The Changing Face of the Precious Metals Markets

With precious metals investors increasingly disgruntled with what has been called an archaic London Bullion Market (LBMA) structure and a monopolistic bullion bank system, the time has never been more ideal for a game-changer to enter the precious metals market scene. It is my strong belief that the current London-based market is no longer sustainable; it does not cater to the modern demands of global market participants and it most definitely is not bulletproof to the Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term, which has flooded the financial markets in the past few years.

Yes, a new LBMA gold price auction has replaced the historic twice-daily London gold fix that the bullion banks were so far in control of, but what does this essentially mean? Despite the fact that this new electronic auction is FCA-regulated and more transparent, the LBMA is still king of an unallocated market.

What this means for investors is high counter-party risk with an investment lying in the heart of a leveraged financial system; one that promises safe haven investments but merely provides the illusion of them. Because the way metals trade right now is on an unallocated basis; one who buys gold has neither the legal title nor the tangible asset to show for his investment. So what happens if the custodian of your precious metal defaults? There goes your investment with them. The plight of the modern banking system is driving each and every serious long-term investor away from the paper markets and into the arms of physical investments.

The world is finally beginning to realize that the value of the physical can never be replaced with that of the virtual. At Bullion Capital, we have long had a vision of creating a global, unified marketplace, which will facilitate the buying, and selling of allocated physical precious metals.

The creation of Bullion Capital was actually a result of my own frustration at not being able to buy wholesale quantities of allocated physical gold in an efficient way. What I wanted to achieve in essence was to take control out of the hands of the London market and place this control in the hands of all market participants in equal proportion, through a system where organizations could not be front-run and power could be enjoyed by more than the elite few.

These are changing times for the precious metals market, with the framework of the existing system being rattled and restructured every day; we feel utilizing disruptive technological solutions afford an advantage.