What is a spot price?

The spot price is the current world market price of a precious metal such as gold or silver, for immediate delivery. This price is set continuously on international markets and forms the basis for virtually all transactions in physical precious metal.

So when you read about the spot price of gold or the spot price of silver, it doesn't refer to the actual selling price, but to a reference price used worldwide by banks, traders, and institutional parties.

Why is the spot price important?

The spot price is important because it:

• Reflects the objective market value of gold and silver
• Is transparent and verifiable worldwide
• Forms the basis for the price you pay when buying gold or silver, or the price you receive when selling gold or silver

At GoldRepublic, the spot price is always the starting point. The final gold price or silver price you pay consists of the spot price plus a markup for, among other things, production, insurance, storage, and logistics.

How is the spot price of gold determined?

The spot price of gold is established on international trading platforms where large quantities of gold are traded. This mainly happens through:

• International precious metal exchanges
• OTC (over-the-counter) markets between major market participants
• Price fixings that take place several times a day

The price is determined by supply and demand. Factors that influence this include:

• Inflation and interest rate developments
• Currency exchange rates (particularly the US dollar)
• Geopolitical tensions and economic uncertainty
• Demand from central banks and institutional investors

The gold price is quoted internationally in US dollars per troy ounce. For UK investors, this amount is converted to the spot price of gold in pounds sterling.

How is the spot price of silver determined?

The spot price of silver is established in a similar way to that of gold. Here too, the price changes continuously based on international trade.

What sets silver apart from gold is that the silver price is also heavily influenced by industrial demand. Silver is used in, among other things, electronics, solar panels, and medical applications. As a result, the silver price is generally more volatile than the gold price and can fluctuate more sharply.

Spot price versus purchase price

The spot price applies to large, anonymous transactions on the world market. When buying physical precious metal, additional costs come into play, such as:

• Minting or casting bars and coins
• Transport and insurance
• Storage in professionally managed vaults
• Administration and verification

The combination of the spot price and the above costs together make up the purchase price of a precious metal.

At GoldRepublic, bars go straight from the refinery into the vault. As a result, we know the quality and origin of the precious metal. This quality is also checked by an external, independent auditor.

Spot price and trust

For wealthy investors, a gold investment isn't just about price — it's mainly about certainty and trust.

GoldRepublic is:

• The first provider in the Netherlands with an AFM licence for physical precious metal
• Active in the sale and storage of gold for more than 15 years
• Custodian of more than £1.2 billion in precious metals

We store precious metals in third-party managed, independent vaults. This means an external party can confirm that the precious metal is actually present. This form of storage is more expensive, but offers maximum transparency and security.