to be able to cloak the margins involved. But the new web-based platforms are ideal for transparency in buying physical gold, allowing clients to select a location, to view exactly what is on offer in all the locations, choose the brand, and select the product.
Via some of these platforms, clients can thereby get access to the many elements of the gold market, for example, LBMA refineries, bullion banks, wholesalers and logistics firms, without the need to open accounts directly with them to enable this. Such a platform can provide customers with free, direct and real-time access to precious metals inventory across the world, as well as all products offered through its global network of supply partners. The platforms can automate and accelerate interaction with customers, improving market access and efficiency.
Platforms such as INTL FCStone’s PMX+ also have added functionality where customers (Buyers) can submit a “Request for Quote” if they do not see inventory that meets their specific requirements (such as a particular quantity, specification or location) notifying suppliers around the world of the request. For example, a client might key in a price request for 20kg of gold, for Hong Kong delivery tomorrow. And the same platform might then determine who can deliver gold to that vault in that time scale and then take the best offer and deliver it to the client.
More from Martin Huxley, StoneX