Editor’s Note
This article explains that the global benchmark for gold’s spot price is set in the London market, referred to as “Loco London,” which excludes shipping and insurance costs.
The international benchmark for gold’s “spot price” is the price in the London market, known as “Loco London” (meaning “the transaction price in London, excluding all shipping and insurance costs”).
In addition to spot prices, gold has “futures” prices, for which the New York Commodity Exchange price serves as the benchmark.
For someone just starting to invest, hearing “gold has both spot and futures” might be confusing. However, consider this: there are about 4,000 stocks in the Japanese market. Those who find stock selection tedious might choose to invest in mutual funds or ETFs. According to the Investment Trusts Association, as of February 2024, there are nearly 6,000 mutual funds. Whether it’s stocks or mutual funds, you ultimately have to choose from a vast number of issues that match your goals or themes.
On the other hand, what you need to remember about gold is just two “issues”: “spot” and “futures.” Moreover, to observe daily gold price movements, looking at just the one “futures” issue is sufficient. Futures prices are more important because the trading volume in the futures market is overwhelmingly larger than in the spot market.
Let’s summarize the discussion so far:
• Gold has prices quoted in US dollars and in Japanese yen, but the “US dollar-denominated” price is appropriate for tracking trends.
• What is mainly reported domestically in Japan is the “yen-denominated” price.
• There is an aspect where the “yen-denominated gold price” is rising due to yen depreciation.
• To check gold prices, look at the New York futures market.
This is about the prerequisite knowledge needed to start investing in gold. After that, it’s enough to understand the fundamental point mentioned in Chapter 2: “Gold loves unstable movements.”
The most important information in gold investment is likely the price itself. As mentioned earlier, “the gold futures price on the New York Commodity Exchange is the basis for gold prices.” Recently, more securities company websites allow viewing of gold futures prices and charts. Also, by searching for “gold futures price” or “gold futures chart,” you can quickly look up the price. While not as detailed, it’s also possible to check gold futures information in the “Commodities” section of the market information on the Nikkei newspaper’s website.