Technology has finally caught up with how the price of Gold is set. After nearly a century of pricing set by first face to face and then teleconferences, the price of Gold will now be set by way of an electronic auction. Traditionally, Gold traders at four designated banks set pricing through twice daily phone calls. The price was not open to bid and was set by caveat by the call participants. Once the price was set, mining operations used the price to negotiate trade valuate their billion stock with the various central banks. Gold Pricing Standard to be Modernized Breaking 100 Year Old Tradition
Under the new method, there is more participation by more firms which are able to participate in the estimated $18 Trillion gold global market. CrunchBase suggests that many believe that the process is more transparent as anyone can follow the auction through LBMA Gold Price online as opposed to needing a relationship with a gold broker.
The initial gold price fixing process was started in 1919. In 2004 the process was switched to a teleconference format. After Deutsche Bank left the benchmark for precious metals, HSBC Holdings, Societe Generale, Barclays and Bank of Nova Scotia, where left to fix the world’s gold prices. Many objected to this closed process and sought a more open auction.