London fixing for gold. London fixing on precious metals

"London fixing" - this phrase, which can often be heard in the analytical forecasts of the precious metals market. The financial procedure is known to all the major players in the world commodity markets, it has a significant impact on pricing in the world trade in precious metals.

What is fixing?

London fixing can be designated as the process of determining the value of gold in the interbank London gold market. It is there that the foundations of supply and demand for metal are formed. Fixing is carried out twice a day during the whole working week. There is a daily price determination (AM fix) at 10.30 and an evening price fix (PM fix) at 15.00. For convenience, it was decided to navigate the Greenwich Mean Time. The cost of precious metal during the procedure is set simultaneously in the three most powerful currencies in the world: the US dollar, pound sterling and euro. The price is fixed for one troy ounce.

History of precious metals valuation process

London fixing on precious metals was developed solely to fix and regulate contracts between members of the London Bullion Market. Today it is considered that it fixing determines the maximum fair value of gold, which is subsequently used to sign contracts for the supply of this precious metal in ingots. At a fixed value of the asset are oriented around the world, including pawnshops and jewelry production. The history of fixing the value of the asset began when, in 1919, the devaluation of the pound sterling occurred. At that time, Rothschild Bank received permission from the Central Bank of England to sell the South African yellow metal. The bank had to determine the price of the asset, which would suit not only buyers in the market, but also sellers. So on September 12, 1919, the first London fixing was held. According to him, an ounce of gold cost 4 pounds 18 shillings and 9 pence. In recalculation on the American currency of that time it is 20.67 dollars.

Participants in the pricing process, or Excursion to the past

At the beginning of the fixing, the five largest dynasties of the latter's producers and its sellers took part in it:

• NM Rothschild & Sons.
• Pixley & Abell.
• Mocatta & Goldsmid.
• Sharps Wilkins.
• Samuel Montagu & Co.

During the period from 1939 to 1954 the process was not carried out. This had a direct bearing on the total stoppage of the work of the gold market during the Second World War. The biggest price jump in the history of the process was recorded in 1980, when an ounce of gold was valued at $ 850. The increase in the price of the asset is associated not only with the unanticipated rise in the cost of oil on the world market, but also relates to inflation and the crisis in the Middle East. The highest price for gold, London fixing, which was determined on an official basis, took place in 2011, on August 23. The price of the asset at that time reached 1911.46 dollars per troy ounce.

Fixing and its participants

London fixing is the process of fixing the value of precious metals, which has some similarities with the auction. As a subject of trades are Good Delivery ingots, whose weight is 400 troy ounces. In a kind of auction involves the five largest banks:

• Deutsche Bank.
• Société Générale.
• HSBC.
• Scotia Mocatta.
• Barclays Capital.

In the auction, investors can take part, but only through dealers, in whose face the above mentioned banks act. Representatives of financial institutions maintain contact during the process with their banks, and those in turn, in real time, inform their own clients. London fixing for gold begins with the announcement by the chairman of the value of the metal, which is the most relevant at the moment. This value is distributed to dealers through the dealers. In the opposite direction, information is received about how many sales and purchases are available in accordance with the indicated asset value.

Flexible partnership scheme

Each participant of the auction has the right in his process to change his status of the seller to the status of the buyer on the basis of data on demand and supply - this is the feature that identifies the London fixing. Silver, gold, platinum, palladium can be bought or sold by the participants of the process until the final announcement of the value of the latter. Change is not only the position of the participant, but also the scope of his operation. The price of assets will then go up and down depending on the volume of purchases and sales. "Swing" will take place until the supply and demand will not be in a balanced state. The procedure takes 5 to 40 minutes.

The longest fixed record in history was registered on May 23, in 1990. Its duration was 2 hours and 40 minutes, it coincided with the crisis in the Persian Gulf. To fix the final value of the asset, the difference between the offers of buyers and sellers should not be more than 50 bars. If in the bidding process the price can not be fixed, it is determined at the discretion of the chairmen and is called "fixing at will." This situation is extremely rare.

How much do participants in the auction pay for precious metals?

The participants of the auction can be interested in a variety of precious metals: gold, palladium, silver, platinum. London fixing allows you to make an asset purchase at the most favorable price, as well as sale. When the trades are completed, the participants pay the asset in accordance with the existing bids. The seller of the metal receives the calculation at a fixed cost. Buyers of assets pay, in addition to the fixed price, another 25 cents on top of each dollar. Buyers of silver overpay for a similar scheme of 0.0025 cents. Buyers of platinum pay at the fixing price and plus one more dollar. The course of gold - the London fixing determines it by bidding - is immediately announced to information agencies of international level, which spread it in all directions. Most effectively reflects the picture of the day fixing, because in its process the markets of America, Africa, the Middle East and Europe are in full swing. Day fixing serves as a guide to all banks in the world in various states.

Determination of gold quotations not only in dollars, euros and pounds

London fixing on gold sets the price of an ounce in euros, pounds and dollars. These quotes determine the development of the market, as they play the role of the most important fundamental indicators. Exceptions to the general rules for the formation of the value of gold are the Russian market, where an ounce of precious metal is calculated in rubles, and the Shanghai Stock Exchange, where the same figure is set in RMB. For investors from Russia and China, analytical work is complicated, as they have to assess the situation not only on the London, New York and other exchanges, but also on the domestic market.

The situation in Russia

Today, in the conditions of the unstable economic situation in Russia, fixing and its indicators began to play a big role for domestic investors. The depreciation of the ruble leads to the fact that people are showing increasing interest in the gold asset, which is supported by a systematic depreciation of the national currency.

By the end of 2014, the purchase of precious metal could be carried out at a price of 3055 rubles. Its sale was carried out at a price of 1,465 rubles. This course is offered by the largest bank of the country - Sberbank. As the demand from Russian residents for precious metals increases, quotes on the exchanges are paired with the ruble. Trend holds for a long time, which allows you to set the price of the asset an order of magnitude higher than the fixing procedure determines. The difference between the fixing indicators and the actual price available to private investors is the income of dealers who perform transactions with the asset directly during fixation.