Gold bid/offer spreads blow out to $100 in loco London market

LinkedIn/Ross Norman/3-24-2020

photo showing a stack of gold kilo bars“The bid/offer spread [on gold] – the difference between the buying and selling prices quoted in the interbank market – is typically around 0.06%. That is tight ! Today however that spread has blown out to over $100 or 7% – an increase of over 100-fold. Evidently the lack of liquidity in the spot market has meant that market-makers are clearly reluctant to take on a trade. With physical supply much diminished, it follows that taking on a position carries significant inherent risk – especially with physical supply drying up rapidly. In short, trading gold has become expensive – not only is underlying price much elevated, but the cost of getting in and out has risen very considerably. It is a reflection of our times.”

USAGOLD note:  The expanding spreads for the big players have spread quickly to pricing on gold coins and bullion typically purchased by retail investors. Some might think that the pressure will let up, but there is an equal possibility that a return to normal could take time. Meanwhile, financial stability continues to erode. The entry price has gone up for gold investors but so has the need……

This entry was posted in Today's top gold news and opinion. Bookmark the permalink.