The Bank of England acts as the banker of the Government, and it sustains the consolidated Fund account of the Government. It looks after the foreign exchange, and gold reserves of the country as well. In 1844, Bank Charter Act fixed the issue of bank notes with the gold reserves, giving the bank sole rights to the issue of banknotes. The Bank of England also acts as a bank of the bankers, which means it is also the last resort for borrowers.
The price of gold like all other commodities are determined by supply and demand. Although unlike other commodities, gold cannot be consumed, and all the gold that was mined previously still exists. In effect, this means more fluctuation, and that it can come on the market again to be sold, when the price is right.
By the end of 2004, many government organisations and central banks were said to have kept about 19% of the mined gold with them. Central banks, and the IMF are involved strongly in determining the price of gold. In 1999, out of the central banks in Europe, the Swiss National Bank, and the Bank of England were present in the list of top gold sellers.
The London gold marketplace has a clearing mechanism, these are five banks that are interconnected. These are The Bank of Nova Scotia, Deutsche Bank AG, HSBC Bank, JP Morgan Chase Bank, and UBS. It is the job of the clearer, to take care of the gold that is shipped from all over the world. This gold will then go to jewellery manufacturers. Clearers also have customers who wish to buy the gold themselves.
The gold fix is the most important attribute of the Over the Counter Trading. It is controlled by the major market makers, which includes four names: Deutsche Bank AG, Society Gnrale, The Bank of Nova Scotia, and the HSBC Bank USA London Branch.
A major concern about Over the Counter Trading is the gold fix. The gold fix is dictated by four major market makers. These are The Bank of Nova Scotia, Deutsche Bank AG, HSBC Bank USA London Branch, and Society General.
This sets the price of gold at a fixed rate, which makes it possible for gold traders to trade at fair market prices. Twice a day, morning and afternoon, members of the gold fix in London conduct an auction. This auction aims at finding the price where the number of buying orders match with the number of selling orders. This price is published widely in newspaper, and posted on the Internet where guidance is provided to those who are in the buying or selling of gold at that very instant. This is a widely used method that is used by the traders to fix the price of gold for physical gold transactions.
More Information:
Jack Wagon is a gold investment consultant. You can take his help to gold bullion. For more information about buying gold you can visit his recommended site at http://www.goldmadesimple.com/
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Article: Gold Price And The Bank Of England Author: Jack Wagon Publication Date: 2009-10-29 Total Views: 211 Word Count: 495 Category:Home /
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