Bullion Market

Bullion Market
Bullion Market

We must have heard about this term multiple terms but may have doubts on the exact in meaning of the same. So, let us delve upon the interpretation of this term and its types.

Bullion Market, just like trading in shares/debentures, is a market where exchange of gold and silveris done. It can happen through physical delivery as well as on paper delivery of these metals. The traders earn profits when they buy these metals at low price and sell them at higher price. It is more like commodity derivatives, wherein the price of security is decided by price of underlying commodity.

This type of trade is done throughout the world and the traders are banks, fabricators, refiners, vault operators, jewelers, hedgers, speculators etc. The primary market is the London Bullion Market which allows 24 hours trading. The trading is also done by Exchange Traded Funds and Mutual Funds. It is said that as of July 2022, the SPDR Gold Trust is the largest gold ETF by assets with total assets of over $55 billion.

Standards are fixed for quality of metals traded. One thing is pertinent to note here that although this market is not that popular in India, but in other countries it is very much in demand. Even, the United States Mint (a bureau for Department of Treasury in US) has allowed investors to add physical gold, silver, and platinum to their portfolio through Bullion Coins.

So, we can say that in next 10 years, as India is moving towards becoming a developed economy, this Market would also be recognized well amongst general public as an investment and trading medium.


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