Today, our focus is on Global gold market, which is the penultimate part of this course. In the final part, we will have a little contest. Stay around.

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Before we continue this session, if you had missed previous classes, kindly check these links in descending order.

• Chapter 1: Introduction to Gold

• Chapter 2: Brief History of Gold

• Chapter 3: Gold processing

• Chapter 4: Amazing uses of gold

• Chapter 5: Cultural value of gold

• Chapter 6: Price history of gold

Without much ado, let me walk you through the major gold markets in the world.

The London Market

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No doubt, The London OTC market has been the focal point of gold trade, historically. As I write this, 70% of global trading volume occur in this market. The London market attracts traders from every corner of the world, and global reference benchmark (LBMA price) are set twice in a day. Distinctively, 400 ounce bars are traded in the market daily and are stored in members vaults popularly called London Precious Metals Clearing (LPMC), and in the Bank of England. London market has distinct vaulting infrastructure, and a powerful enforced chain of custody and huge amount of gold in it. These contributes to reasons why the market is often referred to as terminal market. As a result of time zone that connects Asian and USA trading hours, London benefits from this GMT and it has made her a global financial service hubs.

Despite all advantages listed above, London gold market is losing trading volume on global scale. For instance, in 2015, one of the signs that the market is becoming vulnerable was when the market stopped submitting forward offered rate. Then it got a response from World Gold Councils, when they started partnering with leading financial players. These cases of exchange-traded contracts tries to modernise the heart of gold trading market. Now, can we talk about US market?

The US Market (COMEX)

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CME group operates COMEX, and are getting more bites of the market despite London's leading role in physical market. Not many contracts physical get into delivery of bars into COMEX vaults, nonetheless, the market is closely linked to physical markets via active Exchange for Physical (EFP) market. Obviously, steady rise in COMEX volume is as a result of transactions during Asian market hours, the exchange has successfully tapped into Asian market. But they have the Chinese to contend with.

The Chinese Market (SGE & SHFE)

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Established since about 16 years ago, under watchful eyes of the People's Bank of China, SGE leveraged on Chinese growing love for gold, it also mirrored the country's growing importance in world's gold market. Suffice to say that Shanghai Gold Exchange is the largest purely physical spot exchange. In year 2016, the exchange introduced benchmark which made China a pacesetter, this also encouraged international participation in the Chinese gold market. This SGE deferred contracts supported by very active SHFE future trading, though their is no report that both exchanges are directly linked. SHFE is Shanghai Future Market Exchange.

Other secondary markets worthy of mention are;

• Dubai
• Hong Kong
• Singapore
• Japan and
• South Africa

These markets provides range of spot trading or listed contracts, but they do not offer liquidity experienced on primary markets.
Nevertheless, they play significant roles in serving local gold demands or as regional trading hubs. For instance, HK (Hong Kong) has acted as entrance to the Chinese market and Singapore is gradually establishing itself as paramount trading focus in ASEAN region.

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See ya in last class. I love you and I want to see you prosper.